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P1. Requirement and types of management accounting

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Added on  2021-02-20

P1. Requirement and types of management accounting

   Added on 2021-02-20

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MANAGEMENTACCOUNTING
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INTRODUCTIONManagement accounting is the process to evaluate and analyse of operations of businessand all statement and report that helps to making decision for achieve goal. (Kaplan andAtkinson, 2015). On the bases of financial books, records and documents, management can takeshort term and long term decision. This accounting helps to perform all its functions includingplaning, organizing, staffing, directing and controlling. This report will includes study about Jaguar land rover and it is a British multinationalautomotive company. The founder of this company is TATA motors. That founded in 2008 andprovide products like luxury vehicles and sport utility vehicle. This report will be highlighted torequirement of management accounting and different types of accounting system. Further, it alsoincludes the method of accounting that managers use in organization. It will involves incomestatement. Furthermore, it will include advantage and disadvantage of different types of planingtools used for budgetary control and way of organizations are adapting. MAIN BODY P1. Requirement and types of management accounting.Management accounting prepare and provide information about all business conditionand situation through financial statement and records to business managers' and they use to allinformations and data to making decision and organization, so they easily achieve goal and meetobjective. It is a process that helps to make the internal and external decision in organization. Italso helpful to inventory evaluation, planing, evaluation about new products and solve tofinancial problems that provide helps to organization for long term growth. The application ofthis accounting, managers of Jaguar organization reduce risk and expenditure through theoperations of business.Management accounting systemThis system of accounting helps to raise the productivity and reach to higher profitability withincreasing market share (Maas, Schaltegger and Crutzen, 2016). These things help in increase tobusiness and growth in the future. Mangers of organization making effective and efficientdecision in organization.Cost accounting system :- It is a tool that use by Jaguar for estimating the cost of theirproduct for analysing to revenue. This system is used by manufactures for recording the1
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production activities that use perpetual inventory system. It is a better method to understand thedifferentiation between fixed and variable cost. Cost that remain same from one period toanother so that is called fixed. If cost of production change with quality and quantity of productso that is called variable. Through this system management of organization also easily calculateto cost of production according to different department (What is a Cost Accounting System?,2019). There so Many types of elements include in this system like direct and indirect labour andoverhead. Jaguar can easily analyse the work in progress, ready goods to make financialstatement. Inventory management system :- This system accounting used by Jaguar to tracking ofgood, sales and deliveries of product so that helps in reducing delay of delivery. Organization gethelps to track products and material from production to warehouse and from storage to delivery.It includes first in first out, last in first out, just in time method and weighted average method.Management also get helps to making decision regarding ordering and managing production. It can be so much challenging for managing the inventory in proper manner because it helps theJaguar for maintaining the process of inventory in a proper manner. LIFOIt is a method which used for the inventory of accounting of Jaguar. It is only used in the UK andalso governed by the basically accepted accounting principles. FIFOThis word stands for the first-in, first-out which basically refers to the inventory items which hasbeen recorded for selling first. AVCO This is inventory method which is based on the average cost of the inventory during the time. Itis computed for dividing the cost of goods in the number of goods in inventory at any of time. It has assessed from the evaluation that, in the context of business unit, inventorymanagement system is highly essential. Moreover, it provides better view regarding stock’svalue and thereby assists in making appropriate assessment about profitability aspects. Further,FIFO method facilitates better management of stock and reduces the risk of obsoletion. Inaddition to this, inventory management system such EOQ, JIT etc are highly significant which2
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clearly entails time when order should be placed for stock. By using such system profitability canbe enhanced by reducing the cost of ordering and holding. Job costing system:- it is a type of accounting that use by Jaguar when they produceproducts according to order of customers. Each product considered a job and it records and trackby job the cost of producing each job. It includes raw material, labour and overhead (Quattrone,2016). It also focuses on accumulating cost to each individual unit of production. This systemusing by Jaguar to keep record in systematic and in effective manner.Price optimization system :- Jaguar use to this system for track response of customerwith different prices of different product. This system helps to achieve goal and meet to objectivethrough maximizing profit. Customer change their behaviour toward change in price. Jaguarevaluates customer behavior through demand and supply of product, and then they set price ofproduct that affordable by customers and this system also increase demand. Benefits of management accounting system.This accounting is beneficial for Jaguar because it measures actual performance incomparison with pre determined budgets. This system by management to making effective planand make decision about future on the bases of present statement. This also helpful in raising theproductivity and profitability for growth of economies. Market share increasing due to thisaccounting system and it is a very better application for managers to make effective plan andbudget. P2. Different methods of management accounting reporting.Management accounting report is a tool that Jaguar using it to evaluate and understandingof the business with utmost accuracy and efficiency. This statement also provide accurateinformation and data to management of organization and these strategies is helpful in making theaccurate decision for achieving the goals and objectives. Report is very helpful and essential forCEO, owners, investors and other stakeholders.Budget report :-It is a tool that considered different types of budget and estimate ofJaguar at any given time. Managers evaluate and analyse past performance and profit with givenbudget.It helpful in make decision and budget for future that raise profit. This report use bymanagement for evaluation of actual results of a business to pre established budget and analysegap to take necessary action (Dekker, 2016). It is an estimation of revenue and cost for particular3
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period. Management using this report and achieve goal of organization through raiseprofitability.Account receivable report :- it refers that considered to all unpaid customer list andunused credit memos by data ranges. Management of Jaguar evaluate financial health ofcustomers. If this report shows company's receivables and that are being collected much slowerso it provides warning sign to business and organizational credit risk increasing. It is the assets ofJaguar because it keeps record about all customers who owe money.Cost report :- Cost report is a financial report that analyse the cost and charges related toeach activity, products, services, projects and processes. This report helpful in control to cost inan effective and efficient manner. The types of income and expenses which includes in the reportso management use to this report in the process of making decision. Manager computes all costlike material, overhead, labour and other cost. Than this can be divided totals by the amount ofproducts produced. Performance report :- This report use by Jaguar and it helpful to evaluate work of anindividual in organization. It provides all information and data about operation efficiency andalso provide clear pictures of operation of Jaguar. Stakeholders get accurate data and informationto making decision about invest their capital. Outsiders of organization can easily evaluate profitof current year. Management evaluate to performance report and observe any loophole, so theyalso make strategies to improve and develop action for increasing profitability and productivity.Inventory and manufacturing report :-Management of Jaguar using to this accountingreports and it makes the manufacturing process more effective. It contains all types of data andinformation related to inventory and manufacturing (van Helden and Uddin, 2016). It alsoincludes items such as wastage of products, hourly labour costs or per unit overhead cost. By thisreport, organization get helps in making decision and eliminate waste of hours by labour andwastage of raw material according to per unit of product because it put effect on profit oforganization.Sales report :- This report is useful for management accounting because it includes allrevenue through sales of product. Jaguar sale their product through retailer and wholesaler andthen evaluate and analyse that which activities earn the more income. Managers make strategiesabout action for motivate to members and employees of organization through provide bonus,4
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