(Solution) Management Accounting System : PDF
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Added on 2020-12-18
(Solution) Management Accounting System : PDF
Added on 2020-12-18
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Management Accounting
TABLE OF CONTENTINTRODUCTION...........................................................................................................................1LO 1- Management accounting and its requirement in management accounting system anddifferent method use in management accounting report.............................................................1LO 2- Prepare income statement by using marginal costing and absorption costing.................6LO 3- Advantages and disadvantages of planning tools used for budgetary control................10LO 4- Organisation adapt management accounting use to responding financial problem.......13CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
INTRODUCTIONManagement accounting is a process of accounting that provide necessary accountinginformation to manager that helps to formulating policies and decision making for accomplishthe organisation goals. This accounting system usually used for internal purpose and notregulated by any rules and regulations. It includes monetary and non monetary both which isused for planning, decision making and manage the strategies. Management accountinginformation using to evaluate management accounting system and management accountingreports of the company (Maas, Schaltegger and Crutzen, 2016). Present report based on Unicorncompany which is small medium enterprise and have only 50 clients and deals with many firslike the report will outline costing of TSR Pvt. Ltd.This report includes management accounting and essential requirement of various types ofmanagement accounting system. It consists of various methods of management accounting reportwhich is used by managers. It also includes marginal costing and absorption costing for costanalysis. It will explain about advantages and disadvantages of planning control tools ofbudgetary control and management accounting adapt by manager for respond financial problemsof the company.LO 1- Management accounting and its requirement in management accounting system anddifferent method use in management accounting reportManagement accountingIt is an essential part of accounting system that provide accounting information tomanagers so they formulate policies which helps in decision-making, planning, analysing,monitoring and controlling the activities of Unicorn. Accounting system used for internalpurpose that helps to enhance effectiveness and efficiencies of performance of Unicorn.Managerial accounting used for analysing profitability, breakeven point and forecast the factorsthat impact on business activities that helps to accomplish short term and long-term goals such asprofit maximisation, growth and build goodwill. It doesn’t require general acceptance accountingprinciple and audit also not mandatory. Managerial accounting focus on such area-Strategic management- manager prepare effective strategies for different functionaldepartment for enhance efficiency that leads to achieve goals and objective of the company(Messner,2016).1
Risk management-Manager evaluate market trends then prepare strategies for managing thefunds in such way so company can get future opportunities and reduce losses from futurecircumstances. Performance management- managerial accounting helps to evaluate standard performance andactual performance. If, any deviation found then corrective action can be taken at a correct time.This management avoids unnecessary cost and also enhance performance that ultimately helps inachieving the goals.Distinction between management and financial accountingManagement AccountingFinancial AccountingManagement accounting is used inorganisation for decision making and isoptional for use.This accounting system is essential ofcommunication of financial position and ismandatory to be used.Primary audience of this process areinvestors, tax authorities, regulators, etc. Decision makers and managementEssential requirement of management accounting system Job costing - Unicorn adapt job costing that can help to measuring cost against the specific job.It is often used by Construction Company and ship building company which used to trackrecords expenses incurred and revenue generated by separate job (Lopez-Valeiras, Gomez-Conde and Naranjo-Gil, 2015). It is the situation where job performed according to customerspecification so that Unicorn generate income with retain loyal customers. This costing isessential for comparing previous year job costing and current job executed so they can controlthe cost by taking corrective action. Job costing includes all direct material cost, direct labourcost and expenses for computing the cost and overheads to be charged on some suitable basis.Company often used for computing future cost so they can able to reduce cost on job and providegoods and services at a lower cost that leads to achieve profit targets. Main application of jobcosting is determine overheads on particular job and also selling cost determine on the basis ofcost.Pons-Unicorn predetermine overhead cost and other cost that helps to reduce necessary cost ofthe job.2
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