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Management Accounting Report - Tata Motors

   

Added on  2020-07-22

19 Pages5698 Words54 Views
Management accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Task 1...............................................................................................................................................1P 1 Management accounting and essential requirements of management accounting in thebusiness...................................................................................................................................1P2 Types of management accounting reporting methods.......................................................4Task 2...............................................................................................................................................6P3 Calculation of absorption and marginal costing ...............................................................6Task 3...............................................................................................................................................7P4 Different types of planning tools with advantages and disadvantages .............................7P5 How management accounting system can be used by organisation to respond to financialproblems...............................................................................................................................11CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16

INTRODUCTIONTo assist the business in a good manner the management accounting helps in giving theinternal cure to the entity. Therefore, tools and techniques which will be helpful in managing theoperational activities in the premise. It includes, costing, budgeting and reporting techniqueswhich gives internal analysis of the organisation that will be helpful in managing the internalbusiness. In the present report Tata Motors will be helpful in having satisfactory advices that willbe used in increasing the efficiency as well as productivity of the business which will result inbetter profitability.Task 1P 1 Management accounting and essential requirements of management accounting in thebusinessManagement accounting plays crucial role in the company as it assist management intaking effective and better decisions with much ease. This is a branch of accounting which takesinformation from financial accounting and draws results whether company is efficient or not inproducing tasks. It means that organisation seeks financial data and then management takesdecision for strengthening internal operations of the company (Cooper, Ezzamel and Qu, 2017).Managerial personnels analyses various reports and as such, decisions are made for improvingperformance in the best possible way. Tata Motors Company which is the biggest automotiveindustry in the world also uses management accounting information to make organisationinternally strong. It provides customers large portfolio of goods which provides greater level ofsatisfaction to them in the best possible manner. Management accounting provides timely internal reports which provides clarity tobusiness whether costs are controlled to achieve desired production or not. This implies thatmanagement accounting is process of assessing costs and business operations and thus, reportsare prepared and imparted to managerial personnels to take enhanced decisions. It can be saidthat Tata Motors uses management accounting to control its expenses and costs in the bestpossible way so that expenditures may not exceed revenue in any manner. Thus, this type ofaccounting aids in taking decisions with much ease (Jermias, 2017). Furthermore, managementaccounting information is imparted only to management and not to users of financial informationas it is based on internal operations of the company. In addressing this, essential requirements ofmanagement accounting systems are as follows-1

1. Cost accounting systemIt is useful system of management accounting which deals with controlling costs in theorganisation in the best possible manner. This means that expenditures need to be lowered downso that revenue may be increased up to high extent. Furthermore, there are various costs such asfixed, variable, semi variable, direct and indirect which are incurred in order to generate desiredproduction with much ease (Ax and Greve, 2017). This implies that business costs are analysedby the management and measures are taken to reduce the same in effective way. This accountingsystem help company to initiate control on operational costs and as such, revenue may beachieved in the best possible manner. Tata Motors is required to assess expenditures incurred onproduction of automotive goods so that desired profits may be accomplished in effectual way.Thus, it can be said that organisation controls costs and as such, revenue may be achieved quiteeffectively. 2. Price optimisationThis is another useful management accounting system which help company to quote priceof particular product in accordance with customers' preferences. It is a mathematical techniquewhich is used to set price so that consumer may purchase goods in effective manner. This isrequired by the company because if more prices are set, then customers will be driven away byrivals and as such, it becomes important to set price in accordance to the preferences ofcustomers. Tata Motors is also uses price optimisation technique which help to assess whetherdemand fluctuates with change in price of goods or not. This system provides clarity whethercustomer will pay for the quoted price or not (Pratheepkanth, 2018). Thus, it helps organisationto attain price level by which consumers will be attracted to purchase commodity. Hence, priceoptimisation system aids management in taking effective decision by quoting optimum pricewhich will help to accomplish revenue and customer satisfaction.3. Inventory management Inventory is an integral part of the manufacturing organisation. For achieving desiredlevel of production, it is required that company has adequate level of stock in the warehouse.Tata Motors also requires to have desired inventory level so that production may beaccomplished in the best possible manner. This is essentially needed because if inventory is notion adequate quantum, production will be hampered. It will have serious repercussions on thecompany as customer's orders would not be fulfilled. On the other hand, if excess inventory is2

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