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Management Accounting Systems and Techniques - JOJO fruit juice

   

Added on  2021-02-20

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Management AccountingSystems and Techniques

INTRODUCTIONIt can be defined as those systems which help in preparation of Financial Statements. Thesesystems are generally used in order to prepare various financial reports for the company'sstakeholders. These reports are needed by stakeholders of company to analyse financialperformance. There are various tools and techniques are used in preparation of various financialreports (Management Accounting Systems, 2019). There are several systems such as cost accountingsystems, financial accounting systems, Business accounting system etc. Oshodi Plc is amanufacturing company who is engaged in mainly production of JOJO fruit juice. Company wantsto prepare financial reports to evaluate financial position of company at time of production of JOJOfruit juice. The report includes all the Budgetary control planning can be used by company tocontrol the extra cost allocation by setting up standard budgets. It also includes the varioustechniques to resolve the financial issues in company by using the best technique for company. Italso help in knowing Oshodi that which costing method will be presenting better net profits forcompany. Thus, report covers all the management accounting tools and techniques can be used bycompany to know the financial condition of company. It will also help investors in evaluating andmaking analysis on company's financial position. LO 1P 1 Definition of MA and requirement of different types of MA systemsIt is defined as the method where financial statements are prepared by company to analysetheir financial performance. It main aim is to record all the monetary transactions in books ofaccounts (Kaplan, 2015). MA is the method where all transactions related to finance are identified,analysed, summarized and recorded in the books of accounts to interpret it and develop annualreports. It helps management in taking short term or long term decisions for Oshodi Plc. There arethree types of financial management such as tac, financial and management accounting. It also helpsmanagement in taking decision related to cost reduction and cost elimination. By examining wherethe extra are more and it is necessary or not to allocate the expense in that particular department.This also help in preparation of various strategies and business growth models. Management Accounting systems are required in oshodi Plc in order to prepare FinancialStatements by using suitable systems. The various systems are described below:-Job Costing SystemThis system helps in knowing the various calculation of job departments in company. Ithelps in allocation of different costs in particular department as per the need of cost in thatdepartment. It also help in examining extra cost allocated in different department and avoid that

extra cost if it is not beneficial to company.AdvantagesDisadvantagesThis system help in examining extra costin every department (Kavanagh, 2017);It is a basis for cost elimination or costreduction in all department of OshodiPlc;It provides brief information about directmaterial, direct labour, fixed and variableoverhead charged in the differentdepartments.It is not suitable in small organizationwhere there are less number ofdepartments;This system is very expensive and alsovery expensive to implement in OshodiPlc;Under this method, there is lack of jobstandardization;It needs more professional experts inorder to apply this method in anyorganization.Cost Accounting SystemThis is used under which total cost used in every department and total production cost ofproducts are been calculated. There is preparation of different types of cost sheets for everydepartment in order to know where is need of extra cost allocation. It help in cost effective inOshodi Plc. Thus, it helps in identifying direct and indirect expenses related to production of eachproduct is calculated. AdvantagesDisadvantagesIt helps in cost reduction in company byevaluating extra cost allocated in everydepartment;The method help in knowing underwhich department there is underabsorbed or over absorbed cost;It help in setting up the new price fornew products;Facilitates determining of productioncost per unit.This method very complex in nature andtakes a lot of time preparation of costsheets for each department (Fleischman,2017);It is very lengthy process for preparationof cost sheets for each department;It needs professional to prepare variouscost sheets for every department inOshodi Plc.Inventory SystemInventory System refers to that system where different ledgers are preprepared for knowingthe inventory purchased, produced and sold in Oshodi Plc. Inventory ledgers can be prepared by

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