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Management Accounting : LM Engineering Ltd

   

Added on  2021-02-19

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Management Accounting

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INTRODUCTIONManagement accounting is an important part for an organisation which assist them indriving towards achievement of its desired goals and objectives within pre-determined timeperiod. It performs several functions such as analysing and summarising accounting reports suchas Income statement, Balance sheet, Cash flow statement etc. These reports facilitate managersin framing an effective strategies and suitable policies for the beneficial of company such asusing management accounting and reporting systems, preparing of budget and differenttechniques to monitor unnecessary expenses etc. LM Engineering Ltd. company a civilengineering and planning services company having headquarter in London, United Kingdom andoffers to the people of northern British Columbia. The report discusses the concept ofmanagement accounting and its various types with their benefits to company. In addition withthis, various reporting systems such as performance report, inventory management report etc. arebriefly discussed under this report with the context of selected organisation. Apart from this,types of costing methods and its uses in calculation of net profitability, concept of budget and itstools to control expenses, uses of management accounting systems and techniques to resolvefinancial related issues which are faced by an organisation.TASK 1P1:The process of recording, summarising, and presenting financial records of anorganisation is known as management accounting. For this different types of books are maintainby the financial department of company such as profits and loss account, cash flow statementand balance sheet for an organisation (Chapman, 2011). The concept of management accountingis directly related with estimating cost that will be bear by organisation to operate business itsoperations. Along with this it helps an department to manage the funds by removing oreliminating the waste. LM Engineering limited uses different types of accounting softwares or systems by whichthey maintain financial records as it helps them to formulate the strategy that helps company toachieve their expected results. Some accounting system that are implemented by organisation ismention as follow:1

Cost accounting system:. This helps an organisation to analysis, predicts and calculatesall types of cost such as fixed cost, variable cost etc. To maintain and calculate the financialrecords helps an organisation to calculate proper cost that is invested by company and helps togenerate more profits in future. LM Engineering Ltd. update their financial system that helps toanalysing price of different products and services as it helps to find cost along with their addedmargin. Along with this it helps an organisation to analysis the future profitability of firm (Costaccounting systems, 2013). Price optimisation system:. With the execution of price optimisation system LMEngineering Ltd identify the perception of its customers which help them to decide the price thatensure future profitability as price effects on buying and selling of its customers. For thisfinancial department needs effective employees’ that helps to research in market. As theyprovide essential information to an organisation that relates with satisfaction level of its targetedcustomers it is related with price factor of company. This helps an organisation to decide thatthey follow with current policy or modify changes according to market demands (Christ andBurritt, 2013).Job costing system- It refers to the system by which an organisation total cost of itsoperating activities are calculated by company. This provides various range of its products andservices that help an organisation to allocate financial service individually. For this it is the mostsuitable to adopt by organisation as they provide different products and services with wide rangeof its products. LM Engineering Ltd use such system to make estimate cost for each unitsseparately. Along with this it helps organisation to calculate its expenses and revenuesindividually.Inventory management system- These helps an organisation to manage and track thestatus of its inventory. This helps an organisation to meet with the expectations of customerwhich helps to generate faith in customers through delivering demanded products on time. LMEngineering Ltd uses this system to ensure the availability of company products and theirservices. Example- organisation wants to track the status of its conveyance system then thissystem help organisation to check the productivity of their services (Garrison and et. al., 2010).Difference between management and financial accounting2

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