Management Accounting And Presentation
Added on 2021-02-19
21 Pages5460 Words31 Views
Management Accounting
INTRODUCTIONManagement accounting is used to deals with presentation and accountancydatafor thepurpose ofmaintaining the proper records of accounts and profits. It is used by all businessindustries to execute the business action in effective manner. In addition, managerial accountingis the systematic process of determination, accumulation, measuring, interpretation, readying andcommunication of financial information which is used by management to make plan fororganising and controlling the organisation (Chan, and Hsu, 2016). The main purpose of thisreport is to know how it is used within organisation and helps to remove the financial issues. Forknowing the value of management accounting Bentley motors Ltd is selected that is Britishengineering company. It was founded in 1919 by H.M. Bentley in London. The present projectdiscusses about management accounting system and its essential requirement within industry,different methods which is used for accounting reporting and planning tools that can be utilizedin budgetary control. Additionally, report discuss about costing techniques in order to prepare theincome statement and how it helps to solve the financial problems. ACTIVITY 1PART AEssential requirement of different systems of management accountingManagement accounting:A procedure in which business entities try to pull off,supervise and analyse its functional and operational procedures in a proper manner is known asmanagement accounting. For all the companies it is very important to conduct it every year sothat it can be assessed that the organisation is performing appropriately.Managers in Bentleyuse it for the purpose of formulating strategic decisions for betterment of the company. For thepurpose of forming various strategies various systems are used by management of the entity (Hsuand Lin, 2016).Management accounting systems:All the systems which are used by managers toanalyse and observe timely statistical information of company in order to form decisions forregular operational processes.Management in Bentley Ltd use various kinds of system to keepdetailed information regarding actual status and executional efficiency of the organisation. Allsuch system guides management to keep detailed and well structured records so that it can beused in future for betterment of enterprise. Detailed analysis of them is conducted below:1
Cost accounting system: The system which is mainly used by managers to estimateexpenses which are related to various items or cars which are produced by the entity is known ascost accounting system. It guides them to keep an estimation of accurate costs that have faced inthe process of executing business operations and performing production activities. In BentleyMotors, managers use it to analyse the cost which is related to each and every car engineered bythe organisation. This system is needed for the company as it helps management to determineactual costs of production (Charifzadeh and Taschner, 2017).Inventory management system:This type of system is principally used forproductionactivities by those organisations which are manufacturing different products for the purpose ofkeeping detailed information of goods which are used for production activities. It helpsmanagers analyse that there is stock in their warehouses or not. Managers of Bentley, are using itto assess that company is able to meet the production expectations of clients with sufficient stockfor vehicles. It is required for business enterprise as it helps to monitor that actual status of stock.It has various types and companies used them according to their requirements. All of them are asfollows:AVCO (Average Cost Method): The companies which are using it use the goods onaverage basis for the operational activities.FIFO (First In First Out): This inventory manage is used by such organisations which areusing earlier received goods for production related procedures.It is used by managers ofthe company to manage the inventory appropriately as it will helps to use all theresources properly.LIFO (Last In First Out): In this method currently purchased goods are utilised for theengineering procedures of vehicles.In Bentley Motors Limited FIFO method is used by managers in order to manufacturedifferent ranges of vehicles because this system can help in holding up productivity of all thecars which are engineered by the company.Price optimisation system: It is used by management of business entities to set rightrates for the products to meet expectations of clients. It can help the of the organisations attemptto make the products pocket friendly for their target market. Managers in Bentley are currentlyusing it to analyse responses of clients on various prices which are set by it for the cars. It is veryimportant for the company as it helps management to decide the appropriate rates for all the cars2
which can help to fulfil requirements of customers and meet organisational objectives such asprofit maximisation. For this purpose, companies choose best pricing strategy so that success canbe acquired by the business (Dai and et. al., 2017).Job order costing system: It can be defined as a method which is implement by smallas well as large companies for the purpose of analysing and assigning costs to various operationsaccording to their nature. In Bentley Motors Limited managers are using to assess expenses of allthe processes which were conducted on the basis of specification of customers. It is veryimportant for the company to use it as it helps to determine actual costs of every job which isperformed by organisation. This system is mainly used by those enterprises which are conductingtheir business activities according to specific customer orders.All the above described system are used by managers of Bentley Motors Limited for thepurpose of analysing performance of the organisation and formulate strategies decision forbetterment of it.Methods which are used for reporting of management accountingManagement accounting reporting:It can be defined as the procedures which isfollowed by managers to create different reports which are having information of managementaccounting.For managers it is vital to use appropriate methods for it so that accurate recordscould be generated and detailed information regarding internal status of organisation can beanalysed. Management in Bentley Limited conducting this procedure every year so that it can bedetermined that all the plans which were formed for future are appropriate or not and resultingpositively or not. Managers in Bentley Limited are using different kinds of it to formulatevarious reports. All of them are discussed underneathBudget report: It is a type of insider document which is utilised by management for thepurpose of comparison of actual and standard plans. One of the main use of it is to analyse thatall the funds which are used in operational activities are utilised properly or not. Managers inBentley Motors Limited generate it to measure that financial execution of business is good ornot. In every accounting year, a new budget report is created to compare that company is close toits financial targets or not. Different activities such as production, sales, marketing etc. arerecorded in it and information of all of them is used to allot monetary resources to all theoperational divisions on the basis of their estimation of future expenses. It is advantageous for3
Bentley Motors Limited as it helps managers to assess business performance of company (Qianand Schaltegger, 2017).Performance report: This type of report is created by business entities to documentaccurate and appropriate information of performance of organisation as well as employees. It isused by most of the companies to offer incentives and bonus to work force on the basis of theirefforts which are showed by them to attain organisational objectives. In Bentley Motors Limited,it is generated by managers to observe that the activities which are performed by them areresulting positively or negatively. It is advantageous for business entities such as Bentleybecause it can guide through out the way in which employees could be motivated because theyget reward for their good performed with the help of it.Inventory management report:In order to keep detailed record of goods which areutilised by organisations to making sure that the stock which is used for business operations ismanaged properly or not. It helps to analyse that the company is able to keep appropriate amountof inventory so that the processes for engineering of cars could be performed in systematicmanner. having sufficient stock to conduct its operations or not. Managers in Bentley MotorsLimited formulate this report for the purpose of keeping detailed information regarding inventorywhich is used to produce different models of cars. It is beneficial for the organisation becausewith the help of it management can order stock before the warehouse goes out of stock. If acompany is not able to record accurate data in it then it will become difficult for it to executeoperational activities in appropriate manner (Dayanandan and et. al., 2016).Accounting receivable report: A report which is generated by managers for the purposeof keeping record of all the credit sales which are made in a specific time period is known asaccount receivable report. Enterprises who are allowing credit to buyers create such types ofreport. It helps to list all the unused credit memos and unpaid customer invoices according to duedate. In Bentley Motors Limited it is created by managers in order to analyse the amount whichis owed by clients. Main purpose of making this report is to record information of thosepatronages who are not able to pay whole amount and promise to pay remaining after a certainperiod of time. It is beneficial for the organisation because with the help of it management candetermine actual outstanding amount of different clients. Managers can tighten credit policies oforganisation by analysing account receivable report because it helps them to assess that buyers4
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