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Management Accounting Systems and Techniques: Doc

   

Added on  2021-02-20

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–ManagementAccountingSystems andTechniques

INTRODUCTIONManagement accounting is a procedure which guides internal stakeholders to examineexistent position of the organisation and assess that it is performing well or not. Whileformulating strategic decisions top level executives use it as an essential element as it guidesthem to find the areas of organisation where improvement is required. In order to execute all thebusiness activities in proper way it is crucial for the managers to make sure that they focus onmanagement accounting as it is required for betterment of enterprise (Arena and Arnaboldi,2014). The organisation which is selected for present report is Oshodi Plc. It is a commercialenterprise which is involved in the production of JOJO fruit juice. This assignment aims at various topics such as understanding of management accountingsystems and methods of its reporting, calculation of cost using different techniques, formulationof income statements using marginal and absorption costing. Along with this, different planningtools used in budgetary control and comparison of the ways in which organisations are adaptingmanagement accounting to respond financial problems are also covered under this project.TASK 1P1 Different management accounting systems and essential requirements of them for anorganisationManagement accounting: It can be characterized as a technique that is implemented bytop level executives of an organisation to assess that all the operational activities are executed bystaff members in a proper manner or not. In Oshodi Plc it is utilised by management to observeexistent position and condition of the company. With the help of it strategic decision areformulated by managers for future developments.Management accounting is the techniquewhich is utilised by companies such as Oshodi Plc to determine actual position of the business.With the help of it internal stakeholders analyse that the organisation is performing well in themarket or not.Difference between management and financial accounting:BasisManagement accounting Financial accountingObjectiveMain objective of managementaccounting is to help managers to formstrategic decisions for betterment ofObjective of financial accounting is tocheck financial accuracy of businessand determine that it is generating1

organisation.profit or not.DependencyWhile forming management reportsmanagers take help of financial reports asit is dependent on financial accounting.It is not dependent on managementaccounting.Management accounting system:It is a tool that is utilised by management of businessentities to keep statistical information so that decisions for carrying out day to day activitiescould be taken. In Oshodi Plc managers are using it to form strategies for future so that growthcould be attain by the company (Armstrong, 2014).Types of management accounting systems:Managers of Oshodi Plc are using variousmanagement accounting systems to assess actual position of the company. All of them arediscussed below in detail:Cost accounting system: It is the part of major management accounting systems whichare used by commercial enterprises in order to keep detailed information regarding cost ofproduction and other activities. Managers in Oshodi Plc are using it to analyse actual cost of eachand every unit of juice bottles which are manufactured by it. With the help of it, they try toreduce the expenses which are not required and resulting in enhancement of cost. Costaccounting system essentially required for Oshodi Plc as it guides managers to take effectivedecisions to reduce unnecessary expenditures which may result in unforeseen costs in future(Azudin and Mansor, 2018).Price optimisation system: For large as well as small organisations it is very importantto decide right cost for the products which are offered to the clients by the company. For thispurpose, this system is used by managers so that expectations of client could be matched. InOshodi Plc it is implemented by management to set right price for juices that are manufacturedby it. With the help of it reaction of clients on different rates is analysed by the managers. It isessentially required for Oshodi Plc because it facilitates the process of meeting the long termbusiness objectives such as profit maximisation by attracting large number of customers.Inventory management system: It is used by managers in different organisation tomanage goods that are used to perform business operations. As Oshodi Plc is a manufacturingcompany of fruit juices therefore it is vital for management to use it so that stock could bemanaged properly. It guides them to make strategic decisions to fulfil requirements of inventoryof the organisation. Three different types of this systems are as follows:2

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