Management Accounting Systems Solved Assignment

Added on - 21 Feb 2021

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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3Part 1...........................................................................................................................................3Different reporting methods under management accounting:.....................................................5Benefits of management accounting system:..............................................................................7Management accounting system and reports are integrate with company processes:................7Part 2:..........................................................................................................................................7Analysis the use of different planning tools and their application:.............................................9TASK 2............................................................................................................................................9Part 1...........................................................................................................................................9Calculating cost though proper cost analysis' technique to preparing income statement:..........9Part 2.........................................................................................................................................11Analysis and interpretation of financial statement of NEXT PLC:..........................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13ANNEXURE..................................................................................................................................14
INTRODUCTIONManagement accounting is crucial aspect of accounting. It comprises all the fiscal andmanaging tasks necessary for retrieving information for company's key decisions. Managementpersonnels and accounting officials both play crucial character in management accounting'sprocesses. Account officers gathers data which is further used in various systems to accomplishoverall goals of management accounting (Agrawal, 2018). Organisation's implementsmanagement accounting as per their existing capabilities and efficiencies while focusing on theirpotentials. This study exhibits entire management accounting concept and its systems, howmanaging personnels reports and to what extent management accounting systems areadvantageous in context of Next Plc. It is top retailer of clothings, home care products and footwears etc. in UK. Company is operating its retail chain through approx 680 stores. The studyalso combines practical implication of cost techniques and application of planning tools.TASK 1Part 1(A) Management accounting and typesManagement accounting relates to interpreting, analysing, characterizing, identifying,managing and presenting a commercial enterprise's data acquired through financial accountingand cost accounting. Management accounting assists business organization's executives in policyimplementation, policy and decision making and even in the company's day-to-day tasks andactivities. Organising vital variables of an entity's performance and operations is important thingwhich can be efficientlydone through adaption of various systems (Bryson, Crosby andBloomberg, 2014). Routine working of a company generate events and transactions whichultimately shows impact on their targets so management is divided into different layers, whichassist in monitoring such events and manage them to improve performance. The whole process isincomplete without management accounting's systems because it provide help in fixation ofresponsibilities and maintain accountability within company. Following headings containsdifferent systems and their requirements in context of Next Plc:Inventory Management System:This system comprises formulating and implementingpolicies for managing and directing usages of an entity's stock. Inventory are important fiscal
figure in computation of net results. It requires details of each stock items from processing headsto enable effective tracing of inventory's usage. It provide the list of items causing excess in costof stocks, which help in reducing or eliminating such costs. As in Next Plc store managers andother key officials transfers details of inventory in store, inventory in transit etc. that assist intracking value of wastages, sold units and items still unsold. This system provides details ofinventory store and outlet wise which also exhibits performance of each store. These are majorinventory recording approaches, as follows:FIFO Method: It defines valuation of stock as per a that in a particular sequence firstbought or processed inventory is sold at first in such sequence.LIFO Method: It emphasises on theory of valuation which consists that in a particularsequence recently purchased or processes inventory is sold at first in such sequence.Average Cost Method: In valuing process of inventory average going on stock value isused under this method.Cost accounting system:Expenditures are managed under this systems with intention toachieve desired increment in company's performance profitability. This is significantly relevantfor companies to assess entire process's costs and related variables to know whether these arewithin stipulated figures. A company can attain profitability without increasing their sales justonly by optimisation of numerous expenditures (Charifzadeh and Taschner, 2017). In Next Plcthis system determines the viability of decision of opening new store, launch new product range,develop new processes and so on. Moreover, such system company can evaluate effect of costson company's results and profitability level. Relationship between costs and profitability isanalysed in this system to assess the need of improvement in existing operational efficiencies.Price optimisation system:Main framework of this system consists of interrelation ofcompany's items price and their demand. Managers evaluates how effectively pricing strategiesare working in company. It ensures targeted demand is achieved along with adequate profitfigures. Prices are changed to an extent at which demand is at effective level. In Next Plc thissystem is utilised to enhance the sales at particular store, achieve targeted demand potentials andset pricing policies. Effective price of company's each items is determined and responses areanalysed by management for choosing most favourable price of its products. Company's internalpricing structure are formed by applying this system.
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