Management Accounting : Sollatek (UK)
Added on 2020-10-23
17 Pages4322 Words247 Views
Management Accounting
Table of Contents
INTRODUCTIONIn the present scenario, it has been found that most of the companies are looking for aneffective system that can provide them valuable ways to record their financial transaction inproper manner. Management accounting is basically administration of all the accounting relateddata are recorded, summarise, communicate and evaluated before posting it into their respectivestatements. The primary motive this report is to known about various tools and techniques whichare used by the accountant while analysing the performance of “Sollatek (UK)”. It is privatelimited company which is founded in 1983. This project is providing specific information aboutvarious types of accounting and reporting system used by the company in managing theirfinancial transactions. Use of different costing methods that can help manager of Sollatek todetermine net profit of the company. Merits and demerits of using planning tools are also beingdiscussed under this report. Certain financial issues and their appropriate ways to resolve thoseproblems are covered under this project effectively (Carlsson-Wall, Kraus and Lind, 2015). TASK 1P1:Definitions of MA:Institute of Management Accountants (IMA): Management accounting is a professionwhich includes roles and responsibilities performed by the management such as implementationof plans and policies, preparation of budget, adoption of accounting system etc. It drives anorganisation to achieve its desired goals and objectives within pre-determined time period. Institute of Certified Management Accountants (CMA): Management accounting is anintegral part of an organisation which supports them in achieving desired goals and objectivesthrough adopting an effective management system and preparing reports on regular basis (Christand Burritt, 2013).Meaning: Management accounting assist an organisation to achieve competitiveadvantage through taking corrective actions and plans in order to maintain financial position inmarket. It can be identified through preparing financial reports such as profit & loss a/c, balancesheet, cash flow statement etc.In every business organisation, it has been seen that there is need of accounting systemwhich will assists management in carrying out their functions more efficiently. Any form ofaccounting which allow a corporate to be conducted more properly is considered as management1
accounting. It is related with accounting data that can be helpful in future decision making. Themain objective of using management accounting system is to control and manage all theirbusiness transactions that are being done within “Sollatek (UK)”. It has been analysing thatmanager uses these system for effective policy that is taken into account for organising regularfunctions and activities that are undertaken by the company. It consists of different accountingmethods and tools that clubbed with specific skills and ability to manager organisationalactivities. Price optimisation, cost accounting, inventory management system etc. are suchaccounting systems which can be adopted by Sollatek (UK) Ltd.. In order to get manyadvantages some of which are given as under:Importance of using MA:Achievement of loyalty of targeted people: Management accounting systems such asprice optimisation, inventory management system etc. assist Sollatek (UK) Ltd.. in meetingneeds and requirements of targeted people on time through offering quality and safety electricalproducts at an affordable prices. This will help in achieving loyalty of customers which directlyenhances the sales and profitability of company (Dillard and Roslender, 2011).Measurement of performance: It assist management in making an effective decisionsrelated with investment of funds in execution of different business activities. For example, costaccounting system help management in preparing budget which decreases the chances ofwastage of funds used in production process.Effective management control: Management accounting system assist management toallocate cost to production of individual or group of products. It help in minimising the cost andwastage due to having sufficient information about the cost incurred in past project activities. Management accounting systems:Price optimisation system: Such accounting system help in identifying the actualperception of targeted people related with the price they willing to pay to company in exchangeof its products and services.Thus, it is considered as effective management accounting systemwhich assist an organisation to achieve loyalty and retain targeted clients with company forlonger period of time (Johnson, 2013). This will help management in setting up an effectivepricing policy after determining the buying behaviour of its targeted customers. It will furtherhelp company in restricting targeted people not to shift to their rivals products through providingquality and safety electrical products at an affordable prices. For example, slightly increase in2
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