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Multidisciplinarity in Management Accounting

   

Added on  2020-01-07

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ManagementAccounting1

Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1) Management accounting and its techniques' essential requirements....................................3P2) Management accounting methods.........................................................................................5TASK 2............................................................................................................................................8P3) Different costing methods and differences between marginal and absorption costing.........8TASK 3..........................................................................................................................................12P4) Budgetary Control system for NISA Co. Ltd......................................................................12P5) Different management accounting systems to reduce financial problem for Nisa Ltd.......17CONCLUSION..............................................................................................................................19REFERENCE.................................................................................................................................202

INTRODUCTIONManagement accounting is multidisciplinary approach to expand business entity andmanaging its overall operations. It is useful approach for forecasting and decision making relatedto further business operations. The present report is based on understanding differentmanagement accounting tools and systems of Nisa ltd. It is small scale retail sector enterprise ofUK that provides groceries and food items. Different management accounting tools and methodscan be described to signify its importance. In addition to this, several costing methods to prepareincome statement that present financial position of organization is able to understand throughthis assignment. Moreover, positive and negative aspects of budgeting can be expressed which isconsidered as key component for preparing strategies and monitoring excess of production.Along with this, several management accounting systems for reducing economic problems ofentity is to be expressed effectively. Hence, through this study, learners are able to understandsignificance of management accounting tools for decision making regarding operating furtherbusiness activities.TASK 1P1) Management accounting and its techniques' essential requirementsManagement Accounting:- Process of preparing management reports and accounts thatprovie timely and accurate Financial and statistics information that requires by managers to runbusiness in day to day and short term decisions (Bellah and et. al., 2013). Unlikely Financialreports that are published for external share or stake holders in yearly basis by organizationmanagement accounting provide monthly or weakly reports to run business for internaldepartments like purchase manager, sales manager or Chief executive officer. These reportsgenerally shows amount of cash in hand, purchase order, Sales revenue generated, Accountspayable and receivable, Outstanding debts, raw material, inventory purchase and may alsoinclude trends chart, variance analysis and other statistics Different Type of Management Accounting:Tools & Technique used in managementaccounting.Financial Planning: The main objective of any business is to achieve objective.Objective can be of any kind but for NISA Company which is retail sector company 505 -3

Type of paper : Assignment definitely would be to maximize profit by maximize sales.So financial planning can help to achieve it (Brigham and Houston, 2011).Financial Statement Analysis: Profit and loss & balance sheet are important report ofcompany. These report are analyses at different period. These reports help manager toanalyses growth of business concern. These reports are made through various competitivefinancial statements, common size statements and ratio analysis.Ratio Analysis: It is used to analyses company profitability, efficiency variability, andliquidity (Chandra, 2011). They are current ratio, Quick ratio, return on equity ratio,Equity and Debts ratio, Dividend payout ratio and earning per share ratios.Cost Accounting system: Cost accounting represents cost data in product wise, processwise, department and branch wise. These cost data are compared with determined one.This consist of two cost gives management a reason between differences of cost andoptimal best solution is taken to fill the gap. So retail company like NISA can use thisaccounting to control cost of production and transportation cost so that goods can be soldat reasonable rate (Chapman, Hopwood and Shields, 2011).Fund Flow Analysis: This analysis find out the movement of fund from one period toanother. Moreover, this analysis is very useful to know whether the fund is properly usedor not in a year when compared to the previous year. The Working capital changes andfunds from operation are also find out through this analysis.Standard Costing: It is predetermined cost. It provide yardstick for measuring actualperformance. It is used to find reasons in deviation if any in cost accounting (Gesimba,Alvar and Mante, 2014).Marginal Costing: It is used to fixed the selling price, Selection of best sales mix, bestuse of scarce raw material and resources, to take a decision whether to buy or to make aproduct. Purchase or reject bulk order. This is based on fixed, variable and contribution inbusiness (Hult, Craighead and Ketchen Jr, 2010).Budgetary Control: Future financial needs are determined under this tools. It is used tocontrol financial performance of business. Business operations are directed in desireddirection.4

Revaluation Accounting:Fixed assets are revalued as per revaluation accounting so thatcapital is fairly represented with assets value. It helps in finding out fair value of capitalemployed.Historical Cost Accounting: It means cost are recorded after being incurred it can beused for predetermined cost to evaluate performance (Łukaszewski and Wilk, 2016).Statistical Tools: To solve management problems various tools of statistics are used likemethod of least square, regression, quality control etc.P2) Management accounting methodsThere are several methods applied for effective management accounting including costanalysis, budgeting, performance measurement, project decision making and so on. Therefore,some of the management accounting tools and techniques can be described as below:-Cost analysis:- Management accounting of Nisa Ltd determines costing to prepareincome statement. On the basis of which, financial position of organization is presentedtherefore several ideas are created for enhancing its profit earning capacity same ascreating balance between incurred expenses and gained income (Malhotra and Temponi,2010). In this regard, different costing methods are used such as; marginal, absorption,demand based, competition basis etc. Therefore, analysis of cost is interrelated withbalance of production and distribution of goods. Moreover, fluctuations in marketdemand affects pricing strategies in increasing in demand effects on productivitypositively. On the other hand, decreasing in demand reflects production and supplementof goods negatively. Thus, cost analysis is effective for fund allocation and creatingbalance between expenses and income of the organization.Performance measurement:- As management accounting is multidisciplinary approachin which employees performance analyzed that creates several ideas for enhancing theirworking efficiencies. However, it is useful for improving their skills such ascommunication, problem solving, listening and working in group. It influences personaland professional development of entity. In addition to this, performance of employeesand organization get managed effectively. Hence, performance evaluation is greattechnique of management accounting that is interrelated with organization's effectiveness.5

In this process, performance management is obtained through using this tool (Malhotraand Temponi, 2010).Project decision making:- Under this system, management accountant of Nisa Ltdaccomplishes tasks through decision making for projecting. It includes estimation for costincurred and forecasting time to be spend on projection. In accordance to this, decisionmaking process is implemented for effective project planning and scheduling to reach outset target. It is useful for best use of resources and fund that impacts on productivity andprofitability of entity (Shelby, 2013). Therefore, projecting relating to effectiveness oforganization and increasing its quality services is possible through using managementaccounting tools adequately. In this regard, management accounting is helpful to succeedany project through effective forecasting and decision making process. It involves entireelements that project accomplishment such as cost, time and quality used for projecting.Planning and budgeting:- Management accountant of Nisa Ltd analyzes entire businessoperations and further prepares strategic plans for effectiveness of organization. In thisregard, according to critical evaluation of overall activities, decisions are made forenhancing quality services and valuable market position that affects long termsustainability. However, planning is prepared for short term as well long term periodicity.Including this, it is considered that several ideas are created for optimum utilization ofresources and fund. It affects productivity and profitability of organization for makingdecisions regarding business operations. Therefore, adequate production and distributionof goods can be gained through budget process system. Along with this, managementaccountant of entity recognizes all factors such as finance, production, risk management,marketing and sales. Thus, attractive organizational structure is created through this tool.In this process, planning including forecasting and decision making is implemented bypreparing budget (Swayne, Duncan and Ginter, 2012). Financial management analysis:- There are various financial tools such as incomestatement, balance sheet, profit and loss account, cash flow and fund flow statement.Thus, by identifying these sources, several tools and techniques are presented that isuseful for fund allocation as well resource management. Hence, management accountingas financial statement analysis is one of the great component for economic stability and6

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