Management Accounting Aspects
Added on -2021-02-21
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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................1FIRST ACTIVITY...........................................................................................................................1Management accounting systems:...................................................................................................1Management Accounting Reports:.........................................................................................3Evaluation of integration of system and reporting of management accounting with process ofcompany:................................................................................................................................5Costs calculated using appropriate techniques of cost analysis to frame income statement:.6Applicability of range of management accounting techniques:.............................................9Interpretation of Income statement:........................................................................................9SECOND ACTIVITY....................................................................................................................10Description of application of planning tool used to establish effective budgetary control:.10Uses of planning tools in preparation of budgets:................................................................14Comparison of manner by which organisations are using management accounting systems torespond financial problems:.................................................................................................14Responding to organisational and financial problems leads to sustainability in success:....16Evaluating planning tools for responding to financial problems:........................................16CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
INTRODUCTIONManagement accounting term is combination of accounting and management.Accounting implies to systematic classification and recording of quantitative aspects, whereasmanagement combines planning, control, organising things and making decisions. Managementaccounting covers all aspects whether quantitative or qualitative with aim to provide reliable andrelevant results and information for taking momentous decisions (Lavia López and Hiebl, 2014).Managers are responsible for effective implementation and adoption of systems of managementaccounting. This report helps to enhance the understanding of management accounting and itsdifferent aspects. This report explains management accounting systems, techniques and planningtools to respond financial problems in context of engineering company named “CauntonEngineering Limited”. It is leading steelwork engineering company of UK. Company is famousfor its fabrication quality, best designs and structural steelwork. It has approx. more than 41years’ experience in this industry and providing services and support to real estate andconstruction companies.FIRST ACTIVITYManagement accounting systems:Management accounting: It is process that consisted elaborated planning regarding thecrucial financial business action and overall management performance in state to analyse,monitor, control the business affairs so that productivity and profitability can be increased. It isbasically a simple process that facilitates to the management of the company in decision makingprocess by providing the general business records and financial transaction (Hopper and Bui,2016). Management accounting is combination of two aspect accounting and management, as itconsiders business systems that combines all the financial and non monetary components. Management accounting system: Management accounting systems mentioned thatsystematic usage of the business accounting transaction and information in order to generate thefinancial statement with accuracy so that they can make the decision regarding long term objectsand defined organisational policies or regulation. These system of the management accountingare the elementary business exercise that is significant for the development of the goods andservice providing industry. These sort of management accounting system that are prepared by thehead of the individual business section and suggested to the management of the company so that1
they can make daily business decision to run the business. Caunton Engineering Limitedformulate the business strategies in the short run to betterment of the organisation. Different typeof management accounting system are followed by the company in order to collect the businessinformation measure the business decision and financial growth. Some of them are described asunder: Cost accounting system: It is detailed framework that is used in business to identify theabsolute cost of goods and services that are produced and provided to its respective customer.This system is totally focused on the analysis and determines the cost and its techniques(Wickramasinghe and Alawattage, 2012). In context to Caunton Engineering Limited,management of the company use this system to assist the function and process of the productioncost to evaluating the cost like finishing, developing, designing and other process. This systemcomprises of cost accounting techniques that are used by the companyto determine the actualcost of the designed goods and services with ascertaining the profit along with cost at assorteddegree of manufacture. With the help of this system, management can understand the coststructure and cost process of the organisation so that they can make the business decision byconsidering goals and objectives. This system also helpful in making the cost related strategies,cost sheet structure and annual budget of the business.Inventory management system: It is a process that consolidate application withstructure of production to assure the availability of stocked goods that comprises at differentlevel of processing raw material, work in progress and complete goods to further ensure theiravailability at exact needs with predefined standard quality. It plays a pivotal role in deciding theprice tag of goods and services by assessing value of closing stock. Management of CauntonEngineering Limited handles the broad range of its material and finished production of the steelby influencing the amount of material. Company uses this method to control the cost of storesmaterial and better flow of the goods to help them in provide the standard goods and services.There are different concepts to determines the value of goods such as FIFO, LIFO and weightedaverage. For company this system is essential to manage its stocks and minimise excessive costs.Job costing system: This system directed on allocating costs to categorized task andbatches. It assists to measure different activities and processes of business to improve theefficiency and productivity. It describes as assigning total manufacturing cost over the particularunit of output. It is cost accounting method that related to the manufacturing unit where2
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