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Importance of management accounting in decision-making process

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Added on  2020-06-04

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MANAGEMENT ACCOUNTING TABLE OF CONTENTS INTRODUCTION 1 SECTION 11 PART A1 1 Importance of management accounting in decision-making process for improve performances1 2. (c) Produce reconciled statements of profit and loss 8 SECTION 28 PART A8 (a) Compare different management accounting methods8 Comparison among the different three tools11 PART B12 Effectiveness of management accounting to deal with financial problems 12 Assess problem to respond towards financial problem, management accounting to lead with business success 12 CONCLUSION || 13 RE

Importance of management accounting in decision-making process

   Added on 2020-06-04

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MANAGEMENTACCOUNTING
Importance of management accounting in decision-making process_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1SECTION 1......................................................................................................................................1PART A...........................................................................................................................................11 Importance of management accounting in decision-making process for improveperformances...............................................................................................................................12. Three types of management accounting system used for report of management accounting.23. Critically evaluates benefits of management accounting system............................................34. (a) Absorption costing and marginal costing techniques........................................................44. (b) Supportive calculation and demonstrate profit in each method........................................74. (c) Produce reconciled statements of profit and loss..............................................................8SECTION 2......................................................................................................................................8PART A...........................................................................................................................................8(a) Compare different management accounting methods...........................................................8Comparison among the different three tools.............................................................................11PART B..........................................................................................................................................12Effectiveness of management accounting to deal with financial problems..............................12Assess problem to respond towards financial problem, management accounting to lead withbusiness success........................................................................................................................12CONCLUSION..............................................................................................................................13REFERENCES .............................................................................................................................14
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INTRODUCTIONManagement accounting is the important part of every business which include procedurefor develop report and account. It helps to managers to make effective financial statements totake day to day operations (Otley and Emmanuel, 2013). Further, short term plan can also bemade in successful way for ascertain more effective results. In this context, report based on theMittelstand which is small and medium enterprise which deals in machinery, auto parts,chemicals and many electrical equipment’s. For gaining insight knowledge of the company,present report covers understanding of the management accounting system. Furthermore, itincludes use of planning tools that are used in management accounting. Moreover, it discussesabout ways of management accounting which applied on effectiveness of financial outcomes. SECTION 1PART A1 Importance of management accounting in decision-making process for improve performancesManagement Accounting-management accounting involves the process of preparingvarious reports and account in order to get timely and accurate financial and statisticalinformation for making various short as well as long term decisions (Bebbington, Unerman andO'Dwyer, 2014). For instance sales report generated buy using management accounting isutilised by various stakeholder in order to gain knowledge about profitability of organisations.These reports typically present data related to cash receivable, payable, cash in hand, rawmaterial, stock in hand etc.Financial accounting-Financial accounting is the process which is conducted to keeptrack in firm financial transaction. Financial report is produced by financial accounting system inwhich various transaction are recorded in summarised way and presented in systematic manneras well in proper format. Example of financial report are income and expenditure account,balance sheet etc.Difference between management accounting and financial accountingFinancial accountingManagement accountingFinancial accounting is focussed on financial 1. Management accounting has focus on1
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activities carried out by organisations.2.Some set standard are required to befollowed in financial accounting. 3.Financial accounting aim at providing onlyquantitative data.4.It helps manager in analysing financialposition of company.operational reports which are distributed withina company. 2. There are no set standards in managementaccounting.3. Management accounting provide\s bothquantitative and qualitative data.4.It provides assistance to manger in makingvarious decision (Otley and Emmanuel, 2013).Management accounting profession involves partnering in the management for decision-making. In addition to this, it is the system of devising plans and performance that providesexpertise for financial reporting and formulate management plans (Bebbington, Unerman andO'Dwyer, 2014). In order to contributing development, competent framework has been takensignificant in Mittelstand for decision-making. They are as follows:Cost analysis: In the management accounting information system, there are differenttypes of important elements helps in business to perform functions of cost assessment. With thehelp of this method, Mittelstand can take decisions to sell specific type or product and services.Moreover, it also serves information for cost level and extent relevant results on it (Ammar,2017). For example, management accounting system helps in to take decisions for marketingefforts and plans as well. In this the chosen organisation, manager has aim to take decisions touse alternative mode of the advertisement. It will assist to assess common cost which can behelps in conducting research (Otley, 2016).Ascertain decision to produce or buying: Another importance of managementaccounting is ascertained decision to face several problems and issues that relate to buyingproduct or its production (Freedman, 2017). In this aspect, Mittelstand need to assess cost forproduction and compare it with purchasing product. Therefore, it will help to take decisions forselect the best alternative from several points. In this using system, management accountingbusiness also decide to produce cost component that needed for buying products from others. Data utilization: With the help of different tools and techniques of the managementaccounting, budget, variance and many other things will be calculated that helps to take decisionfor future outcomes (Northcott, 2014). In this aspect, employees of Mittelstand need to take2
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