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MANAGEMENT ACCOUNTING INTRODUCTION

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Added on  2021-02-20

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These reports can be prepared only by this accounting because it consists monetary and non monetary information.Intoday's context-mostly organisations are implementing this accounting because of its increasing importance. The project report contains two activities in which, first activity describes about management accounting systems and reports as well as income statement is produced as per given information. These reports can be prepared only by this accounting because it consists monetary and non monetary information.Intoday's context-mostly organisations are implementing this accounting because of

MANAGEMENT ACCOUNTING INTRODUCTION

   Added on 2021-02-20

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Table of ContentsINTRODUCTION...........................................................................................................................3ACTIVITY 1....................................................................................................................................3PART (A)....................................................................................................................................3PART(B).....................................................................................................................................7ACTIVITY 2..................................................................................................................................12PART (A)..................................................................................................................................12PART(B)...................................................................................................................................14CONCLUSION..............................................................................................................................17REFERENCES..............................................................................................................................18
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INTRODUCTIONThe management accounting is as significance as financial accounting. It can be definedas a different part of accounting in that internal reports are prepared for internal stakeholders(Cooper, 2017). These reports can be prepared only by this accounting because it consistsmonetary and non monetary information. In today's context mostly organisations areimplementing this accounting because of its increasing importance. With the use of it, managersof companies can evaluate the actual financial performance that helps in preparing competitivestrategies and plans as well as in major decision making. For better understanding of it, BAMconstruction limited company is selected which is basically a civil engineering company. It islocated in London and deals in small, large construction projects. The project report contains twoactivities in which, first activity describes about management accounting systems and reports aswell as income statement is produced as per given information. Further, in second activityplanning tools and role of MA systems to solve the monetary issues is included. Along withsolution of given practical parts is mentioned. ACTIVITY 1PART (A)Management accounting and essential requirement of different accounting method.Types of management accounting systems:Price optimisation system- This is a part of management accounting which is related tosales department of companies. It is so because this provides a detailed informationregarding to the customer's reaction on various prices (Jacobs, 2012). With the help of itcompanies can set the prices of their products and services on which customers can besatisfy. Like in the aspect of above BAM construction limited company, they operate inwide range of construction projects and they determine the expected price of their civilengineering projects with the help of it. This helps them a lot because as per theircustomer's reaction on various prices they set the estimated price. Hence, it is essentialfor companies to draw an effective pricing pattern which can benefit to companies as wellas can satisfy the customers.
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Job costing system- It is a type of accounting system of management accounting that islinked to the finance department of companies (Guthrie, Parker, 2014). In this, variouscost such as labour cost, material cost etc. are estimated and calculated. With the help ofit, companies can assess the total cost of their various kind of jobs allocated to multipleoperations. Such as in the context of above BAM construction limited company, there area wide range of labour cost, material cost etc. All these costs are being managed with thehelp of this accounting system. So overall, it is essential to companies for propermanagement of cost in the various operations. Inventory management system-In this type of management accounting, a detailed trackrecord of various kind of inventories such as work in progress stock, raw material,finished commodities etc. is included. Along with under it, the information related to howmuch quantity of material is consumed and how much is remaining. On the basis of it,companies' production department takes crucial decisions. Herein, the context of aboveselected, BAM construction limited company their contractors use this accounting thathelps them in effective allocation of raw material in construction projects. It is essentiallyrequired in organisations for two purposes which are keeping track record of materials aswell as for taking important decision in relation to production and purchasing.Cost accounting system- It can be defined as an accounting system that is linked with thefinance department of companies (Mussnig, 2013). In other words, this accountingsystem forecast and calculate actual amount of cost that occur in multiple operations. Theprimary objective of this accounting system is to keep the total cost of various activitiesunder control as much as possible. With the effective implementation of this accountingsystem, companies can evaluate about how much cost will be occurred in production ofone unit and on the basis of it they try to keep below forecasted amount. Such as in theBAM construction limited company, their finance department is using this accountingsystem to track the difference between actual and estimated cost. Thus, this accountingsystem is essentially required by companies to keep the cost below budgeted cost. Various kind of management accounting reporting.The management accounting reports are kind of written document that are prepared onthe basis of an organisation's financial and non financial transactions for a particular time period
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