Management Accounting Assignment - Excite Entertainment Ltd
Added on 2020-10-23
17 Pages5572 Words50 Views
MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1LO1........................................................................................................1P1. Essential requirement of different types of management accounting systems.........................................................................................................................................................3P2. Different methods used for Management Accounting reporting.........................................................................................................................................5M1. Benefits of application of the management accounting system in an organisation. .......................................................................................................................................................................7D1. Management accounting system and management accounting reporting is integrated in an organisation.................................................................................................................................................8 LO2.................................................................................................................................................................8P3. Cost analysis with the help of income statement under Marginal and Absorption Costs...........................................................................................................................................................8M2. Financial Reporting documents.................................................................................................10D2. Financial report interpretation.........................................................................................................11LO3.............................................................................................................12P4. Explaining the advantages and disadvantages of different planning tools of budgetarycontrol.................................................................................................................................M3. Analyzing the usefulness and application of different planningtools......................13LO4...................................................................................................14P5. Different types of management accounting systems that are used by the organization toresolve the financial problems.............................................................................................14M4. Analysing how the management accounting systems leads to organizational success..............................................................................................................................................15D3. Evaluating how the planning tools help in solving the financial problems..................15CONCLUSION..........................................................................................15REFERENCES..........................................................................................17
INTRODUCTIONManagement accounting is defined as the process of preparing internal management andfinancial accounting reports, records, accounts and statements with the help of availableinformation, statistics and other financial as well as non-financial data. ManagementAccounting helps the manager and other users, stakeholders of the company in the decisionmaking process. Every company should always formulate sound business strategies, plansand concepts which aids in analysing the business costs and operations in achieving the setdefined business goals and objectives. The present report is based on Excite EntertainmentLtd which is engaged in the business of leisure and entertainment industry. The report willdiscuss different types of management accounting systems available and how its benefits theorganization. Further the report will discuss about the concept of management accountingreporting and its uses in decision making. Income statement of Excite using appropriatetechnique for analysing cost factor will be disclosed. Furthermore, the report will discloseabout the budgetary concepts and how it aids in the decision making process. At last, thereport will shed light on advantages and disadvantages about different budgetary planningtools and how it assists in solving the financial problems of the company.MAIN BODYLO 1P1. Explaining the essential requirement of different types of management accounting systems.Management accounting system refers to the internal management systemby whichExcite Ltd makes use of various measures so as to assess the performance of business, itsoperations and activities. This system assists in evaluating the business process as well asprocedure which aids themanagement of company in making business decision.Essential requirements of different types of Management Accounting System in Excite Entertainment Limited are as follows:1.Cost Accounting System – This method of management accounting system dealswith the cost factor of the company. With the help of cost accounting system ExciteLtd can make proper estimation as well as evaluation and analysis of cost value whichis incurred for manufacturing their products and services (Hopper and Bui, 2016).This method aids Excite Ltd in assessing the profitability level or the amount of profitearned against the quality service rendered by them. It also helps in making of theeffective business plans and strategies for controlling the cost expenses incurred forconducting production and manufacturing operations of the business. This methodconsists of following sub parts:
1. Job Order Costing Method – As per this method of cost accounting system, ithelps in assessing the value of cost incurred by the company for producing ormanufacturing a single specific unit or group of products. 2. Process Costing Method – It is a method which can be adopted by Excite with thepurpose of gathering and making assignment of cost related tomanufacturingprocesses or to the units produced. It is very helpful in when largeproduction has to be made of identical units.3. Direct Cost -The term direct costis a definite and a specialized form which helpsin making decision by analysing the cost factor specially using the variablecost. Itdoes not take into consideration the fixedcost assumed to be associated with the timeperiod in which they had incurred.4. Standard Cost–This cost is associated with the all the cost related tomanufacturing process of company such as direct material, direct labour andoverhead. It is defined as the tool for making planning budgets, managing andcontrolling cost and evaluatingthe management performance level (Christ, Burritt andVarsei, 2016). It basically involves the process of estimating the required costofcarrying on the production process.2.Inventory Management System – This method of management accounting focuseson two basic operations of business viz controlling and managing inventory and stocklevel of the company. Excite Ltd can easily assess, monitor and track the quantity ofgoods, inventory and stock it is having with itself through the supply chain or with thehelp of areas in which business operations takes place. This method helps company inmaking inventory valuation, improving the accuracy of inventory by maintainingcontinuous workflow and its reorder so as to facilitate smooth functioning of businessoperations. Valuation of inventory can be done with the help of following twomethods:1.LIFO – It stands for Last In First Out. In this method, goods which are bought orpurchased at last are available for sale at first place.2.FIFO – This stands for First In First Out, it emphasizes on selling first of thatstock which is purchase or bought in at first place.3.Job Costing System – It is methods of management accounting in which Excite Ltdcan process for gathering or collecting information related to the cost incurred withthe production function of some specific job or product group. This method considersevery information which relates to direct materials, labour and overhead costs(Jermias, Gani and Juliana, 2018). Under this system, information related to cost
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