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Management Accounting Systems and Their Types

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Added on  2020-10-22

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Management Accounting INTRODUCTION 1 TASK 11 Management accounting system along with their types1 Different methods of management accounting reporting 4 Integration of management accounting systems in organisational process 5 TASK 25 Costing methods along with the net calculation of net profitability 5 TASK 39 Different planning tool used for budgetary control with their advantages and disadvantages9 Types of budget techniques10 Analysis of various planning tools and their application 11 TASK 411 Compare with other organisation regarding to solve financial issues 11 Critical analysis of financial issues12 Evaluation of

Management Accounting Systems and Their Types

   Added on 2020-10-22

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Management Accounting Systems and Their Types_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Management accounting system along with their types.........................................................1Different methods of management accounting reporting.......................................................4Integration of management accounting systems in organisational process............................5TASK 2............................................................................................................................................5Costing methods along with the net calculation of net profitability......................................5TASK 3............................................................................................................................................9Different planning tool used for budgetary control with their advantages and disadvantages9Types of budget techniques..................................................................................................10Analysis of various planning tools and their application.....................................................11TASK 4..........................................................................................................................................11Compare with other organisation regarding to solve financial issues..................................11Critical analysis of financial issues......................................................................................12Evaluation of planning tools for responding to financial issues...........................................13CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14APPENDIX....................................................................................................................................15
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INTRODUCTIONManagement accounting may be referred as the process of planning, recording,summarizing and interpreting financial as well as non-financial data in order to facilitatemanagers to make a valuable decisions for the betterment of an organisation (Managementaccounting, 2018). Thus, they are playing an important role in growth and success of companyby preparing reports containing statistical as well as financial information that will help inanalysing the actual financial position of an organisation which enables manager to make effortsfor further improvements. The present assignment is based on Rowlinson Knitwear which isengaged in manufacturing clothing products for school and corporate professionals in UK . Theproject discusses the different types of budgets along with the budgetary control planning tools.In addition with this, management accounting and reporting systems are also covered under thisreport along with their beneficial outcome to company. The project also described the costingmethods with proper illustration of calculation of net profitability using marginal and absorptioncosting methods. Planning tools to resolve financial issues are also summarised under this reportalong with the comparison to other company engaged in similar sector.TASK 1Management accounting system along with their typesOrigin of Management Accounting: This is the concept which came into existence in theyear 1950. It first formally described in a report entitled “Management Accounting” in 1950. Thereport was first published by the Anglo American Council of Productivity ManagementAccounting Team after its visit to US in the first quarter of 1950.Management accounting system is the process of recording and managing valuableinformation related with financial as well as non-financial data in order to facilitate managers ofan organisation to make an effective decisions and suitable plans for the betterment of anorganisation. For this, mutual support by different departments is necessary as the reliability andaccuracy of information of different divisions are much depends on the managers of differentdepartments. Such departments includes production, marketing, finance, human resource etc.whose informations of their operations are recorded at one place (Amidu, Effah and Abor,2011).1
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Therefore, it is important for Rowlinson Knitwear to establish a better managementaccounting system in order to acquiring sufficient knowledge about the actual position ofcompany at present in competitive market.BasisManagement accountingFinancial accountingMeaningIt provides accurateinformation to the managers inorder to make them more easyto frame suitable policies forthe betterment of anorganisation.It is the process of maintainfinancial records so as to assiststakeholders in identifyingactual financial position ofcompany.Is it compulsoryNoYesInformationIt includes monetary and non-monetary data.Monetary information.ObjectiveTo make easy for managers tomake an effective decisions.To assist investors to acquireknowledge about the actualfinancial position of company.UsersIt can be used by internalmanagers only.It can be used by both externaland internal.Time frameIt is prepared on annual basisIt depends on the requirementof company.Various management accounting systems:Management accounting systems is considered as an important tool which enablecompany to determine the reliable information of various departments so that an effectivedecisions and suitable plans can be made for the achievement of organisational goals andobjectives.Cost accounting system: It is an effective system which determines the managementabout the actual cost required to be incurred by various divisions and process so that an effectivebudget will be prepare for future project activities. By using this system, the manager ofRowlinson Knitwear is able to record, categorise and estimate the total cost which will beincurred in future business operations so that maximum profitability can be achieved (Ax andGreve, 2017). Such system is categorised into three types which includes normal, direct and2
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standard cost. Such system assist an organisation in handling material, labour and overhead costsaccurately so as to determine accurately the unit cost. Rowlinson Knitwear is engaged inmanufacture school and corporate wear garments due to which such system brings morebeneficial outcome in terms of identifying the cost and budget to execute different functions ofbusiness. It minimises the expenses as well as enhanced profit of company. Types of costs aregiven as under:Direct cost: Such kind of cost in inconsistent and fluctuated on the basis of trends andchanges in the market. Such price is wholly attributed for manufacturing products and creatingservices.Standard cost: It defined as the process of comparing desired cost with actual cost in theaccounts and records. It enables management to identify the deviations which can restrictemployees to execute activities within allotted cost.Benefit: It assist management of Rowlinson Knitwear to prepare accurate budget forfuture business operations after analysing the actual cost incurred in previous year. Itminimises the wastage of funds which makes positive impact on the profitability ofcompany (Drury, 2013).Inventory management system: It is such system related which brings awareness towardsmanagers about the actual level of inventory the company have at present. It is further classifiedinto two parts which includes periodic and perpetual system. Periodic system is adopted torecord the transactions related with inventory on monthly or weekly basis. On the other hand,perpetual system is adopted to update the managers after the selling or acquiring products.Rowlinson Knitwear is following FIFO and LIFO analyse which makes easy for managers to getinformation about available resources with company. It assist managers to decide whether thecompany have sufficient amount of inventory or should order from the suppliers in order tocontinue business operations smoothly. It can facilitate company to meet customers needs andrequirements on time due to which the loyalty of customers can be easily achieved.Benefits: It facilitate Rowlinson Knitwear in maintaining adequate level of inventory asas to make easy for managers to take orders of products from the customers and supplythem on time. It establishes trust and gain loyalty of customers towards company forlonger period of time.3
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