Assignment On Various Aspects Of Management Accounting | Sollatek
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Added on 2020-02-05
Assignment On Various Aspects Of Management Accounting | Sollatek
Added on 2020-02-05
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Management accounting and essential requirement of different types of managementaccounting systems......................................................................................................................3M1 Advantages of management accounting systems and their application................................4P2 Methods that are used for management accounting reporting...............................................5D1 Evaluation of how management accounting systems and reports are integrated..................6TASK 2............................................................................................................................................7P3 Preparation of income statement using marginal and absorption costing..............................7M2 Application of various management accounting techniques..............................................10D2 Accurate interpretation of the data by production of the reports........................................11TASK 3..........................................................................................................................................11P4 Planning tools that can be used for Budgetary Control. .....................................................11M3 Different types of planning tools and their application in the preparation of budgets.......13P5 Adoption of management accounting systems to respond to financial problems................13M4 Role of management accounting in sustainable success....................................................14D3 Solving of financial problems by using planning tools.......................................................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting is the process by which organisation goals and objectives thatare decided can be achieved (Ajibolade, Arowomole and Ojikutu, 2010). For this purpose it willinclude various processes to be undertaken which will include identification, measurement,analysation of the relevant information, and than on that basis interpretation will be carried outand all the findings will be required to be communicated so that the goals can be achieved. Themain purpose of management accounting is to provide the required information to the managerswhich will be helpful for them in their decision making process. This form of accounting focuseson helping the internal managers of the company and in this no information is provided to theoutside parties. In this assignment various aspects in relation to management accounting such asmeaning of management accounting, types of management accounting systems, differentbudgetary control techniques and costing methods will be discussed with reference Sollatek. Thiscompany was founded in 1983 and is involved in manufacturing of products which are helpful inprotecting electrical and electronic equipments. TASK 1P1 Management accounting and essential requirement of different types of managementaccounting systems.In a business there are various decisions that are required to be taken for the attainment ofthe objectives and goals that are set by the company (Albelda, 2011). In order to achieve thissollatek will be required to prepare various reports that will help the management in acquiring allthe financial and statistical information on the timely basis and in accurate manner which willhelp them in performing various decisions. This process of preparation of reports is known asmanagement accounting. These reports are made just for internal use and will not be provided toanyone for external use. They will show various amounts in relation to cash available,outstanding debts, sales revenue, variance analysis and many other figures. The main areas inwhich management accounting can be used are risk management, performance management andstrategic management. There are different types of management accounting systems that can beused by Sollatek which are described below :1.Throughput Accounting : - In the production process of sollatek there are variousconstraints that will be present and will be required to be identified. In the process of
throughput accounting focus will be given on identification of such constraints only. Theconstraints can be various such as insufficiency of labour , material or any other facility.These constraints are reduced in this system and this is achieved by increasing thevolume of production by which the per unit cost of the product will get reduced.2.Lean accounting : - In case of lean accounting instead of giving importance to cost themain focus is kept on formulation of different strategies that will be helpful in reductionof cost (Arroyo, 2012). The objective of cost reduction will be achieved by reducing thelevel of wastage that takes place in the production process carried on by sollatek. Thereare various such irrelevant cost that can be eliminated from the production process andfor that purpose information will be required that will be available with the help of thissystem. The information will be provided by the accountants on the immediate effect.3.Traditional management accounting Systems : - the main focus of this system is ontracking of the cost and that can be achieved by the use of various methods that willinclude methods such as job order costing or process costing. With the help of thesemethods the manner in which various cost are required to be allocated will bedetermined. Job costing will be used in the case where individual allocation is possiblewhereas process costing will be required where there are many processes involved inproduction of the product.4.Transfer Pricing : - in the system of transfer pricing cost of the product will becalculated on the basis of the movement of the goods that takes place during theproduction from the different departments included in production system (Bodie, 2013).Variable cost and opportunity cost are the two main cost that are involved in the systemof transfer pricing. There will be addition at each stage and so the cost will also increasein small portions.A part from these there are various other management accounting systems which are availableand can be used. They include cost accounting systems, job order costing, inventory managementsystem and price optimisation systems.Cost accounting method – It is the process of accounting in which recording of variousoperations are done according to their actual cost incurred. It is a continuous process in whichrecording, classification, analysing and summarising of various entries are made which is utilisedto manage the various activities of the given entity.
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