Case Study on Management Accounting - NISA
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Added on 2020-01-28
Case Study on Management Accounting - NISA
Added on 2020-01-28
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Management Accounting1
TABLE OF CONTENTSIntroduction......................................................................................................................................3Task 1 ..............................................................................................................................................3P1 Explaining the management accounting along with the different kinds of managementaccounting systems......................................................................................................................3P2 Uses of different accounting methods in management accounting system reporting............5M1 Benefits and uses of management accounting system...........................................................6TASK 2 ...........................................................................................................................................7P3 Calculation of cost using marginal and absorption costing....................................................7D1 Critically evaluation of management accounting system....................................................11M2 Range of management accounting techniques ...................................................................12D2 Producing financial report that accurately apply and interpret data for a range of businessactivities.....................................................................................................................................12Task 3 ............................................................................................................................................13P4 Advantages and disadvantages of different types of budgetary planning tools....................13M3 Analyzing the different planning tools and applications for forecasting the budget...........13D3 Evaluating the planning tools that helps in to solve financial problems..............................14Task 4.............................................................................................................................................14P5 Selecting the management accounting techniques towards responding the financialproblems.....................................................................................................................................14M4 Management accounting responds to financial problems in order to achieve sucess ........15Conclusion.....................................................................................................................................15References......................................................................................................................................162
INTRODUCTIONManagement accounting is the process of identifying, analyzing, recording andpresenting financial information that is used as internal information by management forplanning, decision making and control. It is also concerned with the providing helpfulinformation and reports to managers and entrepreneurs. It helps in planning of businessactivities. Management accounting includes the integration of financial and non financialstatements that provide useful information to management that helps in to take effective decisionfor the organization (Sullivan, 2017). The scope of management accounting is very wide itcontains all types of accounting information to particular organization. The present report is based on management accounting and to understand this, Nisa casestudy is taken in to consideration. It is one of the top leading retail chain in UK where it has beenoffered wide range of product and services to customer at affordable prices. The choose firmhave 50 employees and an annual turnover is 500000 Euro. Various types of managementaccounting techniques are to be used such as cost volume- profit analysis, marginal costing andabsorption accounting that helps in to evaluating the company financial condition. Nisaaccounting managers identifies and managing the accounting records for day to day activitytransactions. Management accounting officer are also responsible for preparing the budget andcontrolling the expenses in order to manage high profitability of an organization. The mainobjective of this report is to analyze existing cost accounting system and to develop productcosting on the basis of ABC.TASK 1 P1 Explaining the management accounting along with the different kinds of managementaccounting systemsManagerial accounting is the process of identifying, analyzing, recording and presentingfinancial information that is used as internal information by management for planning, decisionmaking and controlling of business financial operations (Vitez, 2017). It is mainly concernedwith the providing helpful information and report to internal users such as managers andentrepreneurs. Management accounting tools are may be different for different organization, itbasically depends on the size and policy of an organization. It increases the efficiency of an3
organization in financial term like financial position and company profitability through theanalyzing of inefficiency of accounting information. Management accounting provides fact andinformation along with its interpretation that helps in to take decision by senior managementteam, management accounting is a guide not a decision maker. Management accounting forecastthe relevant information of effective decision making through the analyzing of financialstatements, ratio analysis and fund flow analysis it provides approximate information towardsthe forecasting of financial budget (Weygandt, Kimmel, and Kieso, 2015). Managementaccounting helps management to record, planning and controlling the activities to decisionmaking processes. Accounting information are to be used within an organization and it focuseson future accountability. Managerial accounting is not used for specific department of anorganization, it used for entire organization after the effective coordination of all departments. Itis a fundamental tool for making strategic planning. If an organization wants to develop newproduct line and acquiring another business or expanding the existing business in to othercountries so that they uses number of tools for assisting decision making. Functions of management accounting are:Margin analysis- It determines the amount of profit that is generated from the specificproduct, product line, customer, store etc. Cash flow statement also describes the amount of cashat the beginning of a period and the amount of cash at the end of that period its difference showsthe profit and loss of the company. Profit is earned when the closing balance is higher thanopening balance. Break even analysis- It is the position of no profit no loss of company. It determines theprice points for product and services (Fayol, 2016). Constraint analysis- In constraint analysis element, factors or subsystem that work as abottleneck, It restricts an entity, project or system (such as manufacturing or decision makingprocess) from achieving its potential (higher level of output) with reference to its goal. Target costing- It helps in assisting in the design of new product by accumulating the costof new designs, comparing them to target cost levels, and reporting this information tomanagement. 4
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