Unit 5 Management Accounting - Assignment
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Added on 2020-01-23
Unit 5 Management Accounting - Assignment
Added on 2020-01-23
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Unit 5. ManagementACCOUNTING
INTRODUCTIONManagement accounting is important for entire organization's development. It is usefulfor risk management and implementing strategic plans for entity's effectiveness. In this regard,decision making and forecasting regarding business activities are performed that is helpful forsystematic growth of enterprises. The present report is based on management accounting toolsand techniques of Nisa. It is retail sector small medium enterprise UK that provides groceries and food items. Inaccordance to this, various methods for effective accounting system including its types can bedetermined. Including this, different techniques used for management accounting reporting ispresenter. Moreover, learners can learn several costing methods for preparing income statementas well analyzing data interpretation for further decision making can be understood through thisstudy. Along with this, significance of management accounting tools for decision making andaction planning for expansion of small scale firm can present. TASK 1P1) Management accounting and its different systemsManagement AccountingGeneral ManagerSubject: To understand significance of management accounting systems in management ofbusiness operations for Nisa Ltd. Management accounting: - It is considered as provision of accounting informationremains helpful for effective performance and enhancing efficiency of organization. Undermanagement accounting system, varieties of business activities regarding financial, production,budgeting, action planning and solving out issues occur at workplace are determined. Therefore,proper price determination and information related to entity's performance is obtained that isuseful for enlargement of firm and qualitative services produces by company (Otley andEmmanuel, 2013). However, it involves variance analysis, activity based costing and differenttechniques for developing effectiveness of firm. In this regard, management accountant of Nisarecognizes financial statements and reports that leads to making decisions for further businessactivities. Thus, management accounting plays crucial role in organization's systematic1
management that aims to increase productivity and profitability with budgeting and forecastingmethods. Management accounting is helpful for entire business activities and enlargement ofsmall scale enterprise. Therefore, it is valuable for overall implementation of businessorganization and producing qualitative services of firm.Management accounting systems: - Different tools and techniques are determined for effective management accountingsystems such as; analysing business performance, using costing method for adequate pricedetermination, inventory management and additional tools that are valuable for enlargement ofsmall size enterprise. Therefore, various management accounting systems and theirrequirements can describe as below: -Job order costing system: Under this management accounting system, cost incurred formanufacturing process is analysed. It includes decisions regarding investment onpurchasing raw materials, labour costs and additional overhead (Corona, Nan andZhang, 2014). Therefore, decisions regarding investment are done through this process.Cost accounting system: In this management accounting system, planning is createdregarding reducing expenses and increasing sales revenue for business operations.However, effective price determination and management of production and distributionof goods can be done through this process system (Bennett, Schaltegger and Zvezdov,2013).Inventory management system: Management accounting is also effective formanaging inventories of Nisa Ltd. However, different ideas are generated regardingoptimum utilization of resources and fund affect productivity and profitability of thefirm more efficiently (Van, 2015).Price optimization: Through identifying cost incurred on manufacturing andproduction process, price can be determined as well optimized more effectively. It willbe able to increase profitability and management of entire business operations of NisaLtd.Identifying business performance: - Management accountant of Nisa evaluatesbusiness activities including production and distribution of groceries, financial statements and2
all records that company maintained (Fullerton, Kennedy and Widener, 2013). Thus, on behalfof these records, further decisions are made to achieve optimum utilization of resource andgaining better quality services. In addition to this, proper financial management and costing forgoods and services are determined. However, cash flow, income statement, expenditures andrevenue of firm are recognized that is valuable for effective business performance. Inaccordance to this, budget and proper strategies are prepared for implementation and systematicmanagement of firm. Cost effectiveness: -Management accounting involves costing tool for determiningprice of goods produced by organization. Under this system, adequate pricing is obtained forincreasing demand and productivity. In accordance to this, based on manufacturing,expenditures incurred for work in process management accountant sets price of goods andservices provided by company. For cost effectiveness, accountant makes strategies related toadequacy and maintaining effective productivity. In this regard, different costing methods areused for example; marginal and absorption costing. Thus, price is determined effectively forcost effectiveness (Van der Stede, 2015).Inventory management: - This tool of management accounting is useful for properallocation of resources. This type of system, production and supplement of groceries producedby Nisa. However, it includes places and stores to keep inventories safely such as warehouses,stores and factories where manufacturing and production is produced. Hence, managementaccountant of small scale enterprise makes decision regarding inventory management. Alongwith this, business activity of last year related to inventory and its management is obtained thatthan in other industries (Bui and Villiers, 2016).Risk management: - Management accounting is essential for reducing risk occurs atworkplace. Therefore, management accountant and manager of firm identify issues and furtherprepares strategies for its reduction. It is related to formulating, implementing and evaluatingstrategic planning as well action plans. Moreover, different planning procedures and decisionmaking process is obtained for obtaining solutions to recover problems (Senftlechner and Hiebl,2015). It is interrelated with performance and efficiency of entity remains adequate formanaging occur at workplace. Therefore, management accountant formulates financial andother strategies for enlargement of business organization as well increasing qualitative services3
of firm.Traditional cost accounting system- it is very helpful approach in order to determine cost ofsingle project. In this the direct and indirect cost is to be calculated in order to fine out exactcost incurred for particular project. The traditional cost accounting is very important tool inorder to determine the price factor and their services. Lean accounting system- it works in manner to have proper identification in process,accounting, controlling and various measurement techniques. This is very flexible accountingprocess. It can be understood as less complex and cost effective method.Thus, composition of various management accounting systems is useful for Nisa fordevelopment of small scale organization with strategic and managerial plans. In this regard,business organization get developed entirely by focusing on overall activities and performancesof entity. Therefore, different management accounting systems are useful for enlargement andsystematic management of all activities performed by firm. It influences company's reputationand efficiency for producing groceries and food items at high level. Hence, it is determined thatmanagement accounting is crucial for expansion and increasing productivity of firm effectively.P2) Techniques used for management accounting reportingGeneral ManagerNisa Ltd Management accounting is integration of overall systems for implementing businessactivities (Bennett, Schaltegger and Zvezdov, 2013). Under this method, various reports andrecords are maintained by accountant for decision-making and planning procedure related toexpansion and better quality services. In this process, management accountant of the enterpriseprepare and maintain following report can be described as below:Job cost reports: In this management accounting report, accountant records allexpenditures incurred in manufacturing process for Nisa Ltd. For example; purchasingraw materials, labor and additional overhead costs. Therefore, proper recording eachfinancial transaction is prepared on which price determination is done for further4
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