Management Accounting Principles and Practices
Added on 2020-06-06
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MANAGEMENT ACCOUNTING
INTRODUCTIONManagement accounting (MA) is a concept through which an enterprise able to makefinancial plan, implement, monitor and execute at the workplace in proper direction. Further, formaking internal business decisions also this mentioned aspect is one of the highly appropriate. Inthe current project, Nisa Retail Store is taken as a base which is UK based small businessenterprise and operates in retail sector. Through the present assignment, systems and reports ofMA are described which help to take various decisions and accomplish reporting of MA ineffective direction respectively. Apart from this, for chosen company income statements (I/S) areprepared after considering two major method i.e. marginal and absorption costing. Moreover,planning techniques which are used for controlling budgets are evaluated with reference to NisaRetail store. At the end of project, systems of MA considered resolving wide range of financialissues are explained. TASK 1P1 Describing MA and key needs of its several systems in Nisa Retail storeBusiness ReportFrom: Management Accounting OfficerTo: General managerNisa Retail StoreSubject: Several systems of MAA term which helps to every organisation in order to take those business judgements which arefruitful and related to only internal environment is referred as MA. It comprises with severalnumbers of systems and approaches which are implemented at the working place (Groot andSelto, 2013). Some important systems of MA are explained below along with their necessities:Price optimisation system: In accordance to this system of MA, company makesdecision that which level of price of retail items is required to charge from customers.Under this, all the pricing level are evaluated and then analysed that at which pricemajority of the people gave response. Further, one particular price at the which productssold in higher proportion as compared to others then that will be selected. Hence, to optone specific price where more customers purchase products price optimisation system is1
needed for Nisa Retail. Cost accounting: On the basis of this, expenditures which incurred in the companywithin particular period of time like quarterly, half yearly etc. are computed.Management of selected firm easily able to know amount of costing associated tomanufacture and sale goods and services at the workplace. Therefore, Nisa Retailrequires this system to analyse and compute total cost of production. On the basis ofthis, judgement to apply one pricing strategy can be made profitably (Hald and Thrane,2016). Job costing: Another system is job costing which is used for analysing costs associatedfor producing and selling every product comes under one batch. As per the case of NisaRetail, it sales different range of goods like food, shoes, grocery, cloths etc. With thehelp of job costing, chosen firm will become able to know that at which level of costsproducts are sold in the market (The job costing system, 2015). Therefore, company willbecome able to select one attractive price of the product for selling in the market andenhance revenue at the end of year. Inventory management: At the last, it is necessary to manage available stock in thecompany decline it. The reason is that if there is higher inventory remained every yearthen it will affect capacity of generating revenue at the end of year. Moreover, higher thelevel of this aspect leads to reduce stock turnover ratio of Nisa Retail store. Further,essential necessity of this system is to manage stock and boost up turnover ratio in anefficient way (Joshi and Li, 2016). While going to make valuation of inventory at thebusiness place of every firm basic three methods included. Such techniques of stockvaluation are like LIFO, weighted average as well as FIFO. P2 Explaining methods which are used by Nisa Retail store for completing managementaccounting reportingBusiness ReportFrom: Management Accounting OfficerTo: General manager2
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