(MA)Management Accounting Assignment

Added on - 06 Jun 2020

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Concept of management accounting and their kinds to company.....................................3P2 Report to the General manager concerning to methods of management accounting reports6TASK 2..........................................................................................................................................10P3 Difference between Marginal costing and Absorption costing and calculation of Incomestatement through these methods:........................................................................................10TASK 3..........................................................................................................................................14P4 Advantages and disadvantage of various kinds of planning tools for the budgetary control..............................................................................................................................................14P5 Management accounting system use in solving financial problems...............................17CONCLUSION..............................................................................................................................18REFERENCES..............................................................................................................................19.......................................................................................................................................................19
INTRODUCTIONIn management accounting, managers uses regulations data accounting to getsupport indecision-makingprocess of an organisation (Banerjee, 2010). Management accounting is aprovision of financial and non-financial decision-making informations to top management.According toChenhall, 2012“Management accounting is a process that contains involvement indecision making, allocation planning and performance management systems and it also providesproficiency in financial reporting to support management in implementing organisation'sstrategies”.Bizdaq was established in 2015, it is in Business sales sectors. Company gives amarketplace for sale. It's annual turnover is £100,000.This assignment consists of various types of management accounting systems and theirmethods. To enlighten the features of budget control, advantages and disadvantages of varioustypes of budgetary control tool is discussed. Base case study is dependent on two scenario's. Firstscenario, contains a report which focuses on implementation of accounting techniques for thebusiness(Otley and Emmanuel, 2013).In second scenario, resolution techniques for financialproblem or issues has been explained through report to General manager.The main objective of this report is todiscuss on techniques management accountingwhich is marginal costs and absorption costs and profit analysis.Making of Income statement atthe end of the year with two different techniques will shows basic difference between Marginalcostingand also Absorption costing.TASK 1P1 Concept of management accounting and their kinds to companyFrom:Management accounting officerTo:General manager of BizdaqSub:Management accounting systemThis report consists of concept of management accounting system, its different types which isrequired for a company are also being discussed. Some of its different types are Traditional,Lean, Throughput and Transfer accounting. This report is based on explaining the features ofmanagement accounting system, to help management in understanding how it can support topmanagement in decision-making process.
Management Accounting System:This accounting system consists of all provisions that gives essential informations to amanagers. The data of these systems supports top management in finding resolutions forfinancial issues like failure in budgeting, overestimation and underestimation of funds, waste ofresources, etc. (Bebbington, Unerman and O'Dwyer, 2014). The main stakeholders ofmanagement accounting systems are Investors, Creditors, operational managers and company'sbusiness analysts.Below is the diagram of different types of Management accounting system:Explanation of all these types of Management accounting system has been done below:Traditional Accounting:In this accounting method, data's related to costs is recorded.These data's are recorded by applying job order and process costing methods. BigTraditionalTransferThroughputLeanIllustration1: Management accounting
projects are normally refers job order costing methods because in individual projects,recording of costs through this method becomes easy (Bennett, Schaltegger andZvezdov, 2013). On the other hand, process costing method is used by those companieswhich are into production of homogeneous products. Bizdaq is required Traditionalaccounting because it could determine how to allocate its funds into differentdepartments after application of this tool. For instance, this method will makes easy inrecording data's related to purchase, supply and selling department separately whichwould support company in deciding proper allocation of funds into these departments.Lean Accounting:This accounting system, applies new techniques to reduce costs ofproduction. It mainly consists of all steps which eliminates wastes at each processthrough which company could manage to control its costs (Bodie, Kane and Marcus,2014). This accounting system gives informations to accounting managers to supportthem in decision-making.Bizdaq could use this method, in reducing costs of production and in eliminatingwastes. Company has Cost of goods sold of more than 90%, which indicates that there are lotsof fund consumes in this activity. Reason may be unnecessary use of resources which raises theoverall cost of production(Bodie, 2013). Therefore, company could use this method inminimizing costs and elimination of wastage through tracking the operational process.Throughput accounting:This type of accounting is neither cost accounting nor costingbecause it's only considers cash based transactions. It doesn't distributes all types ofcosts like variable and fixed costs to products or services made by a company.Throughput accounting is a technique which uses performance measure in Theory ofConstraints.Bizdaq would be benefited from the application of these techniques becauseThroughput accounting could support company in maximising profits, cost cutting and reducingexpenses. This accounting methods usually focused on generating more throughput fromoperational process of a company.Transfer pricing methods:This method also known as traditional transactionsmethods, in this technique price of a company is compared with third-party prices. Inmanagerial accounting, transfer price supports in knowing price at which upstreamdivision of a company sold goods to downstream divisions. These goods and services
are labour, components and equipments used in production process of a company. Itcould be identified through market-based, cost-based or negotiated method.It could help Bizdaq, determining costs and revenues among various divisions andit also affects performance evaluation of these divisions. It is essentially required at the time ofselling of products across international borders.Apart from this there are other types of Management Accounting systems, which is discussedbelow:Cost Accounting System:A cost accounting system (also called product cost system orcost system) is a framework used by companies to estimate the cost of their products forprofitability analysis, inventory evaluation and cost control.Job Costing:Thisis defined as a method of recording the cost of a manufacturing jobrather than the process. With a job-cost system, a project manager or accountant cantrack the cost of every job, maintains data which is often more relevant to the operationof the business.Inventory:The list includes raw materials, methodology, and finished goods, which acompany receives for its production processes or for sale to customers (Lukka andModell, 2010). Inventory is considered to be a property, so the accountant must use avalid method to specify the costs for the inventory.Price Optimization:Price optimization models are mathematical programs thatcalculate how demand differs at different price levels and then combines the data withinformation about prices and inventory levels, from which prices can be recommended,which in profit Will bring improvement.P2 Report to the General manager concerning to methods of management accounting reportsFrom:Management accounting officerTo:General manager of BizdaqSub:Management accounting reportThis report consists different methods of reporting in the management accounting. Uses of thesevarious reports to help Bizdaq in decision-making process is also mentioned.Management accounting reportThese reports of management accounting supports business in analysing company'sperformance (Boyns and Edwards, 2013). These type of reports usually generated at the end of
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