Management Accounting System and Its Application: Assignment (Doc)
Added on 2021-02-19
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MANAGEMENTACCOUNTING SYSTEMAND ITS APPLICATION
INTRODUCTIONManagement accounting is a special accounting branch which is used by differentcompanies in order to take decisions based on the accounting information to enhance theefficiency and productivity of company and management of firm(Maas, Schaltegger andCrutzen, 2016). The present report is based on company KEF Ltd is of manufacturing sector &is of medium scale of business.The report will start by covering the different types of management accounting system inpractice. Next it will discuss some of the various types of management accounting reportinghelpful for the companies in recording information and relevant data. After that it will highlightsome advantages of management accounting with their integration along with reporting ofmanagement accounting. Moreover, the report will demonstrate advantages and disadvantages ofdifferent planning tools along with their use and application within the company. At last thereport will discuss the use of management accounting system in solving financial problems alongwith analysis that how management accounting leads company towards growth and success.TASK 1Management accounting and types of management accounting systemThe management accounting refer to a series of steps which assist the management ofcompanies with intention of taking decisions with the assistance of analysis of the financialstatements and accounting information in order to manage the working and operations of thecompany. Management accounting system is a system which aids the company in improving theoverall productivity of the company to attain higher profitability which will result in increase inmarket share of the company. The different types of management accounting system is used byKEF Ltd is discussed in the adjoining points below-Cost accounting system- this type of system is used by KEF Ltd in order to estimate thecost of product to analyse profitability, control of inventory and cost valuation. This accountingsystem records all types of cost whether direct or indirect and records all the cost since the rawmaterials are bought and it passes through different stages of production and till it turns intofinished goods (Cooper, Ezzamel and Qu, 2017). The system of cost accounting also helpscompany in determining the cost of various different departments operating in KEF Ltd. themajor components of cost accounting are direct and indirect material, direct and indirectoverhead, labour.
Inventory management system- the inventory refers to as the stock of the company. Thistype of system helps KEF Ltd in tracking the stocks available and needed, sales, deliveries andmany more related item. This system aidto companies in decisive the requirement of stock andwhen it needs to be reordered without any delay is done by inventory management system. Thissystem provides aid in managing chain of supply and also helps in placing order on time beforethe inventory reaches zero level (Nielsen, Mitchell and Nørreklit, 2015). The different types ofinventory management techniques are like LIFO, FIFO, ABC analysis, Weighted averagemethod, Just- in- time method and many more different type of similar methods.Job costing system: The job costing method involves process of accumulation ofinformation relating to all the departments within the business. This is an effective and efficientsystem that provides aid in predicting and analysing cost which is attached with job that is carryout at production time. This method focuses on the accumulation all cost to per unit of theproduction. Job costing provides aid to management of the company KEF Ltd to track expensesand undertake proper record for the product.Methods for management accounting reportingManagement accounting reporting is a system wherein all the data and relevantinformation are recorded in form of report or crucial documents which outlines completeworking and operations of the business . These reports assist accountant of KEF Ltd inmeasurement and evaluation of the performance of the company as all the data is recorded in thevarious types of reports. The different management accounting reports used by KEF Ltd arediscussed in the following points-Budget report - These reports arevery important and necessary in managementaccounting. This is because of the reason that it plays a critical part in measuring and evaluatingthe performance of the company. This report helps the owner and management of KEF Ltd inunderstanding the cost and the income sources and helps in controlling the cost so that the costcan be decreased and income can be appreciated.Performance report- these reports are created by KEF Ltd with intention of reviewingthe performance of the company and all the employees and staff at a particular point of time(Chiwamit, Modell and Scapens, 2017). These performance reports are used by the managers andaccountants of KEF Ltd in taking the key strategic decisions. These reports also helps the
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