Management Accounting Techniques: Assignment
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Added on 2020-12-09
Management Accounting Techniques: Assignment
Added on 2020-12-09
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MANAGEMENTACCOUNTING ANDTECHNIQUES
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................2TASK 1 ...........................................................................................................................................3A. Define the management accounting system and various management accounting systemuses by the organization .............................................................................................................3B. Explain the various types of management accounting reports used in the organization. ......4C. Explain the benefits of different types of management accounting system...........................6D. Evaluating the integration of management accounting system and management accountingreport in the organization ...........................................................................................................7TASK 2............................................................................................................................................7A.1 Explaining the absorption costing and marginal costing ....................................................7A.2. Producing income statements by utilising costing methods................................................8B. Computing the following problem with the help of break-even analysis. ..........................10C. Applying the range of management accounting techniques in the proper formal report.....11D. Produce financial reports that accurately apply and interpret the data for the businessactivities ...................................................................................................................................12TASK 3 .........................................................................................................................................13A. Explaining the advantages and disadvantages of different types of planning tools forbudgetary control .....................................................................................................................13C. Comparing how the Aston chemicals is better in responding the financial problems ........17D. Analysing management accounting techniques which could respond to financial problemsand lead the organization to sustainable success. .....................................................................17E. Evaluate how planning tools could be used to solve financial problems and lead theorganization to sustainable success. .........................................................................................18CONCLUSION..............................................................................................................................18REFERENCES..............................................................................................................................20INTRODUCTIONManagement accounting is that field of accounting which provides the managers with thedecision making. It plays an important role in an organization. It helps in decision-making
process of every system by taking helps from financial record. It has several techniques of likecost accounting , fund flow analysis , standard costing etc. Aston chemicals was profound in 1990. It supplies the raw materials to Europeanpersonal care industries. The report is about the importance of management accounting and itstechniques required by Aston chemical. The report will provide, deep insight of meaning ofmanagement accounting, the requirement of different types of system with their benefits. Theassignment will also discuss various management accounting reports used by Aston chemicals.The present assignment will discuss absorption and marginal costing techniques and alsopresents income statement on the absorption and marginal costing. This study will presentfinancial reporting documents by applying the range of management accounting techniques.Present assignment will be the deep study of various planning tools and their uses which arerequired by the Aston chemicals for the further decision-making. TASK 1 A. Define the management accounting system and various management accounting system usesby the organization Management accounting is a type of system which managers of Aston chemicals uses forthe decision making. It is the provision of monetary and non- monetary decision-makinginformation by managers. It is that field of accounting, which is beneficial to all kind oforganization for better process of decision-making. It is systematic process of making differenttypes of managerial reports which provides accuracy and timely information required formanager to take decisions (Ax and Greve, 2017). These reports are derived from financialaccounting reflect the decision-making process. The information gathers from management accounting is widely different from financialaccounting. Different types of MA system use the various data to identify several informationrequired by the managers of Aston chemicals. Some of the management accounting systemwhich are used by the organization are listed under. Cost accounting system This system is also known as product costing or costing system. This accounting systemused by Aston chemicals for estimating cost of commodities and services, valuation of inventory,and cost control. For profitable operations, estimating accurate cost is very much critical. It helps
to identify the manufacturing cost of each product and services. It helps in determining endingvalue of material inventory, finished goods inventory for financial statements. This systemconsisted of three basic accounting techniques like actual costing which the records the actualcost of labors , cost of overheads etc. standard costing , this costing technique provides the actualcosts of goods that were produced and the cost that is occurred. And last is normal costing,which is used to set annual expenses rates allocated for the production to overhead. Inventory management system The inventory management system helps in managing inventory of organization. TheAston chemicals uses inventory management system to manage its inventory in a proper way. Ittakes care of everything starting from purchasing of raw material than to sales of finished goods(Cooper, Ezzamel and Qu, 2017). The inventory management helps in observing small movingpart of operations, permitting it to make better decisions and investments. Various parts ofsupply chain management are being focused by different inventory managers. Examples ofinventory management includes the LIFO i.e. last in first out method , FIFO that is First in Firstout method, and JITJob costing system This is used by Aston chemicals in order to assign manufacturing cost to an individualproduct or batches of goods. This system is mainly used when commodities are manufacturedsufficiently vary from each other. This system includes process of accumulating informationabout various related with a specific production or service job.Price optimizing system The system helps to analyze best feasible cost that should be quoted for production is called price optimizing system. It renders chances to concentrate on different goals and objectives of Aston chemicals. B. Explain the various types of management accounting reports used in the organization. There are five major types of reports which are used by organization are mentioned under Budget reportPerformance report Accounts receivable aging reports Cost managerial accounting reports Budget reports
The budgeting reports are somewhere found critical in measuring the company'sperformance because they are made on the basis of size of the organization. Like if there is asmall organization there should be only one budget report is to be made and if there are largeorganizations consisted of lots of departments than the budget reports are provided according todepartment. organizations. Every entity prepares budget before entering into a new contract orproject in form of report in order to identify the list of expenses. This report of Aston chemicalswas made with help of past experiences, records and budget reports (Management Accounting:Meaning, Functions and Characteristics. 2017). It is very important to have budget report in an organization because it helps in controlcost of entire Aston chemicals. Account receivable aging reports Accounts receivable aging reports are prepared in firm one the organization is extendingcredit. Notify remaining balances of clients helps in identifying the defaulters and issues rising incollection process (Eldenburg and et.al., 2016). If in report there are many defaulters than Astonchemicals needs to strict their credit policies. It is very important to implement the debtors aging reports so that defaulters can beidentify easily.Cost managerial accounting reports The cost of product and services that are manufactured is computed by managementaccounting. This cost manage reports includes the computation ofoverhead, labor, material costsand any added costs in it. The summary of all this information is offers by a cost report. It helpsmanager to identify difference between the cost of goods and services to selling price of it. It is very crucial to implement the cost managerial reports because it provides the exactunderstanding of whole expenditures which is required for better optimization of the resources ofall information. Performance Reports These reports are made at end of year in order to determine performance of company asa whole and employee's performance. In large organization performance reports are generated ineach of department.
Aston chemicals uses performance report in order to identify the capacity and ability ofits employees. For every organization it is very important to develop the performance report inorder to analyse the performance of the organization as well as the employees. C. Explain the benefits of different types of management accounting systemManagement accountingsystemsBenefits Inventory managementsystem The first and foremost benefit of inventory managementsystem is that it improves accuracy of orders of inventory.It means that it determines that how much stock shouldorganization kept in hand so that shortage and exceeding ofinventory do not take place. It increases the transparency of an information in anorganization. It improves the flow of goods Cost accounting system Wastes, inefficiencies and losses are eliminated by costaccounting system by fixing standard for everything. In reduces cost by following new and improved method ofthe cost (Fullerton, Kennedy and Widener, 2014.). It helps in determining the make or buy decision. Job costing system It enables the organization to assess performance ofemployees It facilitates cost control by comparing actual withestimates. It helps managers to identify that which job is moreprofitable. Price optimizing system It assists in analysis of adequate cost over good andservices. It determines the suitable cost of several products of goodsand services.
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