Management Accounting - Hargreaves Lansdown plc
Added on - 21 Feb 2021
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INTRODUCTIONManagement accounting system is a set of various guidelines and procedures along withvarious rules and regulations for the purpose of providing company's performance relating tofinancial activities to the managers (Albaddad and Nassar, 2018). With the help of this system,managers can be informed in more effective way and managerial accountants can help managersin formation of more effective strategies and plans for the business organisation. In addition,there are also various tools and techniques available in the management accounting system withthe help of which the business organisation can include more effective control and managementof each business activity relating to various financial transactions of the firm.Hargreaves Lansdown plc is a medium sized financial advisory firm. it was established inthe year 1981. Presently the company provides financial advice to a range of hospitality, trust,manufacturing companies, etc. in the present assignment, a brief introduction regarding overallmanagement accounting system is being provided along with numerous methods of managementaccounting reporting and their advantages and disadvantage. Further, the study also includes acalculative part. In that part of study, it shows preparation of various financial reports by usingthe most appropriate techniques of management accounting system. In addition, the study alsoprovides a detailed discussion about different planning tools of budgetary control system to beused by the managers while performing their managerial functions. At the end of project, itshows numerous management accounting systems that can be used by the managers in order tohelp the corporation in responding to various financial problems arise the business.LO1.P1. Explaining the concept of management accounting and the essential requirements of itssystemsManagement accounting refers to the application of the appropriate concepts and thetechniques in order to process the historical and the projected economic data of the enterprisethat assist in developing the reasonable objectives for making rational decisions towardsachieving these objectives(Xiong and Zhang, 2019. It is mainly concerned with effective andefficient management of the business through presenting the information that facilitate efficientplanning and the control. Management accounting relates with the accounting information that isuseful for the management of an entity. There are various systems under the managementaccounting which plays an essential role in smooth functioning of the business are as follows-
Cost accounting system- This system relates with the ascertainment of the cost involvedin the process of production. It plays a crucial role in the decision making process of thecompany as it helps in improving the planning of the resources and its allocation which in turnhelps in gaining the efficiency in the cost and in the overall profitability. Cost accounting systemprovides the firm in estimating accurate cost of the products which is very critical for running theoperations as per the standards and the strategies set. Mainly there are two major kinds of thecost accounting system that includes job order costing and the process costing. Job order costingis the method that accumulates the manufacturing cost of each job and in process costing,accumulation is made for manufacturing cost of each process.Benefits:It is beneficiary forHargreaves Lansdown plc in maintaining cost control within thefirm.It helps in elimination of cost wastage within the firm.It helps in improving profit earning capacity of the business.Price optimization system- It is called as the mathematical tool that is used by thecompany in order to determine the response of the customers at different price level towards theproduct and the services of the organization. Price optimization system is essential for theenterprise for fixing the best prices that meets the profit maximization objective efficiently. It isthe best tool for determining the retail value of the consumer product and the services.Benefits:Adoption of price optimisation system is essential for setting the most appropriate priceof each product.This system helps in analysing the maximum price of product that customer would beready to pay.It is required to be adopted in order to sustain the customers with the firm for long time.Job costing system- This system of the management accounting refers to the process thataccumulates the information relating to the cost attached with the particular production and theservices job. This information is critical to the organization in order to quote the prices thatallows for the reasonable profits(Shiqi and Yuan, 2019). It includes the details regarding the costof the direct material, overhead and they direct labour cost. The information provided by thissystem is also used for assigning the invariable cost to the goods manufactured.