Project Research on Management Accounting
Added on 2020-06-05
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UNIT 5 MANAGEMENTACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1P1 Enumerate management accounting and various types of it.............................................1P2 Methods used for management accounting reporting.......................................................2P3 Computation of costs using marginal and absorption costing...........................................3P4 Merits and demerits of different types of planning tools..................................................3P5 Organisation adapting management accounting systems to solve financial problems.....3CONCLUSION................................................................................................................................4REFERENCES................................................................................................................................4
INTRODUCTIONManagement accounting is quite useful for organisation as it provides crucial informationto the management to take better and enhanced decisions with much ease. The present reportdeals with importance of management accounting information in the manufacturing company.Various planning tools and techniques are discussed in this report. Moreover, types ofmanagement accounting are also discussed along with importance and essential requirements ofall of them. Absorption and marginal costing is discussed which is helpful in the manufacturesector. Apart from this, various management accounting reports are also discussed which aids inmaking effective decisions by the top management quite effectively.P1 Enumerate management accounting and various types of management accountingManagement accounting is the branch of accounting which is used for making internaldecisions by the top management so that organisation can become internally strong and performwell. It is helpful to managers to take viable decisions so that organisation may be benefited inthe best possible way. Various reports are being provided by it which helps management toinitiate control over various business costs and as such, aids in making viable decisions.Management accounting information is not provided various stakeholders' of the company as it isrestricted only to management for analysing business conditions and then accordingly takedecisions for the betterment of the firm (Otley, 2016). As such, it is much helpful formanagement to make business perform better in the market. Various types of managementaccounting are listed below-1. Inventory management system-Inventory is an integral part of the company engaged in the manufacturing sector so thatproduction may be carried out with much ease. As such, managing inventory is important to bedone by management so that it does not result into unnecessary spoilage of the scarce resources.In the same way, overstocking also leads to wastage of stock quite badly. Thus, in order to solvethis issue, inventory management system is prepared and given to management (Tucker andLowe, 2014). Afterwards, managers who takes responsibility to ensure optimum utilisation ofinventory makes sure that only required amount of inventory is purchased. This helps to reduceoverall wastage of resources and production is carried out effectively.1
2. Cost accounting-Cost accounting is another useful part of company as it analyses various costs such asdirect, indirect, variable, fixed and other expenses necessary to carry out production with muchease. It analyses such costs and as such, records them so that overall control can be ensured quiteeffectively. In simple words, it allocates expenditures in that way so that overall profitability ismaximised and costs are reduced. Thus, management takes such decisions by allocating expensesin effective way so that it may not exceed profits of the firm. As such, cost accounting helps totake better and effective decisions by the management so that company may flourish andmanufacture products with much ease (Renz and Herman, 2016). 3. Job costing-Various jobs are performed to carry out the production of commodities in effective way.As such, costs of each of the jobs are required to be maintained so that costs may not exceedrevenue of the manufacturing firm. To resolve this issue, job costing is being used. It recordsexpenditures incurred on each of the jobs so that management may be able to keep track on eachof them. It aids to management that which factors are producing more output and on whichcompany should reduce expenditures so that only efficient jobs can be performed and productionmay be achieved with much ease. Generally, manufacturing costs are allocated to batches ofproducts quite effectively to track them.4. Price optimisation-Price optimisation technique is another useful tool for management to take viabledecisions with much ease. It is a mathematical analysis which is used to assess how change inprices of items and services will impact customers' behaviour. As such, this information is quiteuseful for management to analyse and determine how customers' respond to the change in theprices of commodities of the firm (Fullerton, Kennedy and Widener, 2014). This helps firm totake effective and relevant decisions so that it can set price of a particular product according tothe customer behaviour. If it does not analyse such aspect, customers' may be driven away by therivals. As such, it is important technique of management accounting used by the managers totake enhanced decisions. 2
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