The Impact of Management Accounting
Added on 2020-11-23
17 Pages5444 Words469 Views
Business DevelopmentFinanceLeadership Management
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1P1 Management accounting and requirements of different types of management accountingsystems........................................................................................................................................1P2 Explain different methods used for management accounting reporting................................3TASK 2............................................................................................................................................6P3 Calculate costs using appropriate techniques of cost analysis to prepare an incomestatement using marginal and absorption costs. .........................................................................6TASK 3............................................................................................................................................9P4 Advantages and disadvantages of different types of planning tools for budgetary control..9TASK 4..........................................................................................................................................11P5 Compare how organisations should adapt management accounting systems to respond tofinancial problems.....................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is a process to prepare reports and accounts to scale accuratefinancial status of company. This is required to make day to day and short term decisions that arebeneficial to attain business goals. Every business has an objective and goal to gain profit againstinvestment. In beginning of a business firm's owner invest some amount that is known as capital.There are various activities and operations that needs to be measured so that a final state of acompany can be analyzed in statistical form (Bodnar and Hopwood, 2012) . It is used to measurethe cost and operations of firm to prepare a internal management reports, records and accounts inorder to organization can analyze their actual status to achieve the goals. Oak Cash and Carry issmall firm which is working as a service provider in various fields such as tobacco, food,beverages, cash & carry wholesale, grocery. The firm have between 20 to 49 employees atpresent who are actively working for company. Hence, this report is consists of managementaccounting and their importance along with their methods importance. It also covers costanalysis techniques to prepare income statement, types of planning tools that are use forbudgetary control. Further it also comprises of financial problems with management accountingsystem. TASK 1P1 Management accounting and requirements of different types of management accountingsystems.Management accounting – It defines pattern to prepare and provide timely financial andstatistical information about business operations so managers can make daily accounts report thathelps them to achieve short term goal. As given in the scenario, it is a responsibility ofManagement Accounting Officer that they notice every business activity which are conductingwithin a business. For example, Oak cash and Carry is a wholesale company and in order torun their business in an effective way they needs various sources like logistics services forimport and export (Macintosh and Quattrone, 2010) . Firm needs to spend money on carriageinward and outward that needs to note in daily accounts books as an expense of organization.Similarly, there are some various business operations that are counted as income of business likepurchased material such as machinery and other assets. These are recorded in accounts books1
that supports to business activities to attain objectives and goals. Through these organization cantake short term decisions to attain the targets of the firm. The core purpose of Management accounting system is to develops reports on the basisof company's financial information so that managers can take decisions and also establisheffective planning to run a business smoothly. These reports are confidential because it containsorganization's internal information regarding entire income and expenses that needs to measurerequired changes so that firm can be operated in an appropriate manner (Liandet. al., 2012) . Types of management accounting system - There are different types of managementaccounting systems which also has distinct use for Oak cash and Carry and these arementioned below - Cost accounting system – It is a method which is used to analyse production cost throughassessing input costs of each stage. It includes cost of raw material, manufacturing,testing, packaging etc. Cost accounting system is used to record individual cost of goodsand then it compares the results with output. For example, Oak Cash and Carry ismanufactures products then it will first measure production cost of products then it willanalyse actual result cost of goods. Job costing system – It is used to monitor expenses on manufacturing of the products andservices. The managers keep track of expenses through dividing all expenses in overhead,direct material, and direct labor. So that managers can estimate actual cost of product andaccess value of raw materials, labor hours and equipment can be control in an effectiveway. This is used to analyse the total cost of goods and then it can be control accordingto the customers requirements (Sisaye and Birnberg, 2010) . For illustration, Oak cashand Carry use it to monitor total cost of a product throughout manufacturing phase and itcan be reimburse according to customers needs. When customer needs goods at that timeonly it can manufacture the product that needs some expenses such a they needs to paythe labors, raw materials, packaging charges, etc. The overall cost can be controlthorough identifying the customer needs and requirements. If there is no requirement ofproduction then firm can keep its money safe for other operations. Inventory management system – This is used to monitor available stocks within anorganization. Every department tracks their stored stuff whether they are company assets,raw materials, supplies or finished goods. The core objective of inventory management2
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