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Management Accounting Systems & Techniques Assignment Solution

Added on - 09 Dec 2020

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Management AccountingSystems & Techniques 2
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1P1 Explaining management accounting and giving essential requirements of different types ofmanagement accounting systems................................................................................................1P2 Enumerating methods used for management accounting reporting.......................................3P3 Calculating costs for preparation of income statement under marginal and absorptioncosting.........................................................................................................................................5P4 Listing advantages and disadvantages of different types of planning tools..........................9P5 Comparison of how organisations are adapting management accounting systems forresponding towards financial problems....................................................................................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is one of the crucial system in company for attaining reliableinformation for making well-mannered decisions. Present report deals with British Wax RefiningCompany Ltd which is engaged in manufacturing of chemical products and its competitor in thesame industry is taken named The Proton Group Ltd. Management accounting types and reportsare explained. Moreover, planning tools are discussed in the report. On the other hand,calculation of absorption and marginal costing are done and break-even analysis is beingconducted for new product. Furthermore, management accounting systems are explained whichare used to respond to financial issues. Thus, such accounting helps to strengthen internaloperational and activities of British Wax Refining Company Ltd.P1 Explaining management accounting and giving essential requirements of different types ofmanagement accounting systemsAccounting is art of properly recording, classifying, summarizing and analysing financialinformation pertaining to organisation. It provides clarity in terms of overall standing ofcompany in effectual manner. It is required to be prepared so as to ascertain whether firm hassound position or not. All the activities taken place in business namely gains, expenses,payments and receipts are effectively summarized in a better way for presenting accurateinformation to external and internal users (Cooper, Ezzamel and Qu, 2017).Management accounting and financial accounting are two important tools for BritishWax Refining Company Ltd which is engaged in manufacturing of chemical product is locatedin UK. Financial accounting is first step in assessing information about company as it recordseach and every transactions occurred in British Wax Refining Company Ltd on daily operationalactivities. The financial accounting helps to summarize transactions by which financials ofBritish Wax Refining Company Ltd are produced such as balance sheet, income statement andcash flow statement. These are available to public to analyse overall health of organisation in abetter way.On the other hand, management accounting is useful tool for taking well-structureddecisions by firm's management so that it may be able to inject external operations quiteeffectually. Various managerial functions namely planning, organising, staffing, directing andcontrolling becomes smoother. The information being imparted by management accounting1
helps to strengthen its internal operations so that it may easily attain efficiency and deliver thebest products to clients. In addition to this, such data is not publicly available because internalmanagement seeks it and takes decisions accordingly. Functions of management accounting areto make quality decision to control activities of business. Moreover, to accomplish all objectiveswith the help of which organisation could be able to attain profits.Different types of management accounting systems are as follows-Cost Accounting systems-Costs are to be incurred for attaining desired level of production. British Wax RefiningCompany Ltd implements cost accounting in its operational tasks for accomplishingmanufacturing and delivers services to clients with ease. Expenditures have to be controlled formaximising level of production. Hence, it is useful process for summarizing, allocating andassessing alternative actions leading to control cost (TALEBI and BAHRI, 2018).Actual costing-It is used for ascertaining actual cost of labours, direct cost rates for determining cost ofspecified items. Actual costing effectively traces direct costs in a better way and ascertainexpense of particular object. For example, management of British Wax Refining Company Ltdcan track how many hours does employees' require completing manufacturing at a particular dayso that actual cost of producing such item can be tracked.Normal costing-As the name suggests, normal costs being incurred for completing production is providedby such costing. It is used to assign particular costs to items based on labour, raw materials andoverheads to produce them and as a result, makes up total product cost (MONEM and SAEIDI,2017). For instance, British Wax Refining Company Ltd has to manufacture 1000 chemicals.Normal cost of materials comes to be 40 per head. Direct cost of 20 per chemical and overheadtotalled to 10. Hence, total cost for producing 1 chemical turns out to be 70.Standard costing-The standard costing is done by British Wax Refining Company Ltd' management withthe help of past experience that how much amount of cost will be required to produce particularitem. Preset prices are made based on statistics and experience which have to paid for attaining2
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