Assignment Sample : Management Accounting

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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and its types of management accounting systems...................1P2: Different methods used for management accounting reporting.......................................2M1: Evaluate the benefits of management accounting system and its applications...............3D1: Management accounting system and its reporting are integrated within organisationalprocess....................................................................................................................................4TASK 2............................................................................................................................................4P3: Calculation of cost using an appropriate technique.........................................................4M2 Accounting techniques.....................................................................................................6D2: Data interpretation...........................................................................................................6TASK 3............................................................................................................................................6P4: Budgetary control and planning tools used in budgetary control with its advantages anddisadvantages..........................................................................................................................6M3: Uses and applications of planning tools for preparing and forecasting budgets............8TASK 4............................................................................................................................................8P5: Responses of management accounting system to deal with financial problems..............8M4: Management accounting lead organisation to sustainable success in responding tofinancial problems................................................................................................................10D3: Planning tools respond appropriately to resolve financial problems.............................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONManagement accounting is a process of identification, measurement, accumulation,analysis, interpretation and communication of financial information used by management toplan, control within an organisation and assures the use of accountability for its resources.George Lines is a concrete distributors which is an autonomous civil and landscapemerchants settled in West London. In this project, company is dealing in groundwork of supplymaterials like natural stone and concrete. Company uses efficient accounting framework to thrivesuccess. Company follows several management accounting systems, reporting tools, budgetarycontrol techniques and tools for identifying it's profitability status that would be discussed in thereport. It also uses various planning tools used in budgetary control and evaluate use differentmanagement accounting systems for resolving financial issues that will be discussed in thisreport.(Knežević, Rakočević and Đurić, 2011).TASK 1P1: Management accounting and its types of management accounting systemsManagement accounting is an approach of analysing financial information and setsguidelines use in the arrangement and development of company. The primary aim ofmanagement accounting is to assist the management to take qualitative decision for controllingthe company's working effectively. Management accounting system refers to supply of moremeaningful information to all level of management with the use of various accounting systems.George Lines uses various management accounting systems for translating its objectives intoachievements within a particular time period. Cost accounting, inventory management, job costand price optimisation system helps management in analysing and interpreting information thatcompany have to follow in achieving goals. Different management accounting systems areexplained below:Cost accounting systems:This system is used by manufacturer for recording andaccumulating cost of raw materials in their production activities as they processed throughvarious production stages and then turned into finished goods in specific time. George Lines isperpetually developing a variety of landscaping products like precast concrete and nature stonewhich they supply to builders and merchants within country. Management uses various costaccounting systems like actual costing for determining the actual cost of raw material, labourand variable overheads and standard costing for estimating cost of manufacturing products under1
normal conditions so that they properly utilized their resources against future uncertainty(Schuster, 2015).Price optimisation systems:It is a systematic approach that calculate variation indemand of product at different levels of price and combines that content with information oncosts and stock levels to recommend prices for future profitability. George Lines is a concretemanufacturer and distributor which adopt price optimisation system for identifying it's producteffective price i.e. recommended for improving profits and is one of most preferred decisionsmade by the management. With the help of this system George Lines identify its customer'swillingness to pay for their product.Job costing systems:In this system, management assign the manufacturing costs that acompany incur for a particular job. This system is broadly used in preparing effective budgets.George Lines is working in distribution of stone and concrete so they have to focus on bothlevels of product. Company follow process costing which is a method of job costing system foridentifying single manufacturing cost at different levels and measures their performance.Inventory management system:This accounting system is planned for tracking the flowof inventory continuously through different stages of production. George Lines is small scaleorganisation and is expanding company for concrete distributor. Company use FIFO method forvaluation of inventory which help to determine the inflow and outflow of its inventory. With thehelp of this system George Lines control its inventory and manage the product demand in future.P2: Different methods used for management accounting reportingManagement accounting report is a tool used for understanding management reports thatis useful in decision making. Such reports includes company's quarterly or yearly performance inthe financial statements consist of income statements, balance sheet and cash flows statementsetc. George Lines uses different methods of reporting like performance reporting, job cost,inventory management and account receivable reporting etc. for developing impressive planswhich improves company's performance so that they expand their market without any issues(Venkatesh and Blaskovich, 2012).Different types of management accounting reporting are explained below:Performance report:This report measure continuous performance of organisationwhich involves collecting and scattering project data, communicating its progress toshareholders. It includes analysis of past performance, summary of alternation authorised in2
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