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Introduction to Management Accounting

   

Added on  2020-06-03

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Management Accounting
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TABLE OF CONTENTSINTRODUCTION......................................................................................................................1P1 Explaining the requirements of different types of management accounting in thebusiness context.....................................................................................................................1P2 Presenting different methods that can be used for reporting purpose...............................4P3 Computing cost and profit by using marginal and absorption system..............................6P4 Stating the benefits and drawbacks of different planning tools that can be used forbudgetary control...................................................................................................................8P5 Comparing the manner in which different management accounting system can be usedfor responding financial problems.......................................................................................11CONCLUSION........................................................................................................................13REFERENCES.........................................................................................................................14
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INTRODUCTIONManagement accounting may be served as a process of analyzing, interpreting andpresenting accounting information for decision making. In order to pursuit organizationalgoals and developing sound framework manager requires appropriate input for decisionmaking. In this regard, management accounting tools and techniques are highly significantwhich in turn provides manager with timely financial and statistical information for shortterm or day to day decision. Aspects of financial and management accounting are highlydiffer to a great extent. MA is the most effectual tool that helps in making assessment ofoperational performance and gives indication regarding improvement. Thus, field of MAhelps in improving financial performance and meeting the expectations of stakeholders to agreat extent. On the basis of given case situation, Food for Friends (F&F) has been selected whichoffers dinning services to the customers. It comes under the category of small businesssegment whose turnover is not exceeding £500000. In this, report will shed light on thedifferent MA systems and its requirement for business unit. Along with this, it will providedeeper insight about managerial reporting and its contribution in decision making. Further,report also entails the manner in which different planning tools help in making optimum useof monetary resources.
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P1 Explaining the requirements of different types of management accounting in the businesscontextDifferent types of management accounting system: MA system lays high level ofemphasis on tracking cost which is associated with the production or offering of goods orservices. Main accounting system that concerned business unit can undertake for managingcost include inventory management, job costing and price optimization system. MA systemsconsider operational data and thereby assist in developing informative reports for decisionmaking (What is A Management Accounting System, 2017). Thus, by using MA systemsmanager can get timely as well as accurate information and thereby become able to takedecision pertaining to operational items such as cutting cost, enhancing production time,inventory on-hand & marketing budget. Main MA systems are enumerated below:Price optimization: By taking into account such MA business entity of restaurantl unitcan assess the manner in which customers will respond to different prices. Thus, throughundertaking the system of MA firm can determine suitable prices of products or services thatcan meet the goals of business unit and customers. Moreover, now customers are priceconscious in nature and prefer to purchase quality products at suitable prices. In this regard,by using the system of price optimization business organization can evolve high level ofsatisfaction among the customers (The benefits of price optimization, 2017). Besides this, themain motive of company is to enhance customer satisfaction, productivity and profitability.On the basis of such aspect, by setting suitable prices firm can maximize operating profitmargin and meets organizational goals and objectives. Thus, it can be said that such systemhelps firm in improving profit margin to the significant level. Cost accounting: Such accounting system assists in identifying and evaluating thecost of products, processes, projects etc. Determination of suitable cost is highly requiredfor business unit. Moreover, without having information about cost business entity cannotsuitable price and profit margin. Thus, by using cost accounting system firm can capturethe company’s cost of production to a great extent. On the basis of such aspect oraccounting system, by adding both fixed as well as variable expenses business unit candetermine the cost of offerings. Further, by dividing total expenses from number ofoffering business entity can assess per unit cost.
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