Rowlinson Knitwear Management Accounting Assignment
Added on 2021-02-19
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MANAGEMENTACCOUNTING
Table of Contents
INTRODUCTIONManagement accounting is referred as an accounts management system which is linked tothe analysis, interpreting and monitoring of financial data so that internal decisions related with acompany can be taken in a proper manner. This accounting system is essential for a firm as datastored in these systems helps manager of a company to formulate appropriate plans and polices(Adler, 2018). This allow a firms to gain competitive advantage over rivals. This report is writtenin context with Rowlinson Knitwear which is a UK based clothing manufacturing company,situated in Stockport, England. Company earns revenues of around 11.8 million pounds andemploy 30 employees. This assignment is going to discuss about different types of managementaccounting report and systems along with costs so that an appropriate income statement can beformulated. Also, benefits and drawbacks associated with planning tools to control budget ismentioned. TASK 1P1 Mention about management accounting and provide basic requirement for various kind ofmanagement account systemsManagement accounting is the procedure in which business operations and costs areanalysed so that income & financial reports related with company can be formulated in a propermanner. This will allow the manager of firm to take right decisions so that high businessadvantage can be gained without any compromise. It benefits the concerned company in gaininglong term benefits against rival firms. This system is mainly used by manufacturing companiesso that information related with inventory, textile, spendings and earnings can be managed in asystematic manner (Ahmad and Mohamed Zabri, 2015). In relation with Rowlinson Knitwear,management accounting will benefits the firm in manage their costs and productivity so that highlevel of profit margins can be acquired. Below are mentioned different kinds of managementaccounting systems along with their role in organisational work:Price optimisation system: Main purpose associated with this system is to identify allthe costs which takes place while manufacturing a product. Different costs in this context areselling costs, promotion cost, production costs etc. This system of management accountingacknowledge about product life cycle, goal level, price strategy etc. which helps a firm informulating right business strategies. This system will benefits Rowlinson Knitwear in shaping1
demand and reaction of their clients at different price levels. As product demand is linked withcost, hence this system will benefits Rowlinson Knitwear in adjusting their price moderately sothat a proper balance between profits and sales can be maintained. Inventory management system: This system of management accounting is used bymanufacturing companies to keep a track on their inventory. By using this system, a businessfirm can check if it has needed material to carry out their production process in an efficientmanner or not. Appropriate management of inventory will ensure Rowlinson Knitwear aboutmanufacturing of products without wasting any material (Alsharari, Dixon and Youssef, 2015).There exist varied kind of inventory management systems which are stated below: First in first out (FIFO): In this process, those inventories which are purchased earlierare considered as a priority during manufacturing of products. Last in first out (LIFO): As per this process, material and resources which arepurchased last will be used for production as a priority. Average cost method (AVCO): In this procedure of inventory management system,stock available to company is utilised on Average basis. This means average of stock isselected for production and used for manufacturing purpose. In case of Rowlinson Knitwear, main raw material required by company are raw fabricsand cotton bundles so that manufacturing of clothes can take place. Manager of company canadopt FIFO method so that no resources and raw material will be put on hold for larger timespan. Job order costing system: This system is mostly used when a company is dealing withorders of an individual customer. As requirements of a customer is considered here, it is called asJob order costing system. Here, every job cost is tracked in a separate manner and allow themanager to identify the amount of material, resources and man power required to finish theorder. Rowlinson Knitwear is a cloth manufacturing company which provide customised schooland corporate wear to their customers as their requirement. Hence, this system will allow thecompany to perform their work systematically so that high profits and revenues can be earned(Chiarini and Vagnoni, 2015). P2 Discuss various methods to manage accounting reportsManagement accounting reporting is a procedure which allows a company to formulateincome and management reports in accordance with the facts & information given by2
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