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Methods of Management Accounting Reporting

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Added on  2020-07-22

Methods of Management Accounting Reporting

   Added on 2020-07-22

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MANAGEMENTACCOUNTING
Methods of Management Accounting Reporting_1
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Report on meaning of management accounting and requirements of different types ofmanagement accounting.........................................................................................................3P2 Methods of management accounting reporting.................................................................5TASK 2............................................................................................................................................9P3 Calculation of Income statement using marginal and absorption costs............................9TASK 3..........................................................................................................................................12P4 Report on advantages and disadvantages of different types of planning tools for budgetarycontrol...................................................................................................................................12P5 Use of management accounting system to solve financial problem...............................14CONCLUSION.............................................................................................................................16REFERENCES..............................................................................................................................17
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INTRODUCTIONManaging accounting system or MAS is a process of continuous organisational learningand transformation (Anandarajan and Srinivasan, 2012). It is the practical application ofmanagement techniques to report on financial health of a business. This process involvesanalysis, planning, implementation and control of designed programs to give financial statusthrough reporting for management decision making (Bebbington, Unerman and O'Dwyer, 2014).Rotork plc is a manufacturing company located in British. It's major role is tomanufacture industrial flow control equipment. In this assignment, different types and methods of management accounting systems hasbeen explained. Advantages and disadvantages of different types of planning tools for budgetarycontrol will give the clear picture of how to make proper budget. In this assignment, twodifferent scenarios has been discussed. In first scenario, as a management accounting officer,report is made for implementation of different cost accounting techniques. On the basis ofsecond scenario, a valuable report is written to General manager about how to response tofinancial problems.The purpose of this assignment is to generate report through application of managementaccounting techniques such as profit analysis, marginal costing and absorption costing.TASK 1P1 Report on meaning of management accounting and requirements of different types ofmanagement accountingFrom: Management accounting officerTo: General manager of Rotork plcSub: Management accounting systemIn this report, as a Management accounting officer, I have explained about types ofmanagement accounting systems which will help Rotork plc in making decisions in choosingbest systems. Traditional, Lean, Throughput and Transfer accounting has been explained as atypes of accounting systems of management.Meaning of Management accounting system:Management accounting systems contains of all provisions which provides accountinginformation to managers. This informations helps them in deciding issues within organisations.
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Overall it is guidelines for financial and non-financial decision making informations processwhich supports managers (Chapman, 2011). The main users of management accountingsystems are Investors, creditors and operational managers. Each users have different motivesaccording to their requirements of accounting informations. Some of the essential requirements of different types of management accounting are asfollows:Cost accounting system: According to this particular costing system management canbe able to determine total costs and expenses they are going to incur during the period oftime. It is used specially by managers to record of costs related data is become easy forindividual projects (Damodaran, 2012). Process costing method is suitable for only thoseprojects which are in the production of homogeneous products. Inventory management system: This type of management accounting system, involvesrevolutionary techniques in which it focuses on strategies to maintain overall stock thatare being kept by an organisation. This system provides immediate informations toaccounting managers whenever it is required for decision-making.Price optimisation system: This particular system is done to analyse various price ofthe products which are being set by the company.This can easily be helpful todetermine overall perception of customers about total products cost which are being setby the company during the time. Transfer Pricing method: Here price is added to a product, when there is movementfrom one department to another. This method explains that product will become costly,if it transfers from one department to other. Application of this types on Rotork plcCost accounting system: This type of accounting system is essentially required forRotork plc because after application of this method, it can determine allocation of itscosts related to cost of goods sold. For example, It can apply this method in distributingthe cost of raw materials, direct labours and manufacturing overheads separately.Inventory management system: Rotork plc can apply this method in reducing the costsof its material by eliminating wastes. For example, companies present revenue is 500000pounds but profit is only 9300 pounds. This reflects that there are huge unnecessaryexpenses. The main reason behind this increases expenses could be wastage of resources
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