(Doc) Management Accounting Assignment - Solved
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Management Accounting
Table of ContentsINRODUCTION..............................................................................................................................1LO1..................................................................................................................................................1Management accounting and its different types of system....................................................1Difference between management accounting and financial accounting................................32 Explain different method of management accounting reporting........................................3Evaluation of benefits of various management accounting systems......................................4Evaluation of Management Accounting System and Reporting............................................5LO 2.................................................................................................................................................6Calculation of income statement using marginal and absorption costs:.................................6Application of a range of management accounting techniques..............................................9LO3................................................................................................................................................11Advantages and disadvantages of different types of planning tools used for budgetary control..............................................................................................................................................11Use of different accounting tools and their application for preparing and forecasting budgets...............................................................................................................................................13LO 4...............................................................................................................................................13How organisation adapting management accounting respond to financial problems..........13How management accounting can deal with financial problems and attains sustainablesuccess..................................................................................................................................15Planning tools to solve financial problems:..........................................................................15REFRENCES.................................................................................................................................17Books and journals...............................................................................................................17
INRODUCTION Management accounting refers to the process of recording, estimating, analysing andsummarizing the data associated with operations of organisation. It is field of accounting thatstudies every features related to company's operation (Erserim, 2012). The main purpose ofpreparing such accounts is to ensure the smooth running of business. Techniques and tools suchas cost analysis, budgetary control helps in assessing the expenditure incurred and how theexpenses can be controlled. There are different types of management system we will discussthem in detail in the following report. Equilibrium asset management is medium-sized financialconsulting firm that lends variety of services to it's clients. This company incorporates differentforms of systems in order to maintain information concerning enterprise to efficiently achievegoals of the organisation. This method helps in systematically organising functions performed byseveral department. Equilibrium asset management provides advices with respect to investmentand wealth management. The following report contains detailed description of managementaccounting systems, analysis and advantages and disadvantages of planning tools. Let's examinethem step by step. LO1Management accounting and its different types of system.Management accounting is the systematic process of recording the transaction whichoccur daily in the business. The financial transactions which occur daily are recorded in thebooks. The process of analysing, summarizing of the these transactions for the top level ofmanagement is known as accounting. Financial statements such as balance sheet, cash flows arealso included in the accounting process and these transactions are recorded by the employeesworking in the finance division of the company.The process in which the business analyse its cost for the preparation of the financialstatements to see the actual position of the company is called the management accounting alsoknown as the managerial accounting or cost accounting. This helps the management to find outthe problems related to the financial accounting in analysing the financial reports and preparingit. The main objective of the management accounting is cost optimization and reduce the cost tohelp company to survive in the market and stand against its competitors. Managementaccounting helps the organisation in decision-making process and planning for the future in order1
to make new strategic plans and properly implement those plans (Grabner and Moers, 2013).There are four types of different management accounting systems as described below:Cost Accounting System: Cost accounting system is a system in which the mainobjective of an accountant is to capture and focus on the company's costs for the production. Theaim of the cost accounting system is to properly and effectively allocate the cost related toproduction. It focuses mainly on the cost used for production purposes only it analyse the costrelated to production and find out the new methods to reduce the cost of production and achievethe maximum profit. As Equilibrium Assets Management is providing the financial consultancyto other small and medium size businesses the cost which is incurred is high and to be properlymanaged.Job Costing System: This type of management accounting system is used by theorganisation to optimize and allocate the cost to the particular job. This type of managementsystem is used to keep the track of the work done by an individual as well as team performance.This types of system helps the top level managers to identify the individual cost of production fora specific service or product. This organisation is into financial consultancy services whichprovides different services to different clients, this job costing system helps it to keep the recordof the individual project.Inventory Management System: This system involves in management of the inventoryof a company. Inventory is all the stock in the organisation including the finished stock and workin progress stock. A management system is used to mange the inventories of the organisationwhich helps the organisation to check that at what time they have to finish their inventory so thattheir work does not stops. Inventory management system also includes the raw material andkeeps track of it so that the raw material can be reordered as early as possible so the productionprocess does not stops.Price Optimization: Price optimization is the method which helps the organisation todetermine the price of it products and how they can effectively optimize their price. It is a toolsfrequently used by the organisation to analyse the buying pattern of the consumers and determinethe price according to it. As Equilibrium asset management is into the financial consultancyservices they have to optimize the price related to their service what service is to be given orwhat price is to be charged to the particular service provided (Mancini, Vaassen and Dameri,2013).2
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