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Management Accounting of Dell

   

Added on  2020-07-23

14 Pages3745 Words98 Views
Management Accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1P1 Explaining Management Accounting, its systems and essential requirements .....................1P2 Assessing different method that can be used for management accounting reporting ...........2P3 Analysing the income statement for Dell on the basis of various cost techniques................3P4 Determining the merits and demerits of different kinds of Budgetary control systems aswell as planning tools..................................................................................................................4P5 Performance appraisals..........................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................11

INTRODUCTIONManagement accounting tools and techniques are highly significant which in turnprovides high level of assistance in monitoring internal operations as well as functions. In therecent times, company can provide customers with quality products at suitable price only when ithas effectual control on cost. Besides this, research and development becomes the priorrequirement of business unit. In this regard, firm can manage funds and would become able tomake optimum use of funds through using the tools as well as techniques of managerialaccounting. The present report is based on the case situation of Dell computers which willprovide deeper insight about the systems of management accounting and its requirement withinthe firm. Further, report will highlight the costing system either marginal or absorption willprove to be fruitful for Dell. Along with this, report also entails the tools that can be undertakenby Dell for planning purpose. Such report also exhibits the manner in which managementaccounting system helps in dealing with financial problems.P1 Explaining Management Accounting, its systems and essential requirements Management accounting (MA): It may be served as process that is highly concerned withthe preparation of managerial reports that furnishes accurate and timely information to themanagers. By undertaking such information manager would become able to appropriate shortand term decisions. MA tools and reports provide high level of assistance in making forecastabout the near future (The Role of Management Accounting in an Organization, 2017). Alongwith this, techniques of MA assist in taking suitable make-buy decisions. In addition to this, MAtools help firm in understanding performance variance and gives indication in relation to takingstrategic measure or action for improvement. Types of MA system’s and its essential requirement Job costing: It lays emphasis on recording cost that is related with the manufacturingaspects rather than process. Through undertaking the system of job accounting,management accountant can keep record of expenses incurred and would become able totrack the same. Thus, by maintaining data set and evaluating the same firm wouldbecome able to assess the areas where cost level is high. Considering all such aspects itcan be stated that job accounting system helps in assessing irrelevant operations andthereby helps in controlling cost. 1

Cost accounting: This system of MA focuses on recording cost that is incurred orassociated with the manufacturing or offering of products or services. Such system ofMA enables firm to ascertain unit cost and do profit planning. By using the system ofcost accounting firm can take suitable pricing decision and would become able to getdesired level of profit margin. Inventory management: By using tools and techniques of EOQ, JIT etc business unit canensure effective stock management. Moreover, EOQ entails the level to which inventoryneeds to be maintained within the firm. This system of inventory management is highlysignificant which in turn helps firm in ensuring smooth functioning of operations(Fullerton, Kennedy and Widener, 2014). Nevertheless, unavailability of enough rawmaterials may result into delay in the production activities and overall output. Price optimization: Such system of MA helps in understanding and evaluating thebehavior of customers at different price level. Thus, using such model firm can getinformation about customer’s reaction and become able to appropriate pricing decision. P2 Assessing different method that can be used for management accounting reporting Managerial reports are highly significant which in turn provides summary report ofmonetary performance pertaining to each department. By preparing managerial reports on adaily, weekly basis etc business unit can assess the areas that require improvement. In the presentera, every business unit lays emphasis on the preparation and evaluation of managerial reportswhich in turn aid in suitable and strategic decision making. Main managerial reports that can beprepared by the firm for monitoring performance are enumerated below:Budget or performance report: This report contains information about the extent towhich standards are met by the firm. In this, manager records the reasons due to whichfirm failed to meet the budgeted figures. Hence, by identifying the reasons pertaining todeficiencies firm can assess the action needs to be taken for the purpose of improvement(Kaplan and Atkinson, 2015). Such managerial report provides high level of assistance tothe manager in developing suitable financial plan for the upcoming time period.Inventory report: This report provides information to the manager about cost andwastage level of inventory. In this, on the identification of high cost as well as wastage2

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