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Management Accounting Systems - Doc

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Added on  2020-10-05

Management Accounting Systems - Doc

   Added on 2020-10-05

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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1. Defining management accounting and its different accounting systems ............................3P2. Different methods of management accounting reporting.....................................................5TASK 2 ...........................................................................................................................................6P.3 determination of cost per unit of Ryanair from marginal and absorption costing techniques.....................................................................................................................................................6TASK 3............................................................................................................................................8P.4 Different types of planning tools for budgetary control and their advantages anddisadvantages..............................................................................................................................8TASK 4..........................................................................................................................................11P.5 Report on organisational adaptation of management accounting system and comparisonwith Two Easy jet Airline.........................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
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INTRODUCTIONManagement accounting is a process of consideration of financial and non-financialinformation by managers for decision making. To manage the overall business of anorganisation, people at top level have to consider and take decision in respect of differentfunctional areas. For the decision making process, they need all the relevant information which isprovided by various accounting reports. In this assignment, a discussion about the managementaccounting, its different types of systems and methods of accounting reporting are done for theaviation business of RAYNAIR. Further, a comparison of income statements as per marginal andabsorption costing is done to know which option is better and shall be taken into consideration.An in-depth evaluation is carried out to control budgets by analysing different types of planningtools. Also, comparison with different organisations is done to see how different firms areadapting management accounting.TASK 1P1. Defining management accounting and its different accounting systems Management accounting can be defined as a part of the accounting system of a business.It is a process of preparation of management and accounting reports that provides accurate andappropriate financial and statistical information to the management. This information helps themanagement to take day to day decisions. The management accounting reports give a detailed information about the availability ofcash and cash equivalents, sales revenues, status of accounts receivables and payables, inventory,raw material and debtors. Management accounting is a technique which considers only relevant data andinformation (Cooper, Ezzamel and Qu, 2017). There is no set format for information that passesthe same to management. This provides the management with data and information not withdecision. This mainly focuses on the future of company and analyses different variables.The scope of management accounting is vast. It includes all the information that has to beprovided to the management for financial analysis and interpretation of operations of thebusiness. It includes financial and cost accounting, budgeting and forecasting, cost controlprocedures, reporting, methods and procedures to use its resources, tax accounting, internal
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financial control, interpretation of financial data, office services as well as evaluation ofperformance by management. Therefore, it can be concluded that management accounting is not only a tool forevaluation, it also provides methods and techniques to management of overall business of theorganisation.Different types of management accounting systems:The accounting systems are designed to give management a variety of information basedon their information needs for decision making. These are:Cost accounting systemInventory management systemJob costing systemPrice optimisation systemCost accounting system: It is a system to estimate the cost of product for evaluatingprofits of the organisation. Inventory valuation and cost control is also a part of this system. Thisaids the management in measuring financial performance of the company. It classifies costaccording to information need of the management. A firm must know which product is profitableand which ones are not (Liu and Kuang, 2014). It helps in estimating the closing value ofmaterial inventory, work in progress and finished goods for the purpose of preparation offinancial statements. The two main cost accounting systems are job order costing and processcosting. RYANAIR has kept its operating cost low for aircraft equipment, personnel expenses,customer services cost and aircraft access as well as handling cost which ensure a good profitmargin.Inventory management system: An inventory management system is the combination ofprocedures and processes to monitor and maintain the stocked products of an organisation. Thisis system of properly maintaining the inventory from the stage of its manufacturing up to thestage of its sale to consumers (FKlychova and et.al., 2014). To maintain proper inventory is achallenge for companies and for this, a proper channel is followed to keep an eye on theinventories. This is done for raw material, work in progress and finished goods. Ryanair hasmaintained its inventory by purchasing a new aircraft.Job costing system: This a method of recording the costs of manufacturing job ratherthan process. With job costing system, the managers keep a record of costs of each job which is
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