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Management Accounting on Airdri Ltd Sample Assignment
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Added on 2021-02-21
Management Accounting on Airdri Ltd Sample Assignment
Added on 2021-02-21
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................3P1 Describe about the management accounting and give the essential requirements ofdifferent types of management accounting systems....................................................................3P2 Define different methods used for management accounting reporting..................................4P3 Calculate costs using appropriate techniques of cost analysis to prepare an incomestatement using marginal and absorption costs...........................................................................6........................................................................................................................................................10P4 Defined advantages and disadvantages of different kind of planning tools which are usedfor budgetary control.................................................................................................................10P5 Compare how organisations are adapting management accounting systems to respond tofinancial problems.....................................................................................................................12CONCLUSION..............................................................................................................................15REFERENCE.................................................................................................................................16.......................................................................................................................................................17
INTRODUCTIONManagement accounting is the term which is used by various organisation to analysis itsbusiness activities and also provide financial data and resources to the managers in order to takean effective decisions. It is used by the organisations to identify the internal information so thatthey can improve and enhance the overall performance. This report is based on Airdri Ltd whichis an electrical manufacturer and client of Financial Conduct Authority. In this report, it will bediscussed about the various types of management accounting system and how these are essentialfor any organisation. Along with this, different methods which are used for managementaccounting report and also it will be understand that how an organisation can analysis their costfor preparing a appropriate income statement. Different type of planning tools for budgetarycontrol and defined the benefit and disadvantage of them. At the end, will understandmanagement accounting to solve the financial issues.P1 Describe about the management accounting and give the essential requirements of differenttypes of management accounting systemsManagement accounting is also knowns as managerial accounting and cost accountingwhich is used by the organisations to identify the business cost and operations so they able toprepare internal financial reports, accounts, and records which helps them to take an effectivedecisions. On the other hand, management accounting system help the organisation to control onthe organisation activities, improve overall performance, and maintain the development processso they able to take an effective decision. This system help the Airdri Ltd to maintain theirorganisational activities and create healthy environment in the organisation. There are describedbelow about the various type of management accounting system which are require to adopt bythe Airdri limited to achieve their goals and targets: Price Optimising system: It is defined as a process which is used by an organisation tofind out the suitable pricing of their products and services so the customers will able topay comfortably. It tells the organisations that how the demand change with the changesof the pricing level. This system tells the Airdri Ltd that they should decide the priceaccording to the market segments and they should focus on that analysis that how thetarget customer will react on the price changing strategy. It will help to decide aneffective price so that they able to attract a rang of customers in their services.
Cost accounting system: This accounting system is used by the organisation to decidean appropriate cost of their products and services so they able to attract a large number ofcustomers and maintain their profitability. The main purpose of this system is to controlon the cost which helps them to know that which products is profitable and which is notso they can decide the price accordingly. There are two types of cost accounting systemwhich are described below: -Job order costing: This system is used by those companies who are engaged in theproduction of specific and unique products. It helps an organisation to know their everyindividual activity cost. It helps them to know the difference between their estimated cost andactual cost so they can finish the gap between them and can maintain their profitability. Process costing: This is used by those companies who are indulge in that productiondepartment which contains a long process. So, it will help the to know their manufacturing of theeach department.Inventory management system: This system is related to the proper management ofmaterial, work-in-process goods and finished goods in order to satisfy the customersneeds and earn a great profitability. It is important for any organisation to continue tracktheir inventory so they able to meet their customers demands. This system is used by theAirdri Ltd to track their inventory time to time and help them to manage advanceinventor according to the requirement and also helps them to save their scrape cost.There are various kind of inventory management system which include last in first out(LIFO), first in first out (FIFO), and average cost inventory method (AVCO).P2 Define different methods used for management accounting reportingManagement accounting reporting: Management accounting is a mixture of businessskills , management, finance, and accounting techniques that increases the goodwill of thecompany. It uses all sort of data of all types of business organisations around the globe .Itprovides the business strategy, future risks and other factors for Airdri Ltd. It helps the managersdecide the costing of products ,by giving all sort of informations related to profitability,production costing,factors influencing market. It is the big picture of the business these areproduced quarterly by Airdri Ltd to get a integral field of vision of the business. They help inachieving the ultimate goals set by them. These include accounting, reporting, predictions, costs
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