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Concept of Management Accounting - Assignment

   

Added on  2021-02-19

16 Pages3733 Words71 Views
MANAGEMENTACCOUNTING

INTRODUCTIONManagement accounting is one of the important part of accounting. It may be defined asan accounting system which provides financial and non financial information to the managementdepartment of the companies so that they can manage their business effectively (Zhang, Uchidaand Bu, 2013). As well as this kind of accounting system plays a crucial role in the preparationof competitive strategies, planning etc. Herein, the project report meaning of managementaccounting along with types of management accounting and reporting are mentioned. Apart fromit, calculation of production cost and income statement is prepared with the help of marginal andabsorption costing method is included. Additionally, use of various kind of planning tools ofbudgetary control ad role of management accounting in solving the financial issues is describedin the project report. To understand about these concept of management accounting, KEF limitedcompany is selected that is operated in the manufacturing sector. TASK 1.- Meaning of management accounting and essential requirement of different kind of managementaccounting systems.The management accounting can be defined as a kind of accounting system that isassociated with the collecting, analysing, presenting and interpreting the monetary and nonmonetary information to the managers for managing the business in a respective manner. As wellas this accounting system is beneficial for internal stakeholders not for the external. In the aspectof KEF limited company they use the various kind of management accounting systems which arementioned below:Price optimisation system- It is a kind of accounting system that provides a basis fordetermining the price of products and services at a significant level (Cazier, Rego, Tianand Wilson, 2015). As well as this system also useful in analysing the customer's reactionat different pricing level so that companies can flex their prices accordingly. So it isessential for assigning the pricing of products and services. In the aspect of KEF limitedcompany, they use this accounting system for allocating right price of their manufacturedproducts.

Cost accounting system- This is a type of accounting system that is associated with theeffective management of cost of various kind of activities. It computes the cost of allfunctions and activities separately so that organisation can manage their cost. Basically, itis essential for controlling and minimising the cost as much as possible. In the KEFlimited company, they implements this accounting system in their multi-palmanufacturing activities. Due to this, they get able to have information regarding to thecost of manufactured activities.Inventory management system- It is an accounting system which is related to themanagement of inventory or stock (Sánchez-Matamoros, Araujo Pinzon and Alvarez-Dardet Espejo, 2014). Due to this accounting system, companies can get the informationabout how much stock or raw material they have in warehouses as well as how muchquantity of finished goods is stored. Eventually, essential requirement of this accountingsystem is that it is useful in providing framework to make decision about purchasing ofnew raw material and production of products. Like the KEF limited company is amanufacturing company so in their multi-pal operations this accounting system help themin effective management of raw material and finished goods. So these are the types of management accounting system and each of them have their ownimportance. Like in the KEF limited company, they are using these all accounting system in theirmanufacturing system. - Different method of management accounting reporting.Management accounting reporting- The management accounting reporting are can bedefined as those reports which are related to the providing information about actual performance(Jacobs, 2012). Eventually, these reports are different from the financial reports. This is whybecause these reports are useful for the internal stakeholders. Herein, below some types ofmanagement accounting reports are mentioned below which are as follows:Budget reports- The budget reports are those reports which are prepared with the help ofbudgeted information. These reports contains information regarding to the actual incomeand expenses as well as budgeted income and expenditures. Due to this, companies canmeasure the actual performance. In the KEF limited company, they prepares the budget

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