Management Accounting - JOJO

Added on - 21 Feb 2021

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ManagementAccounting
INTRODUCTIONManagement accounting is an idea that involves an assessment of inner managementcompany operations that facilitates smart decision-making. It will be regarded as cost accountingalso, which assists in analyse the organization's expenses of further supporting the developmentof financials depicting the workings of the organizations ' inner departments. This will includethe use of accounting regulations to determine the economic and statistical data that furthersupports the efficient control of company activities resulting in the achievement of organizationalgoals within a specified time-frame (Al-Mawali, Zainuddin and Nasir Kader Ali, 2012). This willenable the organizations ' inner stakeholders to match their concerns completely with theorganization's processes to achieve effectiveness in their very own job. Oshodi Plc ismanufacturer in UK that specializes in production of fruit juice named “JOJO” across whole agegroups. The primary goal behind preparing of this study is providing data about the relationshipand working of inner departments for sound decision-making to the organization's internalshareholders.This study includes the vital content about management accounting and requirements ofdistinct kinds of accounting management systems, accounting management's reports andapplying of proper cost analysis techniques in the forming of income or revenue statementthrough marginal and absorption approaches. The study also analyse planning tools'disadvantages and advantages in structure of budgetary control and utilisation of managementaccounting systems to address and short out economic issues.TASK 1P1 Management accounting and essential requirements of management accounting systems:Introduction: Management accounting is a branch of accounting which deals with thepresentation of key financial statements and information to the management. The managementuses financial information to draw inferences about the performance of the organisation, anddesign strategies for the future endeavours (Management Accounting.2018). Oshodi PLC is abeverage manufacturing firm engaged in making fruit juice under the brand 'Jojo fruit juice' . AtOshodi PLC Management Accounting systems is made up of various accounts and sub systemswhere all such systems work together in mechanising critical information about the businesswhich the management uses to design policy framework.1
Management Accounting: It is a fundamental science which deals with preparation ofannual financial statements using standards, providing just and fair financial data to themanagement to study the behaviour of organisation and the designing policies and strategies forthe upcoming business periods. It is in complete contrast with financial accounting, since bothhave different purposes. Management accounting is concerned with internal executives only ,while financial accounting is the information provided to the external stakeholders.Management Accounting systems: Management accounting is a fundamental approachto deal with the financial information of an organisation which is supported by several functionalsub-sets. These sub-sets include various systems such as inventory management system, costaccounting system, price optimisation system etc (Abdelmoneim Mohamed and Jones, 2014).These all systems have individual characteristics and functions of generating relevantinformation belonging to their core principles. These sub systems has helped Oshodi Plc foryears in devising cost cutting mechanisms, achieving higher net profit margins and ensuringprofitability index at high. These systems are discussed in detail as follows :Cost accounting system :This system is used to determine the various costs incurred onthe production of Jojo fruit juice as per the volume. There are different kinds of costs associatedwith the production function such as fixed costs, variable costs, direct and indirect costs andoverhead expenses. Costing system helps in allocation of costs to each input working in thepreparation of final product as an internal factor of production. By allocating costs , it would beeasier for the management to identify the final price for the product.Inventory management system :This system deals with the management of stock, rawmaterials, and the flow of goods from the initial stage of preparation to the final stage ofdelivery. It helps the Oshodi Plc inventory manager in procuring the required raw materialsneeded for the preparation of juices based on the ordering capacity. It also helps in maintainingaccurate supply chain and distribution channels to all the retailers and distributors by keepinglive record of the present flow of goods. Reordering of raw materials is done by Economic orderquantity method at Oshodi plc.Price optimisation system :This system helps the Oshodi plc's management indesigning pricing strategies for the range of products. It also helps in analysing price of eachactivity which supports the management with the insights on the areas where extra cost could besaved from dilution. It is based on the mix of cost model and sales model. The combination of2
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