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Report on Varied Management Accounting Systems

   

Added on  2020-06-06

15 Pages4329 Words48 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSINTRODUCTION....................................................................................................................................3P1 Management accounting systems and essential requirements of different management accounting systems........................................................................................................................................................3P2 Varied approaches availability for management accounting reporting...................................................5P3 Marginal and absorption costing method................................................................................................8P4 Different types of planning tools and their advantages as well as disadvantages for budgetary control.8P5 Adoption of management accounting system in order to respond to financial problems......................10CONCLUSION.........................................................................................................................................11REFERENCES..........................................................................................................................................12YTable 1Profit calculation by using marginal costing method.......................................................................8Table 2Profit calculation by using absorption costing method....................................................................8

INTRODUCTIONManagement accounting is the one of the important area which helps firm in measuringits performance and business condition. In the current research study, varied managementaccounting systems are explained along with essential requirements associated with them. Inmiddle part of the report, varied reporting approaches are explained and along with this incomestatement is prepared by using marginal and absorption costing method. At end of the report,varied planning tools are discussed and tools that can be used to deal with financial problem areexplained in detail.P1 Management accounting systems and essential requirements of different management accounting systemsToThe Board of Directors of Bristol commercial vehicles(BCV) Date: 25-2-2017 Subject: Management accounting systems and essential requirementsManagement accounting system refers to the system under which by following specificprocess transactions are recorded by the firms in their books of accounts. Before understandingmanagement accounting system it is important to understand relevant domain. Managementaccounting is the domain wherein facts related to costing of products are recorded in propermanner and varied calculations are performed in respect to cost and profit for the business firm.It can be observed that there are varied approaches in management accounting like varianceanalysis by using which useful management decisions can be taken by the managers. Usually, inthe business in respect to costing of products varied standards are determined which need to befulfilled in order to access firm performance in proper manner (Kothari, Mizik andRoychowdhury, 2015). Management accounting assist managers in keeping track record ofexpenses that are incurred in the business and help them in identifying areas where actually workneed to be done in the business. Varied management accounting systems that are used by thefirms in their business are explained below.Cost accounting system: Cost accounting system is one that is accepted by the firms togreat extent. Under this system overall costing for the business firm is done in terms offixed, variable and semi variable expenses. There is wide difference between these

costing systems in nature. In cost accounting system simply all products fixedcomponents and variable expenses are added separately. Thus, cost accounting systemreflects overall fixed cost that is incurred in the business. In same way cost accountingsystem indicate overall variable expenses in the business. So, by comparing variableexpenses that are computed for different time period it can be identified whether variableexpenses increased or decreased in the business. It can be said that cost accountingsystem help managers in identifying areas they need to do hard work to improvecompany performance (Luft 2016). Thus, there is huge importance of the cost accountingsystem for the business firms. There is easy to use feature in cost accounting systems anddue to this reason it is widely used by the firms in their business. Thus, in upcoming timeperiod more use of cost accounting systems can be observed in respect to the businessfirms.Job costing system: Job costing system is another important accounting system where fordifferent jobs separately costing is done by the BCV. There are many business firms thatmanufacture goods on basis of received order. In other words, it can be said that manyfirms manufacture products by considering orders that different companies give to themin respect to manufacturing products at their workplace. For example many firms likeBVC manufacture care steering for car manufacturing firms. So, different orders that arereceived by the company are considered as jobs. For these different jobs costing is doneseparately. Hence, it can be said that job costing system is one under which for each jobor order cost is calculated separately. Computations that are done for each job reflectmanagers that which of received order is proving costly to the company and which one ischeaper in nature. Managers take strict action to control cost for those jobs where cost ishigh. It can be said that there is huge importance of the job costing system for thecompanies because by same in proper manner in right direction decisions can be taken bythe managers. Job costing system is used on large scale by the companies. This is becauseit give managers an overview of costing of each and every product line. This flexibility isnot available in the other costing systems. Hence, this is the reason due to which jobcosting system is widely used by the firms in their business (Bromiley and et.al,, 2015).Importance of the job costing system increased to great extent in past couple of years andits great assistance in problem solving is the one of the important feature that is usually

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