Management Accounting & Its Essentials - RL Maynard Case Study
Added on 2020-01-23
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ManagementAccounting
Table of ContentsINTRODUCTION........................................................................................................................................3TASK 1.........................................................................................................................................................3P1 Definition of management accounting and its essential requirement of different types ofmanagement accounting system .............................................................................................................3P2 Different methods of management accounting reporting...................................................................4TASK 2.........................................................................................................................................................5P3 Calculation of costs by using absorption method and marginal costing method...............................5TASK 3.........................................................................................................................................................8P4 Advantage and disadvantage of various planning tools which are used for budgetary control.........8TASK 4.......................................................................................................................................................11P5 Comparing organisation's management accounting system to solve the financial problems...........11CONCLUSION..........................................................................................................................................12REFERENCES...........................................................................................................................................13
INTRODUCTIONManagement accounting is an managerial tool, which can be understand by diving them into twoparts: Management and Accounting. Here management refers to proper adjustment and scheduling ofmanagerial function inn an organisation and on the other hand, accounting refers to appropriaterecording , analysing and interpretation of each and every transactions which are related to the business.In this way, management accounting include preparing a report of all the informations, so that managercan estimate the resources and funds and ensure that such resources can be effectively utilised in anorganisation. In this report, RL Maynard is taken as a company whose turnover is below 500000 pound.In this report, management accounting and there essential requirements of different types of managementaccounting systems are explain and it also describes methods of management accounting reports. It alsoascertained the cost per unit by calculating the cost by absorption and marginal costing method. It alsoexplain the budgetary control by using different budgetary control tools in an organisation. At last it alsodescribes the management accounting system, which are used in to resolve the financial issue andproblems in an organisation.TASK 1P1 Definition of management accounting and its essential requirement of different types of managementaccounting system Management accounting is an essential managerial tool in an organisation. It include collectionof all the resources, information and facts in a proper reporting documents and so that as per suchcollected information they can estimate the availability of resources and funds, which influence thecompany's growth. It also help to determining the actual position of the company and also help to makeeffective decision-making process, so that it will increases the profitability of a company(Wajeetongratana, 2016). In this way management accounting involves preparing a report which areprepare by the managers so that buy using report they can make effective decision-making process andensure the company's growth. Here, management accounting are used by the manager and it is prepare asper the need of the business. Essential requirement of different types of management accounting systemLean Accounting- Lean accounting is suitable for lean enterprises so that they can pre-determined an effective strategies for the business. It is basically focuses in traditional accountingmethod, in which transactions are collected, recorded and interpreted by the accountant. All thoseactivity are done, so that it will motivate the employees so that they can perform well. In the given case,RL Maynard company is focuses on lean accounting to perform in management accounting system. In
this way, company eliminate the traditional budgeting techniques and also added value in pricing so thatcompany can manage there prices of products appropriately by using lean accounting. So that suchaccounting techniques gives accurate information as per time so that manager can taker effective courseof action to motivate there employees in a right way.Transfer pricing- Transfer price is a process in which one company, division etc. sell thereproducts and services to another section, division, so that price can be transfer from one division toanother easily. Transfer price includes all the transferring things such as labour, parts, components andequipments etc. so that it can be used in production activities effectively. By transferring the price alsomake impact on business operational activities such as, it are used in determining the cost and revenueswhich is related to the organisation and it also make impact on incentives which are given to theemployees, so that they will be motivated and work more effectively.Transfer price also make impact on tax liabilities and it is also determined by various factors suchas market and cost-based factors. By considering the market-based factors, it include all the impact suchas market position and analysis, the condition of competitors and there pricing strategies etc. which istotally based on market efficiency. On the other hand, cost-based factors include the cost of products,price of each unit etc. which is determined by the total sale in an organisation.Throughput Accounting- Throughout accounting is typically based on improving organisation'scapabilities. Managers who adopt such accounting techniques able to increases the efficiency byidentifying the resource which are available in an organisation. So that to maximising the profit og acompany and increases the profitability, manager of RL Maynard cut it down the wastage and minimizesthe cost. Throughput accounting techniques are used by making effective decision-making process whichis related to the investment, expenditure etc. This is a techniques which are used in both non-profitmaking and profit making company, in this way managers should develop a plan and plays an effectiverole in each activity of an organisation. Throughput accounting will be determined by calculating thethroughput, after that throughput accounting ratio will be calculated. The formulas are as follows:Throughput= Sales Revenue- Total Variable Cost-basedThroughput accounting ratio= Return per factory hour/ Cost per factory hourTraditional Cost Accounting- Traditional cost accounting is used to make balance betweenmanufacturing overheads, labour hour and production machine hours. In this way, by the help oftraditional cost accounting it helps the manager to determine the factory labour and there working,indirect expenses and machine working hour in an organisation. Traditional costing method also includesthat the various techniques such as marginal costing and absorption costing. In marginal costing only
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