(DOC)Management Accounting

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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and its types of management accounting systems........................1P2: Different methods used for management accounting reporting............................................3M1: Evaluate the benefits of management accounting system and its applications...................4D1: Management accounting system and its reporting are integrated within organisationalprocess.........................................................................................................................................5TASK 2............................................................................................................................................5P3: Calculation of cost using an appropriate technique..............................................................5M2 Various types of accounting techniques...............................................................................8D2 Data interpretation.................................................................................................................8TASK 3............................................................................................................................................8P4 Advantages and disadvantages of different planning tools used for budgetary control........8M3 Uses and applications of planning tools for preparing and forecasting budgets................10P5 Responses of management accounting system to deal with financial problems.................10M4 Management accounting can lead organisation to sustainable success in responding tofinancial problems.....................................................................................................................12D3 Planning tools respond appropriately to resolve financial problems..................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is the procedure of preparing management reports and accountswhich provide correct and timely financial and statistical data to managers which helps inmaking short and long term decision. Management accounting plays an important role inidentifying, analysis, measurement and interpretation and communication of financial data whichmanagement used in planning, evaluating and controlling of information within organisation.Company follows four basic function of management process that are planning, organising,controlling and decision making. Management accounting plays a essential role in thesemanagerial functions performed by all managers at different level of departments (Abdel-Maksoud, Cheffi and Ghoudi, 2016).Oak Cash & Carry Ltd is a grocery wholesalers with the registered office located inBanbury, Oxfordshire UK. In this report company works on various management accountingsystems and its reporting techniques to evaluate company's performance. Cost accountant usesvarious costing tools for evaluating its net profit. Oak Cash & Carry Ltd applies several planningtools that are used in budget controlling and forecasting. Management adopt various accountingsystems to respond its financial issues that assist manager in leading Oak Cash & Carry Ltd toachieve profitability.TASK 1P1: Management accounting and its types of management accounting systemsManagement accounting is an essential part of every organisation working. Managementaccountant of company develops information which help managers identify the more profitableproducts. Company can use management accounting systems such as cost accounting, jobcosting, inventory management and price optimisation system that are deployed to renderinformation for favourable decisions. Oak Cash & Carry Ltd is a grocery wholesalers and offersa wide range of products in bulk for retailers, offices, caterers and other local businesses. So, it isimportant for company to opt various management accounting systems in order to prepareeffective plans and decision to achieve it's objectives.Types of management accounting systems are explained below:Cost Accounting Systems:It is a form of management accounting systems, which helpsmanagement to analyse its product's cost. Oak Cash & Carry Ltd purpose of following thisaccounting system is to avoid moving over budget so that management can hold their revenues1
as much of possible. It will help management in determining the costs of products, processes toensure that financial statements and reports are as accurate as possible. It is used to identifyclosing value of inventory that helps in preparing financial statements. It also assist Oak Cash &Carry Ltd managers and authorised members of management in forming the most informeddecisions in company's financial planning. Because it provides accurate cost information relatedto business. Actual, normal and standard costing are the examples of cost accounting indetermining product actual, budget and normal cost of material, labour and manufacturingoverhead. Company uses this method in identifying where it is earning and losing money (Brock,Hinings and Powell, 2012).Price Optimisation Systems:This system refers to customer's demand and the price ofthe products is decided according to customer's preference at different price levels which willhelp to attract customers and increase future profits. Company follow this system for determineits initial, promotional and discount pricing. Oak Cash & Carry Ltd uses this system for settingappropriate pricing strategy and enhance product value among customers that will affect itsprofitability. This system consists various information related to operating costs, inventories andpast prices and sales. With the aid of price optimisation system Oak Cash & Carry analysis ofinformation that anticipate the behaviour of potential buyers at different prices. It also helps toimprove profitability and productivity of the company in order to attain its goals.Inventory Management System:This system is used as inventory control system wheremanagement can tracks two main functions of company's warehouse i.e. incoming and outgoingof inventory. This system is important because it determine accurate level of inventory thatautomatically minimize under and overstock conditions. First in first out, last in last out,weighted average are the examples of inventory management. Oak Cash & Carry Ltd adopt thismanagement system for tracking inventory quantities efficiently across stocking locations andalso assist in making smarter inventory decisions. In order to maintain inventory levelsmanagement uses functions of this system such as creating purchase and sales orders, physicalstock counts by using of FIFO method. This method helps in identify stock level. Oak Cash &Carry Ltd use this system for improving its bottom line, inventory accuracy andworkflow(Christner and Strömsten, 2015).Job Costing System:It is system that involves the procedure of accumulating data aboutthe costs linked with a specific production or service. Process, contract and standard costing are2
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