Management Accounting Needs Doc
Added on 2021-02-19
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FinanceLeadership Management
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MANAGEMENTACCOUNTING
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INTRODUCTIONManagement accounting is referred as the process of formulating management andaccounting reports that includes facts and information so that manager of company can takedecisions in an appropriate manner. It benefits in preparing reports on monthly and weekly basisso that organisational work can be accomplished in a systematic manner (Adler, 2013). With thehelp of these reports, cash flows, revenues, sales and other aspects can be acknowledged in adesired manner. This assignment is based on Tomkins Plc which is a Britain based reputedmultinational engineering company, situated in London, UK. This organisation was founded in1925 and operating with more than 30,000 employees at present. This report will discuss aboutdifferent kinds of management accounting systems and their needs in achieving targets andobjectives of company. Also, various kind of management accounting reports are also discussed.With the help of different kinds of costs such as Marginal and absorption cost, an appropriateincome statement is prepared. Other than this, different management accounting tools to resolvethe issues of financial problems are discussed in brief. TASK 1P1 Define managerial accounting and the needs for varied kind of accounting systems relatedwith managementManagement accounting has referred to the procedure of identifying operational andbusiness costs so that the income and financial accounts and reports of a business can beprepared and accurate decisions can be taken. Main reason of using this tactic is to improve theprofitability and earning revenues of company so that high advantage over rivals can be attainedin a desired manner. In case of Tomkins Plc, company can take the help of managementaccounting to manage their accounts and other income statements in a proper and systematicmanner (Bennett and James, 2017). In this context, there are several management accountingsystems which can be used by a business organisation to perform their business operations in aproper manner. In context with Tomkins Plc, different management accounting systems arementioned below:Price Optimising system: This accounting system will helps a business firms in decidingthe prices for their various products or offered services.This will benefit the company inacknowledging the demand of customers for certain products even when their prices are2
changed and modified. In context with Tomkins Plc, this system can be used to managethe rates of products in different market segments. This will help the company indetermining different prices like promotional price, discounted price, initial pricing etc. Cost accounting system: This accounting system will benefit the company inrecognising the cost of services or products. Due to this, company is able to formulatedesired selling and marketing strategy so that high revenues and profits can be earned.With the help of this system, effective costs for services and products can be maintainedso that attention from large number of customers can gained in a simplified manner(Booth, 2018). This system will help the company in estimating actual and estimated costso that to overcome the differences right kind of strategies can be formulated. For thissystem, there are two kind of accounting methods which are discussed below: Job order costing: This method of costing is good for those businesses whichprepares special and innovative products. By using this particular method, manufacturingcosts can be identified easily. Industries can use this method to acknowledge the costrelated with production if their rates are enhanced by estimated data. Process costing: This kind of system is perfect for organisations which areproducing or manufacturing products. This costing method will help in acknowledgingthe cost of different processes in a desired manner. Inventory management system: This accounting system will benefit the firm inmaintaining their inventory as per the requirements and demands of customers. Due tothis, particular management system has been used for effective flow of services andgoods as it fulfils the expectations of consumers in a desired manner. This type ofaccounting system is very beneficial for Tomkins Plc to manage and track the records ofdifferent inventory so that business activities can be performed without any disruptions.By this, they can reduce their costs and maintain appropriate inventory for the company(Bryer, 2013). Job costing system: This type of system helps in measuring costs which is required inproviding services or products. It is suitable for those organisations that provide differentrange of services or products. As Tomkins Plc is an engineering company whichmanufactures products, it is very essential for them to estimate individual price for eachof the product. With the usage of this system, individual costs can be acknowledged so3
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