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P1 Explaining Management Accounting

   

Added on  2020-10-22

11 Pages3151 Words280 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1P1 Explaining management accounting and providing essential requirements of various typesof management accounting systems............................................................................................1P2 Stating different methods of management accounting reports..............................................2M1 Evaluating benefits of management accounting system.......................................................2D1 Critical evaluation of management accounting reports integration of managementaccounting systematic.................................................................................................................3P4 Explaining advantages and disadvantages of various types of planning tools implied forbudgetary control........................................................................................................................4M3 Analysing use of planning tool for budget forecasting and preparing.................................5D3 Evaluating planning tools for accounting for solving financial problems attains sustainablesuccess.........................................................................................................................................6P5 Evaluating that how organizations are adapting management accounting system forresponding financial problems....................................................................................................6M4 Analysing while responding financial problems , management accounting lead companyto sustainable success..................................................................................................................8CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONManagement accounting is referred as presentation of information related to accountingwith context of formulating the policies adopted through management for purpose of assistingregular activities. The present report would discuss about essential requirements of types ofmanagement accounting systems and various methods of management accounting reports.Similarly, it will be providing application of range of management accounting techniques andexplaining use of multiple planning tools for budgetary control. Lastly, it would reflectcomparison of methods in which company could imply management accounting for respondingfinancial problems on basis of Agmet Ltd which is chemical manufacturer in UK.P1 Explaining management accounting and providing essential requirements of various types ofmanagement accounting systemsManagement accounting involves providing and preparing financial and statisticalinformation on timely basis to business managers so it could make daily and short termmanagerial information. It directly differs from financial accounting where it produces reportsfor internal stakeholders of company as it is opposed to external stakeholders. The managementaccounting directly leads for tracking actual performance as compared to budgets and formaximising rate of return on capital employed. The types of management accounting systems arestated below:Cost accounting system: This is replicated as framework used through business toestimate the product's cost for purpose of gaining information that it leads to profitability or not,cost control along with valuation of inventory. Generally, it is used through manufacturers forrecording activities of production with application of perpetual inventory systems. In simpleterms, this accounting system is framed for manufacturers which tracks inventory flow oncontinual basis via different production stages (Horton and de Araujo Wanderley, 2018). Onbasis of its requirements, it leads to control cost within budgetary constraints management hasset specific service or product. In the similar aspect, it helps for cost accounting as source ofother functions of cost accounting. Further, cost computation provides help to company todecrease cost of projects and processes.Job costing systems: This system is used for assigning and accumulating cost ofmanufacturing of particular individual unit of output. Usually, this information might be requiredfor submitting cost information to customer within contract where each cost are reimbursed. It1

directly leads to identify accuracy of estimating system of company which enables to quoteprices that directly allows for reasonable margin. This information is used with context to assigninventoriable cost to manufactured products. It is distinctive method costing as particular formwhich is adopted for execution of work on strict basis according to customer specification.P2 Stating different methods of management accounting reportsManagement accounting reports are replicated as tool to understand numbers related tobusiness performance. In the same series, standard traditional accounting reports which shouldbe completed for tax objective and it includes data collection which is gives importantinformation related to operations. The management accounting reports could be organised insuch aspect which creates sense with context of business. The types of management accountingreports are stated below:Budget Reports: The budget managerial accounting reports are very censorious formeasuring performance of company. Every business generates overall budget for understandingbusiness's grand scheme. The budget estimate is created on basis of previous experience althoughappropriate budget caters multiple unforeseen circumstances which might arise (Nishimura,2019). In addition to this, managerial accounting reports on basis of budgeting could guidemanagers for offering better incentives to employees, cutting cost along with renegotiating termswith suppliers and vendors. This, budget is very critical with context of business perspective.Cost Managerial accounting reports: Managerial accounting directly calculate costs ofvarious articles which are manufactured. Every raw material costs., labour, overhead andaggregated cost undertaken for purpose of deliberation. In this aspect, total cost is categorisedthrough amounts of products generated. The cost reports provides summary of entire informationand even offers capacity to managers for realizing cost prices of item compared to selling prices.The profit margin is estimated and directly monitored and estimated via reports which gives clearpicture of each cost which went for procurement or production of articles. The inventory waste,overhead and hourly labour costs are part of cost managerial accounting reports. These provideexact understanding of every expense which is mandatory for resource optimisation in everydepartments.M1 Evaluating benefits of management accounting systemCost accounting system 2

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