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Management Accounting Assignment - Unicorn retail store

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Added on  2020-10-22

Management Accounting Assignment - Unicorn retail store

   Added on 2020-10-22

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Management Accounting
Management Accounting Assignment - Unicorn retail store_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A. The management accounting and requirement of management accounting system.........1B. The importance of different management accounting reports...........................................2C. The advantages of management accounting system and their application in organization.3D. The integration of management accounting system and management accounting reports inUnicorn retails store...............................................................................................................5TASK 2............................................................................................................................................5A. 1) Explain the absorption costing and marginal costing methods.....................................5A. 2) Preparation of income statements of Unicorn retail stores as per absorption and marginalcosting method........................................................................................................................6C. Apply the range of management accounting techniques and produce appropriate financialreporting documents.............................................................................................................10TASK 3..........................................................................................................................................11A. Advantage and disadvantage of different planning tools for budgetary control.............11B. The application of the planning tools for preparing, forecasting and analysing budgets.13C. Explaining requirement of adapting different management accounting system in respond tofinancial problems................................................................................................................13D. Analysing the role of management accounting techniques in respond to financial problemsand lead the organisation sustainable success......................................................................14E. Evaluating the role of planning tools to solve financial problems and lead the Unicorn retailto achieve sustainable success..............................................................................................15CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
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INTRODUCTIONManagement accounting plays a key role in organizations today and helps in takingdecisions for company's growth, provides ways to run the company more efficiently. Unicornretail stores is UK based organization which is facing management accounting issues. Thepresent report includes a crucial discussion of management accounting and its method. Thereport will highlight the importance of management accounting system and their essentials forsound business activities to be integrated with management accounting reporting. Further, thereport includes the preparation of income statement with absorption and marginal costingtechniques. The report will also include different type of planning tools for budgetary control. Acomparison is made to show how Unicorn retail stores can adapt management accounting systemto deal with the financial problems which can lead the organisation to achieve success.TASK 1A. The management accounting and requirement of management accounting system.Management accounting is a system where, company's makes a report on financialinformation for internal use by managers for making decisions of company’s growth and ways torun it more efficiently. Unicorn retail stores can use management accounting(MA) to checkinternal performance report which can use to compare the actual result with the budgets, reportof return on investment etc. (Brown and et.al., 2014). Along with financial data, MA can also usenon-financial information such as current sales reports, number of sales per day, deliverydatelines date etc. Both financial and non-financial data are important to identify the keyperformance indicators for various parts of Unicorn stores.There are different management accounting systems which can be used by Unicorn retailstores:Cost Accounting: In this system various analysis is done on cost control, inventorycontrol and expected organization's profitability to estimate the expenditure incurred onthe product to be sold. The company has to know which product is critical for operationalprofitability. Participation of executives by various department is important for costaccounting system and helps in estimating accurate cost of product (Diouf and Boiral,2017). Unicorn stores should have made the cost accounting system which is easy tounderstand and easy to execute. 1
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Job Costing System: this system helps to assign manufacturing cost to each individualproduct by tracking expenses. Unicorn retail stores can use job costing system as it is aneasy method to keep records of order expenses of all identical products (Frimpong,Ameyaw and Osei-Bonsu, 2017). The process of job accounting is done with receivingthe order of a product from customer. At the time of estimating the cost of production, theneeds and preferences of customer should be kept in mind.Price optimising system: This system helps in determining the fluctuations in pricesbased on demand. Unicorn retail stores can control the price of resources using thissystem (DRURY, 2013). Price optimization system can be used in deciding prices ofvarious products at a same time. It helps in estimating the prices as per customerpreferences by stimulating their responses to different price levels.Inventory management system: Organisational process of Unicorn can be integrated withthis system to achieve the efficient and effective flow of inventory within theorganisation at a time of sales. This system is concerned with management of stock andassets in company. There are two common method of inventory valuation last in firstout(LIFO) and first in first out(FIFO). In LIFO the goods purchased last will be taken outto sold first. LIFO is not a good method of valuing inventory, as if the price of lastpurchase goods has increased since the initial purchase than the cost of goods sold will behigher which results in less profit. Whereas in FIFO the goods which was purchased firstwill be taken out to sold first. Due to the risk of increasing cost of produced goods, thismethod considered more profitable. B. The importance of different management accounting reports.Management accounting reports are made for the internal use of management for makingdecisions regarding growth and development plan for business (Kind, 2018). This accountingreports helps management in making forecast and taking critical business decisions. Themanagement team of Unicorn retail stores can prepare various accounting reports for the purposeof decision making by keeping in mind their benefits or significance such as: Budgeted reports: It is the most fundamental report which are very critical is measuringcompany's performance while evaluating different department's performance helps in controllingcosts. At the time of preparing the budget of next year, evaluation of actual expenditure of past2
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