Management Accounting Assignment - Tech (UK)
15 Pages4002 Words385 Views
Added on 2020-12-09
Management Accounting Assignment - Tech (UK)
Added on 2020-12-09
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Management Accounting
INTRODUCTIONManagement accounting is an activity or a process of making an important informationavailable to the management on the basis of which business operations has been executed in anappropriate manner. It is also known as cost accounting which helps managers to make aneffective decisions regarding increasing value of an organisation through utilising availableresources at an optimum manner. Preparing of financial reports includes balance sheet, profit &loss account, cash flow statement which help in knowing the actual financial position ofcompany in market. Tech (UK), a UK-based manufacturing company which deals in producingspecial charger for mobile telephones and other various gadgets for the purpose of selling it tothe retail outlets in UK. Such company is take for the purpose of preparing this report (Albu andAlbu, 2012). The project briefly summarises the various management accounting as well asreporting system along with the difference between financial and management accounting. Allother aspects are also covered under this report with the context of Tech (UK).TASK 1P1: Management accounting concept and their essential requirementsManagement accounting: It is such a practices of bringing out an important datathrough using various accounting systems in order to enhance the value of an organisation so asto sustain in competitive market for longer period of time. It will also help stakeholders to getensure about getting maximum return on their investment through showing them true and fairfinancial reports. Such value data and information can be provided with the help of using variousmanagement accounting system which be briefly described after making comparison betweenfinancial and management accounting:Comparison between management and financial accountingManagement accountingFinancial accountingIt is an activity of maintaining valuableinformation of all departments through usingvarious accounting system due to which themanagement are bale to make a profitabledecisions for company.It is related with finance thus preparing onlyfinancial accounts in order to assess theactual financial position of company inmarket.They are liable to provide financial as well asIt only provides financial related information1
non-financial data so as to make an effectiveplans and policies.thus tool less time as compared to Financialaccounts.It helps in preparing accounts of alldepartment in order to provide sufficientinformation to internal management ofcompany.They are wholly liable to prepare financialaccounts which help stakeholders andinvestors to make investment decision inorder to get profitable income in return.Such management accounting, documents areprepared only when there is need torequirements of an organisation.Finance department is liable to make decisionregarding preparation of financial report onannual basis.Importance of management accounting in decision making processDetermination of aim: The aim can be determined with the help of information availablethrough using various management accounting system.Helps in formulation of plans: Availability of information includes financial as well asno financial will help management of various departments to make a better decisions and suitableplans to execute business activities in more effective and efficient manner (Endenich, Brandauand Hoffjan, 2011).Measurement of performance: With the help of accounting systems, all the informationsabout employee’s performance, daily business transactions etc. help management in identifyingand measuring the actual performance through comparing actual with desired performance andthus able to make corrective actions if any deviations found.Different management accounting systemsTech (UK) has different options of using management accounting systems which arebriefly explained as below:Cost management system: It refers to such management accounting system throughwhich Tech (UK) can able to decide what amount of price should they charged from theircustomers in order to recover all cost incurred manufacturing process along with profit margin.Such cost includes labour coats, material cost, overhead expenses etc. equals to total productcost. Before setting prices for products and services, the management need to first find out theinterest and buying behaviour of customers and according to which prices has been fixed whichhelps in maximising the satisfaction level of customers. For example, increasing in the price ofspecial charger which are more in demand in market, it will help company in maximising their2
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