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Management Accounting in the Conduction of Business for Ryder Architecture

   

Added on  2020-07-22

24 Pages5787 Words219 Views
MANAGEMENT ACCOUNTING

Executive summaryThis report is based on the implementation of management accounting in the conduction ofbusiness for Ryder Architecture. The various aspects of management accounting and theimportance of management accounting will be discussed in this report in detail. Furthermore,two tables have been created for the purpose of calculations which are used to identify thedifferences between marginal and absorption costing techniques of management accounting.Page 2 of 24

Table of contentsIntroduction.................................................................................................................................................5Task 1...........................................................................................................................................................5Introduction.................................................................................................................................................5Description of management accounting and highlighting the necessary requirements of various types of management accounting systems to the chosen scenario..........................................................................6Lean accounting.......................................................................................................................................7Throughput accounting...........................................................................................................................7Traditional accounting.............................................................................................................................8Transfer pricing........................................................................................................................................8Inventory management system...............................................................................................................8Benefits of Management Accounting..........................................................................................................8Plan for the future...................................................................................................................................9Decision making for the future................................................................................................................9Predict cash flow......................................................................................................................................9Reducing cost of production and increasing rate of return.....................................................................9Description of the various methods used for management accounting that can also be beneficial for the chosen scenario.........................................................................................................................................10Financial Planning..................................................................................................................................10Evaluation of the financial statements..................................................................................................10Controlling budget.................................................................................................................................10Marginal costing....................................................................................................................................10Making decision.....................................................................................................................................11Statements of cash flow........................................................................................................................11Representation of graphs and statistics.................................................................................................11Conclusion.................................................................................................................................................11Task 2.........................................................................................................................................................12Introduction...............................................................................................................................................12Computation of the net profit percentage using Absorption Costing method..........................................12Computation of the net profit percentage using Marginal method..........................................................13Page 3 of 24

Differences between the Marginal and Absorption management accounting techniques........................15Conclusion.................................................................................................................................................16Task 3.........................................................................................................................................................17Introduction...............................................................................................................................................17Evaluation of the application of planning tools of budgetary control and understanding their advantages and disadvantages.....................................................................................................................................17Budget...................................................................................................................................................17Master budget.......................................................................................................................................17Operating budget...................................................................................................................................18Cash flow budget...................................................................................................................................18Financial budget....................................................................................................................................18Behavioural implications of budgeting......................................................................................................18Pricing strategy......................................................................................................................................19Supply and demand...............................................................................................................................19Applications of the various methods of Management accounting that can be used by organisations to tackle financial issues................................................................................................................................19Benchmark.............................................................................................................................................20Key Performance Indicator (KPI)............................................................................................................20Budgetary targets..................................................................................................................................20Financial governance.............................................................................................................................20Management accounting skills and their usefulness.............................................................................20Conclusion.................................................................................................................................................21Conclusion.................................................................................................................................................21Reference List............................................................................................................................................22Page 4 of 24

IntroductionManagement accounting is a technique used by the organisations to retrieve the correctdata regarding the amount of sales in a financial year, stock in hand or left in the inventory, rawmaterials bought by the company, salary and wages of the staffs and so on. Therefore, it can besaid that applications and contributions of management accounting is huge in a businessorganisation. In this report, the benefits of the applications of management accounting will bediscussed along with the advantages and disadvantages of the various tools of managementaccounting.The report is conducted as the General Manager of a company and the discussion onmanagement accounting of the company will be identified and evaluated in details. For betterunderstanding of the project the company that has been chosen is Ryder Architecture, which is asmall-scaled enterprise of the United Kingdom and the impact of the applications of managementaccounting on the business conduction process and managing other records will be discussed.Ryder Architecture is a company which is aiming at improving the internal and the externalarchitectural designs of properties of their clients and currently they are focusing on enhancingtheir skills to serve their clients better.Task 1IntroductionThis portion of the report will focus on the management accounting system of RyderArchitecture and will also emphasise on the various types of management accounting that can beincorporated by the company to be more effective in maintaining their books of accounts andalso planning on monitoring their allocated budget. Furthermore, the benefits of managementaccounting used by Ryder Architecture that can help the company grow in the market will alsobe discussed in this portion.Page 5 of 24

Description of management accounting and highlighting the necessary requirements of various types of management accounting systems to the chosen scenarioManagement accounting is a very effective tool that can be used by the companies in order tomaintain their books of accounts and also helps the management of the company to takeimportant tactical decisions that can benefit the company in the market in the long run. In thisreport the company in focus is Ryder Architecture and the management accounting methods thatcan be used will be discussed. Furthermore, this tool has also been very effective in monitoringthe records for the company and also monitors the use of the allocated budget efficiently(Herbert and Seal, 2012).There are four different types of management accounting, they are as follows:Figure 1: Different types of Management Accounting(Source: As developed by researcher)Page 6 of 24

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