Management Accounting Planning Tools- PDF
Added on -2021-02-21
| 14 pages| 2500 words| 71 views
Trusted by 2+ million users,
1000+ happy students everyday
Showing pages 1 to 4 of 14 pages
Management Accounting1
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Management accounting and various types of essential systems. .........................................3P2 Methods used for management accounting reporting.............................................................5TASK 2............................................................................................................................................6P3 Calculation of costs using appropriate costing techniques.....................................................6TASK 3............................................................................................................................................8P4 Advantages and disadvantages of different types of planning tools.......................................8TASK 4..........................................................................................................................................11P5. Compare ways in which organisations could use management accounting to respond tofinancial problems......................................................................................................................11CONCLUSION..............................................................................................................................13REFERENCES ............................................................................................................................142
INTRODUCTIONManagement accounting is a set of skills that presents the accounting information in sucha way that it can assist the management for a better understanding of accounts to prepare andformulate the policies and decisions for the organisation (Abdel-Kader, 2011). It is also knownas Cost Accounting or Managerial Accounting. Management accounting is totally used forinternal purpose and not mandatory by law. Some tools are used in and assist the management indecision-making. In this report, to better understand the topic of relevant topic smallmanufacturing Heatrod Elements Ltd is selected (About Heatrod Elements Ltd, 2019). Therespective company manufacture household heaters at reasonable prices. The overall report shows the understanding about management accounting system andreports to specific company. Report also covers the range of management accounting techniquesused to calculate net profit. In addition, various planning tool and accounting tools are discussedthat help to overcome different financial problem. TASK 1P1 Management accounting and various types of essential systems. In current era, there is a need of systematic approaches by internal manager that use tomanage and control the basic need of business. Management accounting is a detail process that isused to collect, analyse, measure, evaluate meaningful financial information and posting them incorrect accounts so that valuable decision is made to improve and increase profitability ofbusiness operations. The concept of management accounting is totally different from financialaccounting such as financial accounting is procedure of recoding, summarizing and reporting thecrucial business transaction within income statement, cash flow and balance sheet happing fromdifferent operation in a specific time. There are various types of important system tomanagement accounting that are discussed underneath: Price optimisation systemPrice optimisation system is a mathematical analysis that contains the information about howthe demand of a product or service varies by the variation in price (Akbar, 2010). It records theinformation and then applies it on cost and inventory to aid in deciding the price that improvesthe profit. For collecting the information and observing costumer behaviour on different pricing,different channels are used. In Heatrod Elements Ltd this system helps to set the best prices of3
heater so that maximum number of customer can purchase them as per there need. This alsohelps company to grow profit and provide strength to increase production. Cost accounting systemCost accounting system is mostly used by manufacturing industry. Cost accounting is atype of accounting in which the cost of production is calculated for valuation of inventory,profitability and cost control. In this accounting system, a proper record of inventory through thevarious stages (i.e. raw material, work in process, finished goods) is maintained. Thus thissystem helps selected company to determine the total cost involved while producing valuableproduct. Job costing systemJob costing is a type of cost accounting where cost of a single unit has been calculated.When a small contract or a production of a specific product has been manufactured by the firm,the method is used for valuation of the product is called job costing. This method is mostly usedin the firms that provide customised product and services. In context of Heatrod Elements Ltdthis system is used to determine the number of worker involved in production unit and alsoascertain the cost incurred by company on these jobs. This helps them to fix the prices of heateraccordingly in order to cover overall expenses and maintain a good profit margin. Inventory management systemInventory management system is a system that contains the procedure of maintaining andoversees the inventory of the firm (Callahan, Stetz and Brooks, 2011). It is important for a firmto maintain and track a record of the inventory whether it is raw material, finished stock inwarehouses, goods dispatched for delivery to vendors or customers. Inventory is an importantasset for the firm and it is necessary to maintain record of it. For this purpose, so many hardwareand software are used by the firms.Benefits of management accounting systemSystem Benefits Price optimisation systemIt provides quality products with minimumprice to customers. Respective company canalso get to know the maximum profit withminimum costInventory management systemIt controls the cost of inventory stock and4
Found this document preview useful?
You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss
Paid Plans
Free Plan
Single Unlock
Monthly Plan
Yearly Plan