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Management Accounting - Jaguar Assignment
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Added on 2021-02-22
Management Accounting - Jaguar Assignment
Added on 2021-02-22
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1ACTIVITY 1 ...................................................................................................................................1P1 Management accounting and different management accounting system .............................1P2 Different method use in the reporting of management accounting........................................5P3 Calculate cost by adopting cost analysis technique to prepare income statement by usingmarginal and absorption costing.................................................................................................7ACTIVITY 2 .................................................................................................................................16P4 Tools for budgetary control.................................................................................................16P5 Management accounting system respond to financial problem .........................................18CONCLUSION..............................................................................................................................20REFERENCES..............................................................................................................................22
INTRODUCTIONManagement accounting is also called as cost accounting which is operation ofdetermining, activity, rendering & interacting data to administrator for the following objectivesof company. The leading difference among managerial and financial accounting which is aimedat aiding managers to make decisions within the company. Managerial accounting includes allareas of account which purpose of informing management of financial operation of business(Merchant and White, 2017). Report is based on Jaguar Land Rover. It is the Britishmultinational automotive organization in the UK. Organization has six main services for researchand development, manufacturing and vehicles assembly. Organization has invested total of£1,411 million in research and development. The key activity of company is designed,developed, manufactured and sold of vehicles. Study will explicate management accounting andvarious methods for management accounting system. It will calculate the different costs byutilizing suitable technique as well as to make income statement of marginal and adsorptioncosts. It will also examine the advantages and disadvantages of various kinds of planningtechniques utilized for budgetary control. Furthermore, report will compare ways of adoptingmanagement accounting system to respond to financial problems. ACTIVITY 1 P1 Management accounting and different management accounting system Management Accounting:Management accounting is utilization of professed abilities as well as knowledge in theformulation of financial and accounting data in effective way. It can help the internal andadministration in preparation of policies, planning & control of activities of organization. It canonly utilized through internal team of company (Meaning and Definition of ManagementAccounting, 2019). The aim of management accounting is to utilize statistic information and takebetter and accurate decision, controlling of firm, business action and development. Managementaccounting is presentation of fiscal information and business action for inside management of theJaguar Land Rover. Different Management Accounting System:1
Management accounting system aids in improving the productiveness of the firm inrelation to accomplish large profits and market share for upcoming development of organization.The mainly concentration on preparing different reports that aid to make judgementsstrategically. Management accounting system can be further divided into:Cost Accounting System:It is the system that aids Jaguar Land Rover in estimating the costs of actions for profitsanalyse, cost control and inventory valuation. This kind of accounting system aids in effectivemanner defining cost of different production divisions (Kaplan and Atkinson, 2015). This canhelp to financial management of the company which includes define the cost of goods forprofitable operations. It aids to define the work-in-progress, material inventory and end productsto make financial statement. AdvantagesEffective cost accounting systemremove wastes, losses and inefficiencythrough set up standard for everythingin the Jaguar Land Rover. DisadvantagesCosts accounting disappoint to solvethe difficulties relating to workresearch, time, motion and operationstudy. Inventory Management System: It is management accounting method that aids in following levels of inventory, grosssales, orders and deliveries. This kind of administration system aids direction of company todescribe the needs and reordering products without any delay. It aids in making judgementseffectively relating to order and handle manufacture in effective manner (Ellul and et.al., 2015).This kind of aids in handling the supply chain that aid in positioning in relation in effectivemanner. Inventory management system aids in gathering of extra material and controlling theorders as per the production level in effective manner. LIFO: It stands for last in first method which assumes that unit bought latest will be issued first. FIFO: It refers to first in first out method which assumes that stock of bought first will be firstissued.
