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Management Accounting Assignment- Harrods Plc

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Added on  2020-06-04

Management Accounting Assignment- Harrods Plc

   Added on 2020-06-04

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MANAGEMENT ACCOUNTING
Management Accounting Assignment- Harrods Plc_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Explain management accounting and management accounting systems................................1P2 Explain different methods for management accounting reporting.........................................2TASK 2............................................................................................................................................4P3 Calculation of costs to prepare income statement under marginal and absorption costing....4TASK 3............................................................................................................................................7P4 Explaining the advantages and disadvantages of different types of budgetary planning tools......................................................................................................................................................7TASK 4............................................................................................................................................9P5 Use of different management accounting systems to respond financial problems.................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
Management Accounting Assignment- Harrods Plc_2
INTRODUCTIONIn the competitive marketplace, companies are strongly committed towards costmanagement, sales maximization and others to achieve goals. In the technological world, firmsmanages all the records and financial information in computerized system that not only helps inprotecting their data but also helps to evaluate and analyze their performance, extractingcustomized reports and projecting future as well. This investigation emphasizes on some of theimportant system that are extremely useful in current era for business managers of Harrods Plc inprudent and qualitative decisions. Despite this, costing methods comprising both marginal &absorption costing methods will be assessed. Finally, different budgeting methods and moderntechniques in order to trigger possible financial problems will be critically evaluated. TASK 1P1 Explain management accounting and management accounting systemsTo: General Manager, Harrods Plc From: Management Accountant Officer Date: 25th March 2018Subject: Management Accounting and various systems Management Accounting incorporates both financial as well as non-financial informationthat is useful to analyze complete picture of an enterprise. Such information is used to drivebusiness success by taking day-to-day decisions. Chartered Global Management Accountant(CGMA) state that managers use such dataset in order to develop dynamic business solutions topreserve increased value for the business unit. In technology-led world, managers can use somepopular systems which are analyzed below:Cost Accounting system: It is mainly useful for the manufacturing concern who isengaged in production or various products. The system records all the spending that firm incurson their manufacturing process including cost of material bought or consumed, wages paid tolaborers and other production overheads (Fullerton, Kennedy and Widener, 2013). Thus, HarrodsPlc can implement cost accounting system in their business to find out total cost, closinginventory & profitability. It helps identifying areas of wasteful spending or ineffective use ofresources and helps in controlling its occurrence. 1
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Job costing system: This system particularly determines cost on a particular job work bycomplying relevant expenses incurred by the firm. Thus, with the help of such, company canidentify the possible areas of overspending on a particular order work and control it so that it canmaintain promised price proposed for the order placed by customer and get a good profit margin(Banerjee and Das, 2017). Inventory management system: Managing inventory keeping a right balance betweenholding cost and overall market demand is a toughest task for enterprises. This system helps inmanaging inventory at a right level where company neither face any issue of inventory shrinkagenor it is subjected with excessive carrying cost. Harrods Plc can use managing a perfect stocklevel for all the product lines and do not face any issue of loss in revenuesPrice optimization: Pricing is a too difficult task for the companies because in thecompetitive marketplace, too costly goods can bring fall in demand due to cheaper substitutes inthe market. On the other hand, fixing a very low prices can negatively affect the profit margin.Price optimization is significantly useful to set a correct price because the system performscertain mathematical calculation and used to assess that how customers will respond at differentprices of an item (Zimmerman and Yahya-Zadeh, 2011). Thus, it will help concern in setting aperfect prices where both the sales volume and desired profit margin can be keep at a right level.P2 Explain different methods for management accounting reporting To: General Manager, Harrods Plc From: Management Accountant Officer Date: 25th March 2018Subject: Various management Accounting reportsLooking to the tough competition in the marketplace, managers require sound knowledgeto track their eye over business functionality. For such purpose, they need to gather informationfrom different reports that are keep by the enterprise. Some important and often used reports areexamined hereunder:Job cost reports: The report helps in determining total money spent by Harrods Plc toproduce a job work and helps in delivering goods at promised price to the customer and assure2
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