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Management Accounting Report - R.L. Maynard Ltd

   

Added on  2020-07-22

19 Pages5363 Words70 Views
MANAGEMENTACCOUNTING

INTRODUCTIONA method through which effective financial plans or schedules are prepared at theworkplace for taking fruitful decisions of business is known as management accounting (MA). Itconsists of wide range of methods, techniques and tools which are supportive for each entity. Forthe present study, R.L. Maynard Limited firm is taken as base which is a small businessenterprise and operating in construction industry of UK. The reason for selecting this firm is that,it has less than 50 employees and generates annual turnover less than £500,000 (R.L. MAYNARDLIMITED, 2016). The present assignment shows various systems along with methods that areconsidered for reporting by chosen firm. Further, requirements and needs of such systems andtechniques are also explained in the project. Apart from this, income statements are formulatedwith the help of two methods i.e. marginal as well as absorption costing. Besides this, planningtools which are taken into account for controlling budgetary procedure are described with meritsand limitations. At the end, some systems which are used by R.L. Maynard Ltd for respondingfinancial obstacles are explained. TASK 1P1 Explaining MA and its systems with reference to R.L. Maynard LimitedBusiness ReportFrom: Management Accounting OfficerTo: General managerR.L. Maynard LimitedSubject: Different management accounting systemsIntroductionAt the internal environment of any business various decisions are required to take in proper andfruitful direction. So that, it will be able to fulfil its desired objectives related to any branch ofthe enterprise. In the present study financial aspect or area isused where several decisions areneeded to make like cost, margin, expenses etc. Moreover, the report describes about somemethods and their key requirements with context to R.L. Maynard Limited. Those systemswhich are undertaken by the small enterprise are like cost accounting, job costing, stockmanagement and price optimisation.1

Various systems of MACost accounting system: It is framework where cost of the products are analysed which incurredto manufacture goods are services is referred as cost accounting. It is one of the highly usedway because it gives details about the expenses after segregating in structured manner. R.L.Maynard uses this aspect for assess amount which spent to build specific building or house orany other. Basic need due to which it is undertaken is for analysing position of the profitability,valuing level of stock etc (Ismail and King, 2014). Further, on the basis of total costs themanagement easily able to take pricing decisions which is one of attractive point of customerstowards the enterprise. It covers basically three kinds of the expenses which are like actual,normal as well as standard. Inventory management system: An approach where stock levels are tracked using specificsoftware in the firm and analyse orders, sales as well as deliveries is known as inventorymanagement. In short, when stock is needed to manage in business of R.L. Maynard withproper way then this system is considered. It is necessary to reduce this aspect because it leadsto affect efficiency or entity in negative direction. Therefore, stock turnover ratio also decreasedwhich is sign of declining the business performance in construction industry. Further, to knowvalue of stock in terms of amount and units then R.L. Maynard incorporates basic three wayswhich involve LIFO, FIFO and weighted average. Price optimisation system: MA includes pricing decisions also which is used to charge amountof one product from the consumers with higher ratio. As per this system, profitable decision ofpricing of each building or house is taken in beneficial direction (Bruynseels and Cardinaels,2013). The construction firm i.e. R.L. Maynard changes its prices on specific time whereresponse of customers also fluctuate up to the greater level. A particular amount at which whenmore purchasers of the house are attracted then that will be used as price on permanent basis.Hence, key requirement of price optimisation system in R.L. Maynard enterprise is to opt apricing level in the business to make it profitable. Apart from this, some strategies are also formaking decisions regarding to the pricing which are market penetration, cost, competitor andmarket based, cost plus, skimming etc. Job costing system: When an enterprise produces different range of the products and servicesand it wants to know cost associated with each batch then job costing is applied. The R.L.2

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