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Management Accounting: Asda Limited

   

Added on  2020-10-22

16 Pages4923 Words134 Views
MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and requirement of various management accounting systems.....1M1: Benefits and applications of management accounting systems...........................................3D1: Critically evaluate accounting system reporting..................................................................4P2: Explain various methods used in managerial accounting reporting.....................................4TASK 2 ...........................................................................................................................................6P3: Calculation of cost using techniques and preparation of statement of profit and loss..........6M2: Different types of management accounting techniques.......................................................8TASK 3 ...........................................................................................................................................9P4: Advantages and Disadvantages of different types of budgetary controls.............................9M3: Application of planning tools for forecasting preparing and analysing budgets...............10D3: Evaluation to deal with planning tools used in resolving financial problems....................11TASK 4..........................................................................................................................................11P5: Use of management accounting systems in responding to financial issues.......................11M4: Analysing management accounting techniques.................................................................12CONCLUSION .............................................................................................................................12REFERENCES..............................................................................................................................13

INTRODUCTIONAccounting process is related with recording, classifying and summarising thetransactions of business into the financial accounts of business such as journal, ledger and trialbalance in a manner that is easily understandable and comparable to the stakeholders of thecompany. This project will discuss about the branch of accounting, which is managementaccounting. Management accounting is the process of summarising the details of the financialstatements of the company as well as about the future economic and non economic activities ofthe market that will be prevalent in future.( Alleyne, and Weekes-Marshall, 2011) These reportsare then used by the internal management of the Asda Limited so that they can make decisionregarding the formulation of policies and defining objectives in the company. This project willdiscuss about the various management accounting systems that are adopted by the organisationsand how different management accounting techniques range are applied in the companies. Usesof different planning tools in the management accounting process. The report will also perform acomparison about the ways in which companies like Asda limited use the techniques ofmanagerial accounting in responding to financial problems.TASK 1P1: Management accounting and requirement of various management accounting systemsManagement accounting is a process of preparing managerial accounts and reports by thefinancial managers to provide reliable and accurate financial and costing data which can befurther used by managers to understand and handle day to day operations of the organisation.Management accounting also includes translating the financial data into understandableinformation which can be used for effective decision making.Asda limited is a leading supermarket retailer based in United Kingdom, Asda is diversein its activities and due to their efficient management accounting system they have a advantageof reliable management accounts and effective decision making process.( Baldvinsdottir,Mitchell, and Nørreklit, 2010)Types of management accounting systems and their need in an organisation1

Management accounting systems provides a framework to the organisation to helpmanagers to prepare accurate management accounts and reports so that sound decisions can bemade. Product Costing – Product costing management accounting system helps in identifyingall costs involved in production of the products, so that manager of an organisation likeAsda limited can analyse all the expenditures and can manage the allocation ofoverheads. This management accounting system is ideal for business of small scale whichhas simplicity in their activities and can easily handle allocation of overheads and candetermine profitability, this system also helps to analyse organisational position that atwhat point business can face break even condition or no profit no loss condition.Cost accounting system – Cost accounting system also referred as product costingsystem provides a framework to estimate or forecast future costs which can be incurredby the organisation. Organisations like Asda is beneficial by this management accountingsystem as they can analyse their future costs and profitability, Cost accounting systemalso forecasts costs of individual functions like costs of inventory, cost of direct material,direct labour and other variable and fixed costs. Cost accounting system does not givesaccurate costing estimates but the budgeted costs helps in allocation of variousoverheads.( Chenhall, and Moers, 2015)Job Costing – Job costing or job order costing is a method of determining costs for everymanufactured unit, organisations which are engaged in manufacturing unique single unitscan get benefited by this management accounting method as it helps in estimatingseparate costs involved in each job of manufacturing. This method is appropriate forthose business entities which perform their manufacturing tasks upon order requests.Asda is a supermarket retail company which is mainly engaged in delivering the goodsand not m,manufacturing it, due to which job order costing unit is not followed by thiscompany.Process costing – Process costing is a management accounting system which is similar tojob order costing but it estimates all costs separately involved in various processes, thistype of system or method is appropriate for the organisations which has variousdepartments or processes like Asda limited. Asda limited is a supermarket retail store2

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