Report on Management Accounting in Decision Making - Airdri
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Added on 2020-06-05
Report on Management Accounting in Decision Making - Airdri
Added on 2020-06-05
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1SECTION 1......................................................................................................................................11. Explaining importance of management accounting in decision making process forimproving performance of company......................................................................................12. Explaining different types of management accounting systems used for managementaccounting reporting...............................................................................................................33.Critically evaluate the benefits of these types of management accounting systems, and theirapplications within the organisational context.......................................................................44. ............................................................................................................................................5a) Preparing Profit and Loss statements using absorption and variable costing....................5b. Justification of difference in profits from both the methods..............................................6c. Preparing reconciled statement of Profit and Loss ............................................................7LO 4.................................................................................................................................................7PART B............................................................................................................................................7Comparison and contrasting the three planning tools that used in management accounting.7Compare ways in which management accounting applied in respect to increase effectiveness..............................................................................................................................................10Conclusion.....................................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONEvery business is in need to do their job with most efficiency which will be helping themto analysis what are the problems which are prevailing within company. Management of businessis that part which is assisting whole organisation into their efficient allocation of funds andthereafter its use and reducing wastage. In this part the process of management accounting isused which means preparation of books of accounts of firm analysing profits and loss, preparingbudgets and its allocation and at the end identifying area which is not profitable for firm. Underthe current report we would be understanding meaning and important of management accountingin decision making procedures in the context of Airdri which is a hand dryer manufacturing firm.In further therms it would be taking Nero Ltd and explaining the planning tools which are suedin management accounting.SECTION 11. Explaining importance of management accounting in decision making process for improvingperformance of company.Management accounting is majorly helping the internal environment of firm like that ofits employees, owner and management who are directly associated with firm. This is assistingthem all in knowing what is the financial position in market, what are returns that each part ofinvestment is giving to firm and how could they be making future predication as according topresent situations of firm (Abernethy and Wallis, 2018). All the quantitative information like thatof cost, revenue, bills, profits and budgets are been used in management accounting so that theycould be planning and organising what all resource which company is having. Airdri companythat is manufacturing electric hand dryer is the first of its kind in whole world so it is importantfor them that they are been employing best of the management accounting principles in makingdecision as from where they would be obtaining their funds.Management accounting is very much important in order to have a look into fact thatthere are numerous tasks which company need to follow as per the budget and actual expensewhich company is having. In whole firm this system is playing important role like in top, middleand lower level of mangers are employing it so that they could earn higher amount of profitswith the resources which they would be applying. Whole business and its activities are beengoverned by this management accounting system which help in controlling business1
organisation. There are number of benefits which manufacturing firm is getting at time whenthey are using management accounting within their organisation.Product Costing- manufacturing firms are very much and on daily bases involved intopart of making or assembling of products of company. So there is requirement that managers ofproduction department are analysing the cost which would be involved into making thatparticular product (Morgan and Kamaya, 2018). On the same hand this product cost will also behelping in determining the selling price and thus ultimately into profits of the firm. In order tovalue the inventory of firm they could better know how much it would be costing them or in howmuch competitor firms are purchasing them.Variable costing- as per GAAP which is also known as Generally Accepted AccountingPrinciples it is said that all cost of producing all products should be mentioned and determined sothat firm is having knowledge about how much to be spend on each of the product. In terms ofmanagement accounting it would be easy for them to analysis what is the variable cost ofproducing each product and that too at each level of production. Both job order costing andprocess costing would not be easy for manager who are preparing budgets as they would beallowing in assessing the cost of each batch of products which is been manufactured.Activity based costing: Once the association has made sense of what things to offer, the businessneeds to choose to whom they should offer the things. By using development based costingstrategies, free wander organization can choose the activities required to make and advantage anitem advertising. Embedded in this information is the cost of customers. Picking whichcustomers are basically beneficial empowers the business visionary to focus publicizing towardthe buyers who are the most profitableVariance analysis- at the time when production department is allocating cost of eachgood which is been produced by firm then this could be helping in knowing the cost ofproduction. Then this could be higher in two reason which could be using more of input thenexpected. It is also possible that their inputs are costing more than expected or what they haveplanned. This analysis will also be helping the firm in framing difference as in the cost ofproduction both in price and quantitative terms.Utilization of data- Management Accounting information gives a data driven look at howto grow a free organization. Arranging, money related declaration projections and balanced2
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