Management Accounting System and Its Different Types Of System
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Added on 2020-12-09
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Management accounting and its different types of system; 3 P2 Explain different method of management accounting reporting: 5 M1. Evaluation of benefits of various management accounting systems:6 D1Management accounting system and management accounting reporting are integrated with organisation process:7 TASK 28 P3 .Appropriate techniques of cost analysis to prepare an income statement: 8 M2 Management accounting techniques and financial reporting documents.: 11 D2 Financial reports which applies to interpret many business activities: 11 TASK 311 P4
Management Accounting System and Its Different Types Of System
Added on 2020-12-09
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Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1. Management accounting and its different types of system;.............................................3P2 Explain different method of management accounting reporting: ....................................5M1. Evaluation of benefits of various management accounting systems:.............................6D1Management accounting system and management accounting reporting are integrated withorganisation process:..............................................................................................................7TASK 2............................................................................................................................................8P3 .Appropriate techniques of cost analysis to prepare an income statement:.......................8M2 Management accounting techniques and financial reporting documents.:...................11D2 Financial reports which applies to interpret many business activities:.........................11TASK 3..........................................................................................................................................11P4 Advantages and disadvantages of different planning tools used for budgetary control:11M3 Analysis of different planning tools and their applications:..........................................13P5 Organisations are adapting management accounting systems to respond to financialproblems:..............................................................................................................................14M4 Management accounting in response to financial problem can lead organisations tosustainable success:..............................................................................................................16D3 Various Planning tool to resolve financial problems:....................................................16CONCLUSION..............................................................................................................................16REFRENCES ................................................................................................................................18
INTRODUCTIONManagement accounting refers to that field of accounts which is concerned with assistingmanagers in decision-making, planning, analysing the performance of organisation in order tostrategies appropriately for the further growth of the company. Business is complex activity, itrequires constant attention on part of managers to deal with the uncertainties occurring at everypoint of time. This practice helps in understanding detail information about various aspects andestimation of alternatives for effective working of enterprise (Kraus and Strömsten, 2012). Therole of Management accountant is to assess the risk associated with certain instruments alongwith identifying which elements of company needs to be discarded to achieve goals. There aredifferent types of management accounting systems such as cost accounting, Inventorymanagement, price optimization and Job costing. McGoff is construction company offering widevariety of services like site identification, constructing building, acquisition of land, interiordesigns and many others. The company manages it's accounts on regular basis. Informationabout requirements and availability of materials, equipment, machinery can be obtained fromfinancial book of organisation. It is essential for managers to prepare such statements tounderstand the working of company. It helps in achieving the goals along with attaining thesuccess for the business.TASK 1P1. Management accounting and its different types of system;Management accounting is system of preparing management reports which includefinancial and other statistical information. These informations are required by the managers tomake important decisions and as well as to run day to day activities. This accounting system isvery important for all the organisations. It is generally used for the internal purpose and helps inmaking internal decisions. The basis of this accounting system is informations regarding tofinancial and non financial terms, which is needed by managers.Inventory management system- This method deals with managing records of datarelated to production activities. It keeps track of stocks availability and it's flow during thevarious stages of production. McGoff is manufacturing association it uses this to analyse courseof material used while constructing building. They have this technique installed which providesinformation about raw materials which are being converted into finished goods. Importance of
such system is that it helps in maintaining and controlling the inventory levels. It requiresensuring smooth functioning of supply chain. It covers areas from warehousing, retail andshipping movements throughout the production process. Macgoff gained profit because thiswhich helped in maintaining the stock effectively. The advantage of having this system is it freefrom the error and mistakes of manual handling. Companies able to manages warehouse facilitiesalong with locations of goods (Laksmana, Tietz and Yang, 2012).Cost accounting- This system manages the costs occurred during the production. It isconcerned assessing expenditure incurring in the business. These are involved at every stage ofmanufacturing thus it is important to evaluates how much the company is spending and return itis getting over such expenditure. It is beneficial for managers take decisions to cut down certainprices that aid in achieving the economies of scale. McGoff collects data about business assetsand liabilities through such process. It keeps track of information about transactions and theamount of acquiring machinery, equipments, and amount of depreciation. McGoff used thisprocedure to measure the performance of business.Price Optimization- It refers to the process of identification of point where companycharge enough to make profits and able to expand customer base. It is not necessary that forbuyers this point is perfect they may find it expensive, but as long as it serves the businesspurpose this should be considered. The main purpose McGoff is to construct large projects, forthat this helps in guiding managers in setting price appropriately. It should neither be too highnor too low. This system is important for creating balance between price and value based on thechanging relative value of goods and services. McGoff designed the pricing software based onthe structure of it's organisation. It creates segments of customers based on prediction aboutresponsiveness towards changing prices. Further promotional strategies and pricing method canbe developed as per their preferences. Job Costing system- It refers to the process of collecting data about manufacturing andservice costs, to acquire such info as it helps in estimating business sustainability. It is importantto understand cost associated with each job. Direct material cost are analysed to checkexpenditure incurred during construction, labour on the other hand evaluates salaries or wagesgiven to workers for the services provided by them. Over head calculates the depreciation ofmachinery. McGoff accumulates money spend on direct material, labour, overhead with the helpof this method and then charge customers accordingly.
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