Management Accounting Systems & Technique Assignment
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Added on 2020-12-10
Management Accounting Systems & Technique Assignment
Added on 2020-12-10
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Management AccountingSystems & Techniques
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Main Body.......................................................................................................................................1P1 Management Accounting and its requirements......................................................................1P2 The following are methods of that are used in Management Accounting Reporting............4P3 Difference Between Marginal Costing and Absorption Costing...........................................5P4. Advantages and Disadvantages of planning tools which are used for budgetary control....8P5. Comparison of different management accounting system which are adapted by AtexMedia and its competitor Wolfram Research to respond financial problems.............................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is the specialised branch of accounting, as it plays veryimportant role in surviving and accomplishing growth in an organization(Macintosh andQuattrone, 2010). In this presented scenario, there is a huge requirement for presence ofappropriate management accounting system to ensure proper functioning and operation of day today financial and non financial activities. This presented report will provide a brief discussion itssignificance and types on the basis of Atex media. It will also put emphasis on variousinformation which is related to management accounting reports and its importance tomanagement. Further, advantages and disadvantages of accounting systems are also highlightedwith their application. Practical aspect of this report contains calculation on the basis of breakeven formula accompanied by margin of safety. Moreover, different types of planning tools ofbudgetary control are also mentioned in this paper.Main BodyP1 Management Accounting and its requirementsAccounting- It is an systematic process to identify, record, summarize, measure andcommunicate information about financial transactions that had been taken place in Atex Media. Management Accounting - It is an process of preparation of management reports, accounts forproviding timely and accurate statistical and financial information that is required by managersfor making decisions in normal course of business(Ward, 2012). It helps in formulating policiesand that are to be adopted by management.Financial Accounting – It is a field of accounting wherein preparation of financial statementswith help of money transactions that had occurred in business over a period of time(Shah, Malikand Malik, 2011.). If Financial accounting is considered which produces annual reports that are mainly forstakeholders of company whereas management reports are generated monthly or weekly for AtexMedia internal persons such as Chief Executive Officers and managers of different departments.The different types of management accounting systems that can be used by different departmentsare-:1.Cost Accounting – This is an method of accounting wherein all costs that are incurredfrom an activity for completing any process are collected, classified andrecorded(Bebbington and Thomson, 2013). The aim of cost accounting is to know1
company's cost of production through assessment of different costs at each stage ofproduction that re incurred.1.Actual Costing – It is type of cost accounting wherein Atex Media can use anysystem which uses actual fixed costs and direct costs, actual qualities that are used inproduction for determination of cost of products(DRURY, 2013). The actual costaccounting for calculating product costs are based on factors that are given below-:1. Cost of Material= Actual Cost of Material* Actual Quantity Purchased2.Cost of Labour= Actual Cost rates * Actual Quantities used3.Overheads Costs that are allocated using actual quantity that are used in reportingperiod. This all cost are considered on actual basis that had been incurred.2.Normal Costing – In this method cost are allocated on basis of material, labour, andoverheads that had been required in production of any product(Gupta, Pevzner andSeethamraju, 2010). The total of all these costs are product costs that are used tocalculate Cost of Goods Sold and valuation of inventory. In this system of costing, costrates of manufacturing overhead are decided by management as these expenses includesrent, electricity, depreciation etc that are related in production of product but can't bedirectly applied to different items.3.Standard Costing – In this technique of cost accounting where manufacturers identifydifference between actual costs of goods produced and with planned costs of productionof that product(Berry, 2010). Many manufacturers rather than assigning actual cost ofmaterial, labour, overhead they assign expected or budgeted cost. So there valuation ofinventory and cost of goods sold are valued at standard cost but, as they have to payactual costs, so difference arising between these costs are known as variance(Tsorakidisand et.al., 2011). The following are different types of variances-:1.Material Variance 2.Labour Variance3.Overhead Variance4.Sales Variance2
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