Management Accounting System Assignment Solution

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Added on 2020-10-04

Management Accounting System Assignment Solution

Added on 2020-10-04

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Management AccountingSystem

Table of ContentsINTRODUCTION................................................................................................................................3TASK 1.................................................................................................................................................3P1 Management accounting and its types...................................................................................3P2 Methods of management accounting reporting......................................................................5P3 Calculation of cost using cost analysis..................................................................................6TASK 2.................................................................................................................................................8P4 Advantages and Disadvantages of Planning tools.................................................................8P5 Evaluation of techniques use to adopt management accounting system.............................10CONCLUSION..................................................................................................................................10REFERENCES...................................................................................................................................11

Management Accounting System Assignment Solution_2

INTRODUCTIONManagement accounting plays a very important role in the organisation. It is that field ofaccounting that helps the managers of company in providing useful information which can be usedin planning, decision making, cost management, performance evaluation and many more. This typeof accounting is for internal management i.e. officers and managers. The company referred in task 1of the report is Kingdom securities Ltd which provide services to every sector whether its iscorporate, manufacturing, public sector, education sector etc. This report will include explanationabout what is management accounting and different types of management acc. , different methodsthat will be used for management accounting reporting, calculation of cost using the cost benefitanalysis for making income statement using marginal and absorption cost (A. Hammad, Jusoh andGhozali, 2013). It will also include the advantages ad disadvantages of different types of planningtools used in calculating budgetary control and the techniques that are adopted by organisations todeal with the financial problems. TASK 1P1 Management accounting and its typesManagement accounting can be defined as a process of preparing the management accountsand reports that help I providing accurate and timely statistical and financial data required by themanagers for their daily work and sort term decisions made. Generally, management accountinggenerates weekly or monthly reports for the organisation's internal workers such as the managersand the workers. These reports generally includes the maount5 related to the sales revenuegenerated or the cash, accounts payable or receivable, outstanding debts of the company, statisticaldata or variance analysis etc. A management accounting system can be defined as s system thatcollects financial data from the business operations like change in raw material, change ininventory, sales data and later on converting these reports into analysis reports for the company.There are various benefits of using this system of accounting like with the help of timely andaccurate knowledge and information, the company can make useful decisions about the operationsof the company like making marketing budgets, increasing production time, cost cutting and manymore (Agbejule, 2011). Those companies that use management accounting system have advantagesin making more capital for the company that will help them in expansion. The importance of thissystem in relation with the organisation are:-Critical information provided:- These type of systems are so flexible and efficient in theirwork hat they are able to generate approx 300 reports in one go and can even analyse it forthe company. This helps the company to perform the work very fast and eventually thesuccess rate of the company increases

Management Accounting System Assignment Solution_3

Ongoing training and information:- This system is helpful for the management only if theemployees knows how to use it. Employees of organisation must be provided ingoingtraining for h system including the upgrades (Albelda, 2011) . The should also be told howto access the reports and analyse it. The system should contain a operation guide forthemselves so that new employees learn it right from their first day. Timely informationRelevant information.The different types of Management accounting system which an organisation can use are like costaccounting system , inventory management system, Job costing system and price optimizingsystem. Cost accounting system :- This is the type of system that will help company in estimatingthe cost of the product by using the profitability analysis approach, valuation of approachand cost control. Since the accurate cost of control is difficult to estimate therefore thecompany uses these method so that they are able to know that which products are profitablefor the company and which are not. Inventory management system:- This is one of the most useful management system ofaccounting because they are helping the company in getting more orders and increasing theturnover for the company. It also helps in cost control and ensuring that how much inventorywill be required at minimum cost by the company. There are various tools that are used bycompany in valuing the inventory like:-◦Economic order quantity◦Just in time ApproachThey both help company in maintaining he balance between inventory and cost so that business isable to achieve its long term targets easily. Job costing approach:- here the manufacturing cost of the product I being analysed in anappropriate manner i.e. by dividing it in three categories mainly:-◦Direct material◦Labour cost◦Overhead The main objective of this approach is to control the operation expenditures os the company andincrease the profitability (Amidu, Effah and Abor, 2011). Price optimisation system:- In this the various factors that are responsible for influencingthe price of the product is carefully analysed which mainly includes demand , supply etc. ifthe demand of the product is increasing he the company should reduce the prices of theprices of the products i.e. price and demand have an increase relationship with each other.

Management Accounting System Assignment Solution_4

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