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Management Accounting Reports

   

Added on  2020-02-03

15 Pages3732 Words56 Views
MANAGEMENT ACCOUNTING1

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INTRODUCTIONManagement accounting is a combination of several processes such as accounting,finance and management of business skills and techniques which are also crucial in terms ofadding value to the organization (Hopper and Bui, 2016). The information presented in theaccounts have many implications on the organization which are being stated in the presentresearch study. Thus, the present research study has been made on Dell which has severalhardware products for the computer system and which uses different management accountingsystem for the purpose of managing all business aspects. Therefore, in this respect discussion hasbeen made included regarding absorption and marginal cost which aids the business to managediverse aspects of the accounting procedure. Furthermore, researcher has also stated advantagesand disadvantages of types of planning that is used for budgetary control. TASK 1P1 Explain management accounting and give the essential requirements of different types ofmanagement accounting systems Management accounting can be defined as the process of preparing management reportsin order to get financial and non-financial information required by managers to take day to dayshort term decisions. Management accounting reports consist of company's available cash,revenues, sales, accounts payable and receivable etc (Messner, Becker, Schäffer and Binder,2016).The main aim of any business entity is to maximize its profit capacity and such objectivecan be attained through adopting specific financial planning. Dell has been emphasizing onmanagement accounting procedure for the purpose of identifying, analysing, recording andpresenting financial information to the management. This is useful to the internal management asthat aids in undertaking proper decisions for the business. Management accounting is very much different from financial accounting because itgives reports about company's internal investors or stakeholders (Nasseri, Yazdifar and Askarany,2016). In simple words we can say it is the application which provides useful information formanagement.Management accounting includes different kind of reports which are used to analysecompany's information. Some of which are:3

Cost Reports: Management accounting calculates costs of item produced. This is doneby taking all the cost of raw material, labour, overhead and all the additional cost get included inthe report.Budget Reports: Budget reports lists all the sources of revenues and expenses. In thiscompany tries to achieve al its goals and objective with the budget defined in formerly.Performance Reports: Performance report compares expenditures with respect torevenues. This report is calculated every year and it helps manager to calculate future demandand production as well as cost increase (Otley and Emmanuel, 2013).In Dell, the variance in demand and variance in supply determines the inventory of achannel. Channel inventory cannot be eliminated, but can be moved around, unless the reductionof variances takes place. Profitability management is used by this, the matching of selling anddemand of Dell on a monthly, weekly or daily basis. Hence, the need of inventories is reduceddue to sharp reduction in variances.Moreover, it can also be said that management accounting process aids Dell to plan andbudget the things so that resource capability can be maintained accordingly. With the help ofmanagement accounting, it is vital for Dell to plan and control the operations so that furtherdecisions can be made. Dell is using such procedure because that aids the business entity to focuson inventory management which can also assist in releasing the dead stock. Importance of management accounting essentialIdentification, analysis and communication metrics in cost accounting: The threebasic elements of accounting helps management to find out the most efficient use ofcapital resources, measuring the cost controls and communicating the informationthroughout the organisation (Renz, 2016). The accumulated cost reports are drafted andare discussed with the managers and external users. After getting all the information theabout the cost the management reallocate the capital; to improve efficiencies and toreduce costs.To identify the appropriate national economic measures for analysis: These reportsprovides economic productivity via standard measures known as gross domestic product.The relevant financial data is identified and analysed regarding cash flow and profit andloss statements and then communicated with the decision makers.4

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