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PDF Management Accounting Is Crucial Part Of Accounting System

   

Added on  2021-02-19

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MANAGEMENTACCOUNTING

INTRODUCTIONManagement accounting is crucial part of accounting system. It is related with theintegral management of the organisation by providing various kind of reports to themanagers (Zoni, Dossi and Morelli, 2012). It includes both kind of information likemonetary and non monetary. So, it may be defined as a kind of accounting system thatis associated with the collecting, summarising and interpreting the financial and nonfinancial data to the managersintaking important decisions. To understand about themanagement accounting in broad sense, KEF limited company is selected that isoperated in the manufacturing sector. In the project report, various types and methodsof management accounting is mentioned along with benefits. As well as per unit cost,cost of sales and income statement is prepared in the report. Apart from it, limitationsand benefits of management accounting is mentioned. As well as importance ofmanagement in resolving financial problems for the companies. TASK 1.Mean of Management accounting and essential requirement for various type ofaccounting system of management accounting. This is a type of accounting system that is associated with the integralmanagement of organisations through help of monetary and non monetary information(Bryer, 2013). Additionally, by this systems of management accounting organisationsmake their further policies. In the context of KEF limited company this accountingsystem can help them for better management of different kind of activities and functions.The systems of management accounting are mentioned below:Price optimisation system- It is a kind of accounting system which provides abasis or framework to determine the price of products and services (Grabner, Moers,2013). Eventually, this accounting system is essential for assigning the accurate price ofproducts and services at a level which can be beneficial for both to company and to thecustomers. Apart from it, this system is also helpful in the analysing the customersreaction at different pricing levels. Like in the KEF limited company, it can help them in

assigning the right price of manufactured products.As well as due to this accountingsystem they evaluate the customer's reaction on different pricing. Cost accounting system- It is a kind of accounting system which is associatedwith the calculating the total cost of different activities. Due to this accounting system,companies can analyse about each individual activity's cost. As well as it is essential forthe companies to evaluate the actual profitability by comparing actual earned moneywith the actual cost. In the KEF limited company, this accounting system is beneficial forthem in computing overall cost of the manufacturing and on the basis of it, they canevaluate their profitability. Apart from it, this can also help them in eliminating andcontrolling the cost effectively. Inventory management system- It is a type of accounting system that managesthe stock such as raw material, opening and closing stock (Lee, 2012). Eventually, thissystem is essential for the companies to track the quantity of available raw material andfinished goods in the stores. In the KEF limited company, this accounting system can bevery useful to provide information regarding to the raw material, W.I.P. and finishedgoods. Due to this they can make further decisions regarding to the purchasing of theraw material and for production.Various methods of reporting of management accounting:These are the reposts that provides information regarding to the actualperformance of different kind of activities. On the basis of these accounting reports,management makes further strategies. Herein, some types of management accountingreports are mentioned below:Budget report- It is a kind of report which includes information regarding to theestimated and actual income, expenditure (Morden, 2016). On the basis of it,companies can evaluate the actual performance by comparing actual income with theestimated income. In the KEF limited company, this report is beneficial in measuring theactual performance. Inventory report- These reports have the detailed information about theavailable stock at the warehouses. As well as total cost occurring due to the inventorymanagement such as ordering cost, carrying cost etc. In the respect of the KEF limited

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