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Management Accounting Airdri

   

Added on  2020-11-12

22 Pages6470 Words130 Views
Management Accounting

Table of ContentsINTRODUCTION ..........................................................................................................................3TASK 1............................................................................................................................................4Management accounting and requirements of essential kind of management accountingsystems........................................................................................................................................4Explain different methods used for management accounting reporting.....................................5TASK 2............................................................................................................................................8Range of management accounting techniques............................................................................8TASK 3..........................................................................................................................................12Budget an important tool for control.........................................................................................12Use of different planning tools and their application for preparing and forecasting budget.. . .13TASK 4..........................................................................................................................................13Management accounting to respond to financial problems.......................................................13How in responding to financial problems, management accounting can lead organisation tosustainable success....................................................................................................................15Planning tools for accounting help to solve problems and support organisations withsustainable success....................................................................................................................15CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16

INTRODUCTION Management accounting which also known as managerial accounting, chain of activitiesby evaluating business cost and operations helps in prepare financial reports, records. It helps tomanager in taking important decisions for achieving goals and objectives. On other hand itmeans managing financial and costing of data then translate into useful information withinmanagement and organisation. This report is based on Airdri which is an small manufacturingcompany that produce or manufacture hair dryers and accessories to give major attributes toconsumers. This report is based on various management accounting system and their methodswith their critical evaluation. Further it evaluates about management accounting techniques andpractical evaluation of accounting terms. It also includes planning tools and techniques and theiradvantages with disadvantage and at last how organisation respond to management accountingsystem by defending various problems (Arroyo, 2012). It also includes budget as an importantplanning tool and technique to control each and every activity in an effective manner.TASK 1Management accounting and requirements of essential kind of management accounting systems.Management accounting use by managers for provisions of accounting knowledge andinformation before making important decision within their organisation and it helpful formanagement and their performance to control works and activities (Hasniza Haron, KamalAbdul Rahman and Smith, 2013.). In preparing management accounting organisation have tobuild reports and accounts that helpful in taking accurate and timely financial and staticaldecisions by managers in day to day operations. Management accounting enables to managersand others in taking crucial decisions and provides cost of goods and services in both conditionprofitability or non profitability. Management accounting essential while Airdri taking importantdecision such as open a new venture and while building budget. There are kinds of managementaccounting systems that are activity based costing, cost accounting system, inventorymanagement system, job costing system and price optimization system (Laine, Paranko andSuomala, 2012).There are some key areas in which management accounting systems plays very crucial role thatare as follows:For long and short term planning:

Management accounting enables in both long term and short term planning andimplementation for taking future decisions. It helps for long term plans and policies, strategicmanagement and formulation of various strategies according to market trends and interest.Managing information system:The management accounting system helpful in managing and running informationmanagement system at every level in organisational hierarchy.Management accounting systems:Management accounting systems are collection of information and statistics by takinghelp of external parties such as stakeholders, regulators and various lenders by obeyingprinciples of accounting (Klychova, Faskhutdinova and Sadrieva, 2014.). For an organisationthey have to follow various kinds of accounting systems after accessing needs and wants ofclients of particular organisation. There are kinds of management accounting systems that are as follows:Cost accounting system:Cost accounting system or product costing system that is a structural criteria use byorganisation to analyse cost, profitability and inventory valuation by controlling various kinds ofexpenditure (DRURY, 2013).. Finding accurate cost of goods and services are significant in caseof Airdri Ltd to find out potentiality. So it require for estimation of various kinds of cost,profitability and value of organisational products and services (Maskell, Baggaley and Grasso,2016. ).Inventory management system:Inventory management system is a combination of technology and various kinds ofprocesses that helps in oversee maintenance of products which are stocked, assets oforganisation, raw materials and finished products (Boyns, Edwards and Nikitin, 2013.).Inventory management system helps in evaluation of every item of inventory and informationthat associated with it. In case of Airdri it uses inventory management system to record allnecessary information.Job costing system:In job costing system involves chain of activities for collecting information regardingkinds of cost while production or service job. It is beneficial at time of producing different goodsthat are totally different from each other.

Cost plus pricing:Cost plus pricing refers to adding or including markup to cost of goods and services toreach at selling price. In that pricing direct material cost, direct labour cost and overhead cost fora product by adding to a markup percentage to reach at price of a product (Arroyo, 2012).. Italso be used within a consumer contract in which seller reimburse the seller for all costs thatincurred and pays negotiation profit with cost incurred.Price optimization system :Price optimization system used is an application that use for set prices and it is andecision making process that uses employs data, software and algorithms to bring results inproper manner (Malmmose, 2015.). It is most useful in determination of prices that helps inattaining goals and objectives. Hence various kinds of management accounting system areimportant for any organisation in taking important decision in terms of price, inventory andmany more.Explain different methods used for management accounting reporting.Management accounting which focus on collecting data and information with help offinancial accounting. It is very useful for preparing financial statements, income statements withcash flow with balance sheet that helps in checking viability of a business project. Organisationuses various kinds of methods or methodologies for accounting reporting that are as follows:Cost reporting:Cost reporting is one of important method in predetermined of price of products andservices. It helps in estimation of fixation of pricing, over head cost, labour cost and many morepricing strategies comes under it (Cheng, 2012.). In cost reporting whole cost divides into totalitems created into it and it helps to managers to oversee price of products and services withselling cost. It is one source for planning and implementing various pricing strategies.Budgets:Budget is one of most important accounting tool that give direction and estimation ofspending plans and controlling measures of it (Burkhard and et.al ., 2012.). Budget managerialaccounting are very much critical for acquiring performance of an organisation and build as awhole business in which department wise. Organisation build an overall budget to understandtheir grand scheme of their business. In case of Airdri Ltd they build an effective budget byevaluating income and expenditure so that important decisions should be taken.

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