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Management Accounting Solution Assignment - Galway plc

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Added on  2021-02-19

Management Accounting Solution Assignment - Galway plc

   Added on 2021-02-19

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MANAGEMENTACCOUNTING
Management Accounting Solution Assignment - Galway plc_1
Table of ContentsINTRODUCTION...........................................................................................................................3LO 1.................................................................................................................................................3P 1. Explaining the concept of management accounting and the essential requirements of its system..........................................................................................................................................................3P 2. Explaining several methods that are used for reporting under management accounting. .......4LO 2.................................................................................................................................................5P 3 Calculation of income statement under marginal and absorption costing.................................5LO 3.................................................................................................................................................9P 4 Advantages and Disadvantages of different types of planning tools used for budgetary control.........................................................................................................................................................9LO 4...............................................................................................................................................10P 5. Discussing management accounting system for responding financial problems...................10M 4. Analysing management accounting assist in achieving organisation success.......................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
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INTRODUCTIONManagement Accounting is the process where all the transactions are prepared for thecompany for preparation of financial statements. It takes into account various accounting techniquessuch as cost accounting, management accounting and financial accounting (ManagementAccounting, 2019). Galway plc. Is the company which serves its clients in various sectors such ashospitality, construction, retail etc. in order to make them decision making in particular area. Thisreport covers various planning tools for budgetary control. The application of various costascertainment methods such as marginal costing and absorption method. Using these methodscompany can come to financial problem of the company and how to respond those financialproblems. It also covers the need of management accounting and how it can be used in theorganisation and what are benefits if any company is using these tools. The company uses LIFOmethod for the valuation of closing inventory which assumes that the goods brought by thecompany are first sold out. Company also compare the budgeted performance and actualperformance of the company. It helps in knowing the company that the budget prepared is underbudgeted or over budgeted.LO 1P 1. Explaining the concept of management accounting and the essential requirements of its systemManagement accounting refers to the presentation of the accounting information forthe purpose of formulating policies that are been adopted by management and in running the routineactivities (McLaren, Appleyard and Mitchell, 2016). It helps the management of the organization inperforming all its function effectively and efficiently that includes the planning, staffing,controlling, organizing and directing. It is also called as cost accounting as it provides for theanalyses of business cost and the assessment of the operations in order to prepare the internal reportwhich in turn helps the management in making the decisions for achieving the goals of the business.There are various management accounting systems that plays a vital role in smooth functioning ofthe business as follows-Cost accounting system- It refers to the system that estimate the product cost for making theanalysis of the profit, valuing the inventory and controlling the cost. This system is critical for thecompany as it helps in ascertaining the accurate cost in producing the product. Cost accountingsystem is classified into two major parts that include process costing and job order costing. Theformer accumulates the manufacturing cost for each of the process separately and the latteraccumulates the cost for each of the job separately. Inventory management system- It is the software system that maintains the record and the
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details relating to the inventory of the firm (Hoozée and Mitchell, 2018). It is important for everyorganization to adopt this system as it helps in tracking or tracing the level of inventory, sales,deliveries and the order. It could also be used by the industry for creating the work order, documentsrelating to production and material bill. Job costing system- It involves the accumulation of the information relating to the costattached with particular production or the service. Job costing system is essential for theorganization as it provides the vital information which is required for submitting the information inrelation to the cost to the customer under the contract where the cost are been reimbursed. Thisinformation is also considered as useful in order to determine the accuracy in the estimating systemof an entity. This in turn helps in quoting and fixing the suitable price that generates larger profits. Itis also used for assigning the cost the goods manufactured within the premises of the enterprise. Price optimization system- It is the mathematical tool that is used by the organization fordetermining the response of the customers at different price level for the products and the servicesthrough the different channels (Chenhall and Moers, 2015). It is important for the company to adoptprice optimization system as it is the best way to assess the demand and in fixing the price that isbest in meeting the objectives like profit maximization. P 2. Explaining several methods that are used for reporting under management accounting. Managerial accounting includes the preparation of the reports that are used as the base forplanning, decision making, regulating and in measuring the performance (Maas, Schaltegger andCrutzen, 2016). Reports are been continuously generated for the overall accounting and thebookkeeping period as per the requirements. Managers of the organization uses these reports forhighlighting certain patterns or translating it into the useful information for the enterprise. There arevarious management accounting reports as follows-Budget report- It means the report that describes the budget regarding the expenses so thatcontrol over the spending can be attained. Budget report is critical for measuring the performance ofthe company and in generating the higher profitability in the overall business. Estimations in thisreport are made on the basis of the previous experiences. This helps the organization in meetingwith the unforeseen event or the conditions in the future.Performance report- This report includes the information relating to the performance of theemployees and the organization. Managers uses this report for making the strategic decisionsrelating to the future of company. It also provides the deep insights towards the working of theenterprise. Performance report plays an essential role in keeping an accurate measure of the strategytowards the mission. Accounts receivable report- This management accounting report includes the information
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