Types of Management Accounting Assignment (Solution)

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and essential requirement of various types of managementaccounting system........................................................................................................................1P2 Different types of management accounting reporting:...........................................................3M1 Benefits of management accounting systems and their organizational applications............5D1 Critically evaluate the accounting system or accounting report with the organisation.........5TASK 2............................................................................................................................................6P3 Produce income statement by using marginal or absorption costing method........................6M2 Use appropriate accounting techniques to produce financial reporting documents..............7D2 Financial reports which helps in interpreting business operational activities........................8TASK 3............................................................................................................................................8P4. Planning tools for budgetary control.....................................................................................8M3. Usage of planning tools and their application for preparing and forecasting budgets.......10TASK 4..........................................................................................................................................10P5. Comparison of organisations to solve the financial problem by using managementaccounting system......................................................................................................................10M4. Management accounting in response to solve financial issue that can lead to thesustainable success.....................................................................................................................14D3 Planning tools to resolve the financial problems.................................................................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting is a application of accounting concept, techniques as well asknowledge at the time of preparing accounting information (Boyns, Edwards and Nikitin, 2013).It is used by managers to take decisions for the operational purposes. It also helps in formulatingpolicies or plans in order to control organisational operations and making decisions for thepurpose of optimum resource utilisation, safeguarding assets as well as disclosing financialinformation. In other words, management accounting is a process of presenting economic alongwith financial data which helps in performance evaluation, making comparisons, forecastingbudgets and formulating strategies for the betterment of the company. It is used for increasingoperational effectiveness along with efficiency for the purpose of enhancing productivity as wellas profitability that generates more revenue for an entity. For understanding managementaccounting concept, Brightstar Limited is selected. The chosen organisation has its headquarterslocated at London, UK which provides financial consulting services and serves numerous clientsthat operates their business in sectors such as hospitality, manufacturing, construction, retail andso on in order to provide crucial information for the requirement of managerial decision making.One of the client entity of Brightstar Limited is Galway Plc which takes consulting services forfinancial solutions. The present report includes description of management accounting alongwith its systems. It discusses about different types of management accounting reports, benefits ofsystems, various costing techniques which are used for preparation of income statements. It alsoincludes pros and cons of various planning tools which are used for purpose of budgetarycontrol. Lastly, it discusses several ways adopted by management to solve financial problems byusing effective accounting systems as well as reporting. Manager uses appropriate tools ortechniques to respond towards financial problems which helps them to lead towards sustainablesuccess.TASK 1P1 Management accounting and essential requirement of various types of managementaccounting systemManagement accounting:It includes procedures for preparing management reportsalong with accounts which helps in providing timely as well as accurate statistical informationthat are used by managers for the purpose of making daily and short term decisions (Bui and1
Porter, 2010). Such accounting concept is future oriented which is used for deciding as well asplanning future actions. Managers of Galway Plc uses this type of accounting for the purpose offinancial planning, record keeping, decision making and so on. It bridges the gap betweenfinancial department and other departments that helps in controlling undertaking operations. It isconsidered as backbone of selected company as it enhances internal efficiency of financialdepartment by preparing accounting reports with the help of various financial information.Financial reports are used by stakeholders for the purpose of making investment decisions whichare based on financial performance of the company in an accounting year.Management accounting system:It encompasses practices that help a company tomaintain operational activities in effective manner. Such system are designed for providingvarying information to management on the basis of managers requirements in order to aid indecision making. Managers of Galway Plc uses various types of management accountingsystems in order to enhance functions of operational department that increases productivity andat the same time profitability. Following are some of the systems:Inventory management system:Such system is used for the supervision of stock itemsas well as non capitalized assets. It is a software or system that is used by organisationalmanagers to track level of inventory for the purpose of preventing material shortages. GalwayPlc managers uses this system to track the incoming and outgoing of materials or finishedproducts. It helps in getting accurate information about current inventory level which results inminimizing situations related to under stock or overstock at workplace or warehouses. Trackingquantities of inventory at different stock locations provides insights as well as making smarterdecisions for required inventory. This system is essentially required as to keep daily as well asdetailed record of new and returned products which enters or leaves organisations or warehousesat some point of sale.Cost accounting system:Another name is product costing system. Such system is usedto estimate costs of products for the purpose of valuation of inventory, controlling cost alongwith analysing profitability. This system helps in estimating accurate product or service costbased on profitable operations. The essential requirement of cost accounting system is todetermine prices, fixing standards, controlling costs and to classify cost on the basis on factorycost, prime cost, selling cost, direct cost and so on (Clarke, Dean and Graves, 2017). Using suchsystem, production managers of Galway Plc carefully analysis costs of different products. It also2
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