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Importance of Management Accounting in Decision making of Alara Wholefoods Ltd : Report

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Added on  2020-06-06

Importance of Management Accounting in Decision making of Alara Wholefoods Ltd : Report

   Added on 2020-06-06

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MANAGEMENTACCOUNTING
Importance of Management Accounting in Decision making of Alara Wholefoods Ltd : Report_1
Table of ContentsINTRODUCTION...........................................................................................................................1SECTION I......................................................................................................................................1LO 1.................................................................................................................................................1P1 Importance of management accounting in the decision making process\.........................1P2 Different types of management accounting systems.........................................................3LO 2.................................................................................................................................................4P3 Use of absorption and variable costing techniques in management accounting...............4SECTION II.....................................................................................................................................7LO 3.................................................................................................................................................7P4 Advantages and disadvantages of different types of planning tools adopted for budgetarycontrol in Nero Ltd.................................................................................................................7LO 4.................................................................................................................................................9P5 Adaptation of management accounting systems to respond to financial problems..........9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
Importance of Management Accounting in Decision making of Alara Wholefoods Ltd : Report_2
INTRODUCTIONThe management accounting standards ensures the management team of an organisationto undertake an effective decision making process in order to achieve well desired goals as wellas objectives of that venture. It assists an entity in its decision making process by providing thatfirm with relevant financial as well as cost accounting details, which gives a clear picture of theworking of an organisation and identify the loopholes that are prevailing in the firm and thus,leading to desired changes to overcome the same. The management accounting system enablesthe mangers appointed in a venture to determine the availability as well as requirement ofvarious resources required to undertake the operational activities in that firm. Managementaccounting keeps a record of sales made, the revenue generated, purchases made, profits earned,the efficiencies improved, etc. , which are important to analyse as per the view point ofmanagement. SECTION ILO 1P1 Importance of management accounting in the decision making process\The management accounting standards adopted enables the managers of an organisationto determine decisions regarding the day to day functional activities of that venture. The smallbusiness organisation taken into the report is Alara Wholefoods Ltd. The managementaccounting standards adopted in present organisation assists the managers with its numerous dayto day functional activities, that they need to perform in the context of managing a business(Schaltegger and Burritt, 2017). The benefits of various information that is collected byundertaking effective management accounting system are listed as well as explained in detail asunder: Cost analysis: An effective management accounting records initiated in the citedorganisation enables the appointed managers to analyse the cost of input inculcated inorder to generate desired outputs. This cost analysis ensures the managers or leaders todetermine the price to be charged for the products that are being offered to customers, asper the cost incurred, in order to generate efficient results or profits. Thus, managementaccounting standards enables to analyse cost of manufacturing the products and thus,undertake an important decision making mechanism regarding its prices to be charged. 1
Importance of Management Accounting in Decision making of Alara Wholefoods Ltd : Report_3
Determining target market: The determination of target audience is of utmostimportance for an organisation, as the marketing activities of that venture is carried inaccordance with targeting those customers. This determination of target market isundertaken by the appointed mangers of cited venture (Susilawati and Baridwan, 2016).In order to determine target customers, the management accounting standards maintainedby that firm assist the managers or leaders. A major decision making process is involvedin defining the market market of a particular product. It should be decided as per theofferings made by the present firm as well as demand patterns of customers. Thus, animportant decision making mechanism is needed to be undertaken to achieve the desiredgoal of the venture to increase its market share. The management accounting standardsadopted gives a relevant data regarding the offerings made and applying it to generatemore customers leading to more share in the market, which further leads to long termgrowth as well as development. Analysing purchases: The purchases made here, are in the context of purchasing variousresources required for undertaking operational activities of an organisation, in order togenerate desired output. The decisions regarding purchase of raw materials or inputs isessential in order to avoid any emergent situation or any loss that may occur to theinventory stocks maintained by the mentioned firm, i.e. Alara. The managementaccounting standards keep a well maintained record of availability of raw materials,finished goods, semi- finished goods and work in progress, while further enables themangers to make availability of these resources in a timely manner, in order to avoid anydisturbance in the production process (Höglund and Svärdsten, 2016). Thus, it can beconcluded that, management accounts assist the managers appointed at mentionedorganisation to undertake effective decisions regarding its purchases to be made. Growth and developmental activities: Achieving growth as well s development is theprimary objective of every business organisation which operates in an economy. Ingeneral terms, it is the base of various objects to be achieved by a venture. Theinformation included in the management accounting system is relevant to determine thegrowth and development that has been achieved by mentioned venture in the long run.Along with this, the mangers are required to undertake the function of planning theresources in order to generate maximum results for future growth and development2
Importance of Management Accounting in Decision making of Alara Wholefoods Ltd : Report_4

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