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Management Accounting Systems Types

   

Added on  2020-10-22

17 Pages4004 Words98 Views
MANAGEMENTACCOUNTING

FROM: MANAGEMENT ACCOUNTING OFFICERTO,GENERAL MANAGERRL MaynardSUB: MANAGEMENT ACCOUNTING SYSTEM INTRODUCTIONManagement accounting is considered as the core function of an organisation whichincludes formulation of managerial accounts and reports through various systems, techniques andtools. The main aim of this system is to serve accurate and reliable reports to related partieswhich reflects true and fair position of the business, these related parties are creditors, investorsand many more. In this project report, a medium scale organisation is chosen and that is “RLMaynard” which is a construction company. Various management accounting systems and theirreporting systems are discussed in this project along with the several planning tools of budgetarycontrol.TASK 1P1 The need of Management Accounting and its typesManagement accounting is a process of preparation of managerial accounts and reportsfor efficient decision making mechanism. This method is considered as a technique which helpsan organisation in better planning and controlling mechanism. . It is appropriate for almost everyorganisation including public limited company, private limited company, sole proprietorship,non profit organisation and many more. Management accounting plays an significant role in abusiness firm by facilitating them to achieve their overall organisational goals. It is a procedurewhich requires a lot of skills and professionalism for its conduct and this process is considered asscience as well as an art (Burritt, 2011).RL Maynard is a medium scale organisation which uses management accounting in orderto satisfy their needs of efficient management and effective control. This is a combination of setof activities like finance, accounting and management. This procedure makes sure thatorganisation account for all available resources and utilise them in the most efficient way1

possible. The main aim of management accounting systems is to serve reliable and accuratemanagerial reports to manager and other related parties such as investors, creditors, debtors etc. Management accounting systems helps RL Maynard in preparing managerial reports andearn more profit, which are described below:Cost accounting system: Cost accounting system is the method of estimating andanalysing the cost involvement in the activities of the organisation. RL Maynard uses thismethod to ascertain expenditures and costs incurred during a financial period. Thismethod is considered as the most tested and accurate for estimating the future costsinvolvement and analysing current expenditures. RL Maynard is engaged in numerousactivities of construction due to which they use this method in order to determine overallcosts and individual costs (Cuganesan, 2012). Price optimisation system: RL Maynard exercises this system to allocate prices to theirmanufactured products. This method provides a framework which helps an organisationin allocating various prices to various products. Price optimisation system analyses howclients would react for the prices of the product. This system enables manager of RLMaynard to maintain a balance in the prices of the products, as too high prices makes aproduct undesirable for the customers and too low prices will increase the demand anddesire but will result in poor profitability of the organisation.Job costing system: This framework is used to identify the cost involvement in aparticular product or job activity, this system also helps in ascertaining batch number andprofitability of different products or jobs. The manager of this RL Maynard classifiesactivities according to their nature and technical know-how required for performing themand then uses this system, in order to recognize cost involved in each of the activity. Themost important benefit of this system is that the manager can estimate the profit makingability of several activities by estimating their costs and expenditures. Methods used injob costing systems are Batch costing, process costing and contract costing. RL Maynarduses contract costing as they deals in construction business. Inventory management system: Inventory management is considered as the mostcomplex but the most significant process of an organisation as it deals in maintaining andmanaging the inventory available in the organisation. RL Maynard deals in constructionbusiness due to which they uses this system so that they can mange their ample of2

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