Management Accounting of KEF Ltd : Assignment

Management Accounting

INTRODUCTION
Management accounting is the financial statesman firm preparing management reports to
identifying the accuracy in financial and statistical information. It is helpful for analysing the
cost of the firm by identify the internal financial position and records of the firm (Nishimura,
2019). Thus, by making the statements it helps to managers for decision-making process in order
to achieve overall objective of the firm.
The present report is based on management accounting of KEF Ltd. The report will cover
the various topics like different types of management accounting systems, different methods
used for management accounting reporting. Thus, report will cover various factors such as
benefits of management accounting systems, explain the benefits and disadvantage of different
types of budgeting tools used in budgetary control. Lastly report will describe how organizations
are adapting management accounting systems in order to reduce financial problems.
TASK 1
P1
Management accounting is the tool of managing the business financial activities. This
accounting and financial statements helps to recognize the profit and non-profit position of the
firm. Therefore, this accounting system helps to manager of the firm that they easily take the
decision regarding funds and other activities (Nishimura, 2019). In other words, The
management accounting contains different concept and methods which are necessary for the
enterprise because these methods identify the actual performance of the firm. Therefore, to use
these statements in the business for planning in effective manner and to choose the best
alternative action of business and also control by the differentiates between actual and standard
performance and evaluation and interpretation.
types of management accounting systems
Management accounting tool refers to identify the overall cost of the firm. It is the
process which is used by every enterprise to identify the particular cost of the department. It is a
tool that KEF Ltd used in the business in order to determine overall cost of product which is for
identify the actual performance or profitability of the firm. Therefore, firm identify the actual
cost of the production than they estimate the budget to decrease the expenses of product and
control cost and valuation of inventory. There are different types of management accounting
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system such as — Inventory management system, cost accounting system, Job costing system
etc.
Cost accounting system — This system is the framework which helps to identify the production
cost of the KEF Ltd. Cost accounting system is the best which identify the profitable product or
non-profitable products (Nasreen and Baker, 2019). Therefore, by tracking the raw material and
identify the actual cost of the raw material it helps to Estimating the accurate cost of products.
This accounting works through managing of raw materials by going through different stages of
production and go slowly into finished goods. Therefore, KEF Ltd prepare their financial
statements by debit and credit in accounts the closing value of materials inventory, work-in-
progress and finished goods.
Inventory management system — This management system is managed the inventory accounts
of the firm. That means firm order the inventory according to the demand of the product.
Therefore, this system helps to manage the raw material by tracking the supply chain and
operations department of the KEF Ltd. Thus, this system contains different production
departments like retail to production, shipping to warehousing any many more. In this system
there are different statements which manage the inventor such as ; LIFO, FIFO and weighted
average statements. These statements help to KEF Ltd to makes the better decision related to the
raw material and sales of the product.
Job costing system — This system includes the control process of information which is allied
with cost along with particular job of production and service. There are different kinds of
information needed when identify the cost of production, which is direct labour, overhead and
direct materials. Thus, It helps to identify the cost of production of particular departments of
KEF Ltd.
P2
Management budget are those budgets which describe the actual performance of the firm.
Manager of the firm makes this budgets to identify the actual cost and reduce the extra cost of
the production. These report gives the internal information of the firm, managers use this report
to takes the better decision and makes better planning. Therefore, These reports explain the
internal data which is received through top management of the firm like, auditors, financial
accountant, these statements are used by the enterprise for effective planning, organizing,
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