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(solved) Management Accounting System : PDF

Added on - 08 Dec 2020

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1ACTIVITY 1....................................................................................................................................1Part (A)........................................................................................................................................1Part(B)..........................................................................................................................................5ANNEX (A) Question 2...............................................................................................................5ANNEX (B)................................................................................................................................6ACTIVITY 2....................................................................................................................................8PART(A)......................................................................................................................................8ANNEX C..................................................................................................................................10PART (B)...................................................................................................................................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is a type of accounting system that is related to internalmanagement of the organisations. It consists both kind of information including financial andnon financial. Eventually, management accounting is a wide term which is being used by thecompanies to proper management of different functions (Abdelmoneim Mohamed and Jones,2014). This project report describes in detail about this accounting system including its differenttypes, their benefits and drawbacks. As well as various planning tools in context to performancemanagement. Apart from it, report states about the role of management accounting in solving thefinancial problems. Herein, the L&B haulage civil engineering contractors limited company isselected. It was evolved thirty years ago and this company provides services like civilengineering contracts, recycle and waste management project etc. Majorly this company deals inconstruction project.ACTIVITY 1.Part (A)Management accounting system and their essential requirement:In the context of internal management of the organisations, management accounting playsa crucial role (Armitage, Webb and Glynn, 2016). This is why because managers use all theneeded information from this accounting system. The basic mean of management accountingsystem is the monitoring, analysing, interpreting the financial data in order to take importantdecisions. One of the best feature of this accounting system is that it consists monetary and nonmonetary information which becomes basis of internal decision making. Additionally, thisaccounting system does not require any audit as well as it is not mandatory. The L&B haulagecivil engineering contractors limited implements this accounting system for proper managementof their various kind of civil and construction projects. The management accounting includes awide range of accounting systems that are being used by the companies for their different kind offunctions and applications. Herein, the essential requirements of the different accounting systemsare mentioned as below:Price optimisation system- The price optimisation system is a kind of accounting systemthat is related to the determination of right price of different kind of products and services(Boučková, 2015). As well as this accounting system provides a basis for analysing the
customer reaction on different pricing levels. Due to this companies enables to evaluatethe impact of change in price level. Additionally, price optimisation system helps inproviding guidance in assigning accurate level of price which is suitable for both to thecustomers as well as for company. Herein, the context of the L&B haulage civilengineering contractors limited they use price optimisation system for assigning rightprice of different civil projects. Due to this, they analyse their clients reaction on thedifferent pricing level. Apart from it, price optimisation is majorly required for fixing thelevel of price that can satisfy both to the customers and company.Inventory management system- Inventory management system is an accounting systemthat is related to the proper management of the raw material as well as of finished goods.Due to this accounting system, companies can check movement of goods in entire supplychain system. Additionally, it helps in checking the level of raw material and preparedgoods in the ware houses. In the context of L&B haulage civil engineering contractorslimited company this is useful in checking the quantity of raw material and because ofthis they can purchase right quantity of material of construction. As well as thisaccounting system is required for ensuring the quantity of goods and material so thatcompany can order for new material accordingly. Eventually, in the absence of thisaccounting system companies can not asses the need of purchasing new material and thatcan result in lose (Cleary, 2015).Cost accounting system- As the name assists this accounting system is related to thecalculation of cost of different products and services. The main purpose of thisaccounting system is to evaluate the profitability of products and services by comparingcost with the actual money earned. This accounting system is required for analysingwhich products are profitable and which ones are not. L&B haulage civil engineeringcontractors limited applies this accounting system to check the cost of different projectsand to evaluate the profitability of each projects. With the help of this accounting system,in the end of any project, they can check that which civil project is beneficial and whichone is not. Basically, this accounting system includes two accounting systems which areas follows:Process costing- This costing system is useful for evaluating the cost at different stages. Like inthe above mentioned company, they can check the cost at different step of construction projects.
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