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Assignment on Management Accounting (pdf)

   

Added on  2021-06-17

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FinanceLeadership Management
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Management AccountingTech (U.K) Limited
Assignment on Management Accounting (pdf)_1

MANAGEMENT ACCOUNTING1Table of ContentsIntroduction................................................................................................................................2Task 1.....................................................................................................................................2iii. Cost Accounting Systems.............................................................................................5Iv Inventory Management Systems....................................................................................6v. Job Costing System........................................................................................................6i. Types of Managerial accounting reports.........................................................................7ii. Importance of presentation of the information in an understandable manner...............8Task 2.....................................................................................................................................8Absorption Costing................................................................................................................8Income Statement of Tech (UK) Limited using Absorption Costing......................................10Marginal Costing..................................................................................................................10Task 3...................................................................................................................................12Kinds of Budget...............................................................................................................12Advantages of Budget......................................................................................................14Disadvantages of Budget..................................................................................................14Task 4...................................................................................................................................16Use of Management Accounting to overcome financial problems..................................16Balanced Scorecard for Tech UK Limited.......................................................................16Conclusion................................................................................................................................19References................................................................................................................................20
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MANAGEMENT ACCOUNTING2IntroductionAccounting means the procedure of recording, categorizing and summarizing the events andtransaction of the business in financial terms, and understanding the consequences (Bazley,Hancock and Robinson, 2014). This report is being prepared in order to highlight thefunctions of Management Accounting systems which will involve four tasks. Task one willprovide the description of management accounting and important requirements of the systemof management accounting in the Tech UK Limited. In Task two income statement of thecompany will be presented. Task three will explain the use of budget for planning and controlpurposes and in Task four different ways will be explained by which the balanced scorecardmethod can be utilized to respond company’s financial or economic problems.Task 1a) i. What is Management Accounting and difference between Financial accounting andManagement Accounting.Management accounting and financial accounting are the two accounting branches.Management accounting objects at offering both quantitative and qualitative information tothe administrators, so as to support them in the process of decision making and thereforemaximizing the profit (Nørreklit, 2017). On the contrary financial accounting focuses onproviding a fair and true review of the company’s financial position to different parties(Narayanaswamy, 2014). BasisManagement AccountingFinancial AccountingMeaningManagement accounting isthe system of accountingwhich offers significantA system of accounting thatemphasis on the financialstatement preparation of a
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MANAGEMENT ACCOUNTING3information to theadministrators in order toprepare plans, strategies, andpolicies for continuing thebusiness properly. company to offer thefinancial information to theparties is known as Financialaccounting. InformationNon-monetary and monetaryinformationOnly monetary informationIs it compulsory?No YesTime FrameThe reports are createdaccording to the requirementsand need of the company.The financial reports orstatements are created at thefinishing of accountingperiod which is normally oneyear. ObjectiveTo support the administrationin the process of decisionmaking and planning byofferingthoroughinformation on differentmatters.To offer financialinformation to the outsiders.ReportsDetailed and completereports of differentinformationA concise report of thecompany's financial position.UserInternal managementExternal and internal partiesPublishing and auditingNeither audited nor publishedby the statutory auditorsVital to be audited andpublished by statutoryauditors (Surbhi, 2014)ii. The importance of information of the management accounting as a tool of decision-making for the managers of department
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MANAGEMENT ACCOUNTING4Management accounting is very essential for every company so as for Tech (UK) Limited.Some of the management accounting importance is:Support in making the plan – Current era is the period of planning. Producers who are saidto be the most successful producers are those who produce articles as per the needs and planof the consumers. Before making any plan the administration of the Tech UK LimitedCompany should study and evaluate the future and present of the business.Better services to the consumers – Management accounting which is also called as costcontrol device allows the decrease in the product prices. Every employee in the concern ismade cost Curious. The product quality of the Tech UK Limited will become effective due tothe implementation of quality standards. The consumers are delivered goods at reasonableprices. Easy to make a judgment – Before making any plan or defining policies, there are variouspolicies or plan in front of the management based on which they decide which policy andplan need to the adopted such that may become more helpful and useful. Performance Measurements – The budgeting control standard costing techniques allowsmeasuring the presentation or performance. In the standard costing, standards are defined firstand then the actual or definite cost is associated with the standard costing. This system willsupport the management of Tech UK Limited to identify deviations between actual cost andstandard cost. The effective performance of the company can be identified if the actual costdoes not surpass the standard cost.Increase effectiveness of the business - The business effectiveness increases throughmanagement accounting. The objectives of various subdivisions of the company are defined
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MANAGEMENT ACCOUNTING5in advance and the success of these goals is considered as a instrument for assessing theircompetence (Management study online, 2018). iii. Cost Accounting SystemsA framework utilized by the companies to identify the product cost for inventory analysiscost control and profitability analysis is known as Cost accounting systems. Identifying theprecise product cost is serious for lucrative operations. It is very important for Tech UKLimited to see which product is moneymaking and which one is not effective, and this can bedetermined when it possesses projected accurate product cost. In addition to this, a system ofproduct costing supports in approximating the concluding cost of materials inventory,finished goods inventory and work-in-progress inventory for the drive of financialpreparation (Accounting Explained, 2013). The types of costing system are:Historical Costing – In this, the costs are determined only when they have incurred. The keypurpose of it is to determine costs which had been incurred in past. The historical costs areutilized for investigation of incurred actual costs and it will be very late to control or manage.The actual statistics can be associated only when the performance standards exist.For instance: The Washington Company built a building in 2005, with a cost of $45,000. OnDecember 31, 2017, the building’s fair market value is $65,000 however still stands on itoriginal cost of $45,000 on balance sheet. Absorption Costing – Under this system, all variable and fixed costs are assigned to the costunits and entire overheads are engaged as per the level of activity. In this, fixed overheads ofmanufacturing are assigned to products, and these are comprised in the valuation of the stock.Direct Costing – In direct costing, the amount of the product is charged with those costs thatvary in terms of volume. Direct or variable costs such as direct labor, expenses of variable
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