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Management Accounting - Pavestone Assignment

   

Added on  2021-01-03

14 Pages4678 Words269 Views
MANAGEMENTACCOUNTING
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INTRODUCTIONManagement accounting can be defined as the preparation of management andoperational reports, that may provide actual information of business to the internal stakeholdersand managers. It helps to improve the efficiency of decision making ability of managers. It helpsinternal as well as external stakeholders to get insider information of the company (ManagementAccounting, 2018). These reports consist various informations such as cash and cash equivalentsinformation, sales, profits etc. Main objective to prepare management reports is to analyse theactual performance of the company. It helps to forecast future and make various decisions. It isused to look at the events that happen in and out of the organisation.Pavestone is a stone and concrete manufacturer and supplier company. It is mainly basedin US. The managers of the company use management accounting to administrate operationalactivities of the company. This assignment consist various topics that are managementaccounting its systems and reporting, various costing techniques, planning tools used inbudgetary control and various financial problems that an organisation have to face. Differenttype of techniques that are used to resolve financial problems, are also discussed in this report.TASK 1P1 Management accounting and different types of its systemsManagement accounting is the procedure of formulating various reports that helps themanagement in tactical decision making. It is a function that is used to analyse costs andappropriate selling price for the products. It provide accurate informations that is helpful whileplanning for future and forming various strategies to achieve organisational goals (Al-Mawali,Zainuddin and Nasir Kader Ali, 2012). The managers of Pavestone use management accountingsystem to analyse customer demand, setting appropriate prices, keep a track record of customersand their outstanding demands etc. To maintain above information management of Pavestone usedifferent management accounting systems, that are as follows:Cost accounting system:It is a system that is used by organisations to estimate themanufacturing cost involved in their production. It provides accurate cost information that helpsthe management to control running operations of the company. It is a process that includevarious steps such as recording, classifying, summarizing, allocating and examining costassociated in the production. Management of Pavestone use cost accounting system to analyse1
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accurate cost of their products. It helps them to know that products are profitable or not. Theinformation gathered form cost accounting system is mainly used in financial accounting systemto analyse financial strength of the company, but the main function of cost accounting system isto facilitate the management's decisions. It is very helpful for the company because it providesactual information related to costs (Chiu, Teoh and Tian, 2012).Price optimisation system: This system is mainly used to determine customers reactiontoward prices changing strategies of the company. It helps the management to find the perfectprice for the products that can acquire more and more customers and increase profitability of thecompany. Pavestone use price optimisation system to match the price level to the customer'sperception toward products. The main objective of the management is to provide products tocustomers at a satisfactory price. This system is also used by the managers of Pavestone to findout the balance between values and profits. It is highly profitable for the organisation as it mayhelp to set suitable value for the goods that is affordable for the customers.Inventory management system: It is mainly used to get the direct evidences of theinventory, that is in the warehouses or in transit or sold. Effective management system helps thecompany to easily meet customer's demand and fulfil the demand within a short time period.This system is used in Pavestone for various purposes such as for purchase planning, gatherinformation of inventory etc. It also help the managers to track inventories through the entiresupply chain of business operations. It is very helpful for the company because it providesinformation of concrete status of the stocks and help the managers to pre plan the purchase ofgoods before the warehouses goes empty (Eierle and Schultze, 2013).Job costing system: It is a system that is used to assign manufacturing cost to theproducts or bulk of products. This system is only used by those manufacturing companies whoare manufacturing different kinds of products. It also helps to record cost of various jobs thatdifferent from each other. Pavestone's management authority use this system to analyse variouscosts such as direct material, labour and overheads of different jobs. It is an expendituremonitoring system that is used to determine manufacturing cost of each job. It also helps themanagers to keep a record to various expenses. It is very advantageous for the company becauseit delivers detailed material of various jobs and cost tangled in those jobs.2
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