AVCO: It means average value of cost method which is necessary that nature and utilization ofunits is similar and interchangeable. AdvantagesInventory management involveassuring that business does not spendmoney on unneeded goods orders andfollowing that goods are selling andwhich are not. DisadvantagesIt needs continuous attention as goodsconstantly requirement to be updated,restocked and reordered. 3
Job Costing:It is the effective procedure that aids in examining and anticipating the cost connectedwith each job carried out at time period of production. It directs on accounting value to eachsingle person unit of production. It directs on collecting cost top each single unit of theproduction. It aids to directions of Jaguar Land Rover to support appropriate record and trackexpenditure of each good (Taleizadeh, Noori-daryan and Cárdenas-Barrón, 2015). This aids indefining cost of the project in appropriate way. It is the very essential to assess the costs thatoutcomein impressive estimation, fiscal reporting as well as strategic decision eventually. AdvantagesThe costs can be determined at any stepof accomplishing of job in the JaguarLand Rover. DisadvantagesThere is no standardization of job in jobcosting (Advantages andDisadvantages of Job Costing, 2019).Therefore, there is need of closesupervision. Price Optimization: It is an impressive technique that ids in defining the price of goods and facilitiesdelivered through the company. Price optimization aids management to meet objectives of thefirm in relation to increase profitability and revenue. This aids in examining the attitudes ofconsumers with the modification in costs and define the request as well as supplying of specificgoods (Ferreira, Lee and Simchi-Levi, 2015). This aids in compounding data of costs & stocklevel to define the costs that fellows to larger profits and development in enterprise. It can beutilized through management of Jaguar Land Rover to adapt the price for consumers andexamine their attitudes with the modification in the price levels of goods and facilities. AdvantagesIt is approach where Jaguar Land Roverarrive at ways through which they canacquire within determined profits levelsafter intended sensitive their existingDisadvantagesIt prevents poor people from getting thethings they require. Prices significantlyration products on the basis of ability to4
consumers. pay. M 1 Benefits of Management Accounting: Management accounting is very advantageous for the firm in terms of improving thequality of decisions of company. It helps to make decision in the form of accounting in whichJaguar Land Rover utilize the techniques from all fields like costing, economies, statistics and soon. Also, this can aid to determine the business problems areas (Meaning and Definition ofManagement Accounting, 2019). Through effective management accounting, Jaguar Land Rovereasily improve their financial position and increasing profitability as well as productivity. P2 Different method use in the reporting of management accounting.The managerial reports are generated via managers of a company in order to make reportswhich provide right to interior involved users of company. The effective decision-making inbusiness is performed by help of these reports. These reports are focuses on internal data whichis accepted by auditors by financial accounting. It is an essential report because it helps inorganizing, planning and decision-making of an organization. The managerial reports are also helpful in measuring execution of employees which isworked in the company. In, managerial accounting this report is provided as this helps thecompany to provide information to the internal users of the company. Different managerial reports is prepared in companies like Jaguar Land Rover arefollowing :Account receivables ageing report – It is the report which involves extending credit in theirbusiness. The account receivable ageing report focuses on credits which is offered to customersin a specific time. The defaulters are also identified under this report as these people are unableto pay money. The account receivable report is also availing different benefits to Jaguar LandRover as they able to ascertain all the defaulters along with it the managers of Jaguar Land Roverable to changing as well as altering the relevant credit policies and strategies. The certainbenefits this report offers to Jaguar Land Rover are as follows :The internal interested users of Jaguar Land Rover execute effective decision as the creditpolicies changed by analysing this report.5
The report provide aid to managers of Jaguar Land Rover in deciding the policies ofcredit and decisions regarding restructuring.The account receivable ageing report lay Jaguar Land Rover in determining period ofcollection for the credit they avail to customers. Budget report –This document is very important because it provides helps to business inappraising budget as well as execution that is prepared on various division of company toundertake functional actions of business effectively. The functions of Jaguar Land Rover areeffectively assessed expenses of every department. The budget document provide way to an organization like Jaguar Land Rover incomparison existent execution of company with planned execution in report. The company alsotake bettering assesses to eliminate deviations discovered after comparing actual with planned.By the help of Budget report, Jaguar Land Rover is also capable to handle their expenses andincome. Also, another beneficial component of this report is to inform internal involved users ofJaguar Land Rover like employees, managers, etc. for cash inflow and cash outflow. The budgetdocument also lay certain advantages for the company which will be discussed as follows :Budget report enables Jaguar Land Rover managers to assess presentation of everydivision such as production, sales, marketing, etc. Therefore, it is an effective tool.The corrective measures are also taken by the managers after evaluating the deviations inthe company.It also provides access in identification of financial risk for the company Jaguar LandRover by the preparation of budget report.The budget report enables investors in deciding investment which is based onperformance of the Jaguar Land Rover.Performance reports – This report is prepared for reviewing and analysing businessperformance. The members of staff execute decisions in accordance with appraisals aligningwith their performance. The performance report is generally prepared under large organisationsuch as Jaguar Land Rover as this organisation have employed numerous staff. Performancereport assists the company in performing right decision and also corrective measures taken bymanagers to eliminate planned and actual performance of staff members working in thecompany. There are some benefits which this performance report offers the company JaguarLand Rover are as follows :6
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