Management Accounting Assignment (solution)
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Added on 2020-12-09
Management Accounting Assignment (solution)
Added on 2020-12-09
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and need of different kinds of management accounting system....1P2 Different approaches used for management accounting reports............................................2TASK 2............................................................................................................................................4P3 Calculate costs by using techniques of cost analysis to prepare a income statement byusing absorption and marginal costs...........................................................................................4TASK 3............................................................................................................................................6P4 Merits and demerits of various kinds of planning tools are used for budgetary control.......6TASK 4............................................................................................................................................8P5 Compare how companies are using management accounting system to respond financialissues...........................................................................................................................................8CONCLUSION ...............................................................................................................................9REFERENCES..............................................................................................................................11
INTRODUCTIONManagement accounting is a profession that includes devising planning, partneringwithin management decision making, performance management system and giving expertise incontrol as well as financial reporting to help management in making and applying of organisationstrategy (Ogata and Spraakman, 2013). It analyses information to advise enterprise strategy aswell as drive the success of sustainable business. Sollatek limited mainly deals in energy as wellas power consumption solutions by providing various electrical equipment’s within UnitedKingdom market. In this assignment it involves the needs of various kinds of managementaccounting and importance of management reports. Along with this also discuss about varioustypes of planning tools for budgetary control and its merits and demerits. TASK 1P1 Management accounting and need of different kinds of management accounting systemManagement accounting is a very important function for an organisation as it preparevarious managerial records as well as reports, it is different from others financial statements as itcan be prepared anytime within a accounting period according to its requirements whereas thesemanagerial accounts are prepare at the end of accounting year (Napier and Haniffa, 2011). Thiswill assist in knowing the position of enterprise by effectively analyses of accounting statementsat the end of accounting period.Sollatek limited is an manufacturing industry which supply solar products to theircustomers by providing better quality of of their goods and services. Firm use the system ofmanagement accounting in order to take proper decisions. By preparing managerial records, itwill help them in giving a better image of business functions. Kinds of accounting systems and its requirements: This system of management accounting will help business in organising and controllingits functions through determining various costs which are involved in business activities. Thesemanagerial accounting system provides various guidelines which help in leading supervisors toascertaining as well as delivering better image of business activities and profitability. There arecertain types of systems which are as follows: Cost accounting system: In this, it involves costs in all the functional departments like asmarketing, production, distributing, finance and so on. This system makes assumptions of1
profitability ratio in upcoming events. Sollatek limited is engaged in manufacturing ofelectronic goods which involve several expenses which determine accounting systems.Essential part of cost accounting systems is that it helps in identifying future incomewhich assist in taking future investments decisions accordingly. Inventory management system: This system provides a model which help business inmanaging stock. Hence, inventory refers the raw material availability in business, work inprogress stock, material stored within warehouses and finished goods. Sollatek limitedmainly deals in electronic products which results to have ample of semi-finished andfinished stock, due to this whole system is suitable for this company. Firms manager canfollow the system of inventory management in order to manage all the stock of thecompany (Management Accounting, 2015). This company is adopting methods ofperiodic, ABC, EOQ as well as perceptual for managing inventory. Job costing: This technique determine cost which is included in each job. Hence, it is ajob order taken from the clients in order to complete specific work in a given span of timeaccording to provided brief by customers. Job costing is adequate for firms which dealsin manufacturing like as Sollatek limited company, as they will take the orders ofelectronic items from various customers and try to complete the work within the span oftime. It will help in assuming cost of organisation which is further used in takingdecisions of labours requirements and raw material procurement. P2 Different approaches used for management accounting reportsThere are several types of managerial accounting reports methods are adopt by enterprisesupervisors in order to manage the business effectively as well as analyse overall enterprisetrends for the short and long term. Some of methods are given below: Cost Reports: Managerial accounting plays a very main role in determining the productprice as well as it is not possible to determine cost of product without knowing its actualcost. For that, report of cost is made by accounting employees as it enables supervisors totake decision regarding cost of goods and services. It allows supervisors to limit theirexpenses which are not necessary as well as also provide ideas about the cost should becharged for specific goods or services. This report is very essential part as it helps inascertaining the incurred cost in order to take necessary measures which aid in decliningoverall cost as well as raise the profits for the long run. 2
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