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Management Accounting Method

Added on - 17 Feb 2020

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STUDENT NAME:STUDENT ID:SUBJECT CODE:ASSIGNMENT TITLE: MANAGEMENT ACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Task 1...............................................................................................................................................1P1: Explaining management accounting and demonstrating the requirements of various types ofmanagement system.........................................................................................................................1P2: Different methods for preparing management accounting report.............................................5Task 2...............................................................................................................................................7LO 2: Application of a range of management accounting techniques.............................................7P3: Calculation of costs...................................................................................................................7Task 3.............................................................................................................................................10LO 3: Explanation on the ‘planning tools’ used in the field of Management Accounting...........10P4: Advantages and limitations of the ‘planning tools’ with respect to the scenario underconsideration..................................................................................................................................10Task 4.............................................................................................................................................13LO 4: Comparison of the different ways by which Organizations react to the financial problemsusing management accounting.......................................................................................................13P5: Comparison of the accounting system implemented in companies to tackle the financialproblems........................................................................................................................................13Conclusion and Recommendation.................................................................................................15Reference list.................................................................................................................................16
INTRODUCTIONManagement accounting refer to the method in which organisation store financial data forsystematic planning of business and it also helps management body of an organisation to takefinancial and non-financial decision relating to the firm. The process measures, identify,interpret and communicate information throughout the business environment to achieve goals oforganisation. Alternatively, the role accounting plays to supply information, which will assistmanagement in planning economical structure, controlling cost, decision making, and to increaseprofitability of business is termed as Management accounting. The user of accountinginformation who will be benefited from management accounting can be divided into two groups.The groups are internal manager and external parties. Internal managers group are divided intotwo part again one who makes short-run planning and another who make decisions to formulatepolicies. External parties refer to shareholders, investors, associate partners and others. Here inthe study a manufacturing organisation Big Bear (Food Company) has been selected to interpretmanagement accounting system of the company which will give clear concept of fundamental ofManagement accounting.Overview of companyBig bear Limited supply foods, it is situated at Leicester, London and owned brands of differentcompany such as XXX mints, Sugar Puffs and others. The company was established in 2011 byRaisio Group and specialised the brands which is unknown or have household names. Thecompany operate small-size business by producing different food products.Task 1P1: Explaining managementaccountingand demonstrating the requirementsof various types of management systemManagement accounting focuses areas of accounting which help management in financialplanning and they prepared principles by interpreting financial data available in business sectors.Management accounting gives information to management body which will assist them to takedecisions and fulfil objectives of business (Kaplan and Atkinson, 2015, p.47). The basicobjective of management accounting are discussed below-formulate policy related to financial managementplan for future events to cooperate with internal and external changes of business1
monitoring performance to use resources efficiently and control daily activities of firmcomparing between alternative scenarios of business to assess growth and implement newmethods to improve quality of productsolving financial problems and achieving business targetsConsidering behavioural factors that can affect business activitiesAn accounting system always provide various ways to collect, arrange and communicateinformation related to financial activities of firm to organise different elements of firmsystematically (Zimmerman and Yahya-Zadeh, 2011, p.258). Management accounting isdifferent from actual accounting system, it basically focused on collecting information aboutproduct or cost of specific operation at detail level which will help higher authority to takedecision especially financial decision. The work of management accounting involves aroundidentifying different types of resolution management will need to carry on business activities(Ward, 2012, p.36). The decisions which are concerned with management accounting are of twotypes, output decision and input decision. Output decision relates with quantity, quality and priceof goods or product supplied by company and Input decision deals with production elementssuch as labour, raw materials, capital investments and equipments.Both the decision discussed above are interconnected thus, for management accountingmanagerial planning is necessary which involves seven stages. These stages are also appropriatefor small enterprises as selected above Big Bear (Food Company) for efficient managementaccounting system in their manufacturing company. Management accounting has responsibility,which includes:Planning:By planning, the accounting manager gets ready for application of the structuredprocess as per the raised budget of the overall business.Implementation:After planning the activities the factors essential for implementation areperformed on the workforce is done as an activity as per the raised situation.Controlling:The workforce of the concerned firm is controlled in order to stabilize theincreasing budget of the firm.2
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