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Management Accounting Report - Harrods Limited

   

Added on  2020-07-22

19 Pages5107 Words28 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSTASK 1............................................................................................................................................1P1 Describing various systems of MA which are considered by Harrods Limited at theworkplace...............................................................................................................................1TASK 2............................................................................................................................................3P3 Preparing income statement (I/S) by taking base of two techniques of MA i.e. marginal aswell as absorption costing......................................................................................................3Segregation between marginal and absorption costing..........................................................5TASK 4............................................................................................................................................6P4 Advantages and disadvantage of different budgeting tools.............................................6. Managers may have the knowledge of other department but they don't know the strategic goalsand financial objectives of the overall organisation. ....................................................................10P5 Comparing how organisations are adapted management accounting techniques to overcome financial crisis.............................................................................................................10CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13

TASK 1P1 Describing various systems of MA which are considered by Harrods Limited at the workplaceBusiness ReportFrom: Management accounting OfficerTo: General ManagerHarrods LimitedSubject: Systems of management accountingDate: 6th December 2017IntroductionA procedure through which financial plans are prepared as well as implemented andevaluated at the workplace is referred as management accounting. It is used by only internalstakeholders of the selected business which include managers, owners and employees. Further,it comprises with various kinds of approaches as well as systems which are presented throughthe current business report. In addition to this, essential needs of MA's systems under HarrodsLimited are described throughout the report. Systems of MAIllustration 1: Systems of management accounting(Source: Messner, 2016)1

Cost accounting system: At the workplace of every organisation, cost is very essential aswell as crucial part. The reason behind this is that, expenses create direct impact on profitabilityand business perfection of Harrods Limited. On the basis of this specific system, accountantable to make calculation of total expenditures incurred for producing and selling retail items.Along with this, the expenses are to be shows by segregating in different ways like fixed,variable, production, semi-variable etc. In addition to this, key components involved under thissystem are like overheads, labour as well as material. Moreover, it consists of target costing,environmental, activity based, throughput, standard cost accounting etc (Messner, 2016).Considering to this, cost incurred for selling and distributing every unit is determined easily inHarrods. Therefore, decisions for considering pricing method is taken in proper and fruitfulmanner. Hence, essential need of cost accounting is to derive cost of production and makecorrection accordingly, if required. Inventory management system: Stock at the workplace is highly needed to utilise andmanage properly as it is very crucial part of the firm. Higher the inventory at the end of yearleads to reduce capability of business of generating sales and enhance stock turnover ratio at thefiscal period ending. On the basis of this mentioned system of MA, Harrods Limited able tomanage as well as decline total stock available within firm. When this specific aspect decreasedconsistently then firm able to make more sales and turnover in financial year. As revenuegenerated in more proportion, then the retailer easily able to boost up its turnover ratio(Inventory Management, 2013). Therefore, profit generation capacity of the firm will beimproved up to a greater extent in the retail segment of UK. Apart from this, for managing stockit is essential to analyse its total value. Further, there are three methods considered for inventoryvaluation i.e. weighted average, LIFO as well as the FIFO. Price optimisation system: Along with the stock and cost, price is another key factor ofthe company which must be determined in an appropriate manner. A monetary factor at whichretail products and services are to be sold among customers is termed as price. It is notnecessary that accountant of Harrods Limited charge one particular price of products up to longterm. This aspect differ within sometimes which leads to derive purchasing and consumptionlevel of consumers. At different level of Central Systemcharges, number of customers alsodiffer by which sales and profit of the retailer vary. Furthermore, basic need of price2

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