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Management Accounting & Control Assessment

   

Added on  2021-02-21

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Management Accounting &Control Assessment
Management Accounting & Control Assessment_1
Table of ContentsINTRODUCTION................................................................................................................................3Scenario 1.............................................................................................................................................3(a) Calculation of production plan and profit and loss statement for LK Ltd.................................3(b) Evaluation of adopting Economic Order Quantity, Margin- of- safety and Just- in- Time incost reduction by LK Ltd.................................................................................................................4(c) Using Balanced Scorecard evaluating the areas where cost can be controlled..........................5Scenario 2.............................................................................................................................................7(a) Evaluation of best Investment Decision to be selected for Kadlex Consultancy from availablealternatives.......................................................................................................................................7(b) Evaluating the benefits and limitations of measures used in selection of InvestmentAppraisals by kadlex Consultancy Ltd..........................................................................................10(c) Preparation of Balanced Scorecard for short- term Financial Performance by KadlexConsultancy for reduction of short- term orientation....................................................................12CONCLUSION..................................................................................................................................12REFERENCES...................................................................................................................................14
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INTRODUCTIONManagement Accounting can be defined as the accounting used for identifying, analysing,measuring, interpretation and recording to preparation of Financial Statements. Accountingconsiders all the monetary transactions to be recorder in the books of account. It also deals withother accounting methods such as Cost accounting, financial accounting etc. Control Assessmenthelps in controlling of various extra costs allocated in different departments of company.Management Accounting helps in preparation of books of accounts (Management Accounting andControl Assessment, 2019). This books of accounts help in analysing the various loopholes incompany and where company can control extra cost allocation. Im this manner, managementaccounting helps in controlling and assessing cost in LK Ltd. Lazy King Ltd is a company whowants to maximize its profits by preparing proper production plan for the company. Company wantsto prepare such production plan which helps company in achieving their targets and maximizingcompany's profits. The report covers profit or loss statement and production plan for four goodswhich are produced by company in order to maximize profits of company. Company wants to alsoknow Economic order quantity, Margin of safety and Just- in- time system in order to knowminimum requirement of raw material for completing maximum demands of company. LK Ltd alsouses Balanced Score Card in order to make decisions on how to control extra cost in company. LKLtd sells its company to Kadlex Consultancy in order to earn higher profits. Kadlex Consultancyuses divisional method for running its business.Scenario 1(a) Calculation of production plan and profit and loss statement for LK LtdProduction Plan can be defined as the process which starts from purchasing raw material toconverting them into finished goods (Becher, and et.al., 2018). This process helps in knowing thecost of production and manufacturing cost. It helps in preparing the optimum level of different typesof products portfolio so as to earn higher profits as compared to the past performance. Calculation of weekly Profit/ Loss that will yield maximum profit for LK LtdRevenue33133Less:- COGS-22923Gross Profit10210Less:- Fixed Costs-6390Net Profit3820Calculation of Production plan which will maximize company's profit
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ProductsWoodLeatherMetalsPlasticTotal No. of units27757528205Total machinehours135225300140800Total labourhours2715015028355Sales per unit214120163220717Total sales5786900012188616033133Cost per unit15478111165508COGS416658508288462022923Profit1134450120010363820Weekly profits that can be maximized by company are £3820 with the production of 205units of different chairs available to the company. LK Ltd can produce more number of chairs whoneed more labour intensive such as leather and metals chair are more of labour intensive chairs ascompared to two other chairs (Robinson, and et.al., 2015). Company is having more production ofchairs through machine which leads to high usage of machine hours by plastic and wood chairs. Inorder to achieve higher profits company should minimize the production of wood and plastic chairsas compared to production of leather and metals chair. Explanation how to avoid/reduce the losses by use of ad hoc measuresAd Hoc Analysis is a process where a single product is created on spot such as production orloss of customers on spot. This analysis is done as per need of organization and can be conductedregular basis or daily basis. These are done in order to measure cost reduction or cost eliminationany company.More Current data can lead to access of data of per minute happenings in the company sothat if there any problem occurs it can be sorted as soon as possible (Chen, and et.al., 2015).This process also leads to line decisions taking in any organization becomes faster becausepoint- and- click interface eliminates the risk of requesting data and analysis from any othergroup in within that company. This capacity helps in quicker response times when businessdecisions are to be taken.Ad Hoc also help IT users to run their own queries in organization than it leads IT team tofewer create reports and can easily focus on other tasks (Balaji, 2019).
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