Management Accounting in Airdri
Added on 2020-10-23
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3Explain management accounting and give the essential requirements of different types ofmanagement accounting systems................................................................................................3Explain different methods used for management accounting reporting.....................................5TASK 2............................................................................................................................................7Range of management accounting techniques............................................................................7TASK 3............................................................................................................................................9Budget as an important control tool............................................................................................9TASK 4..........................................................................................................................................12Management accounting to respond to financial problems.......................................................12An analysis of how in responding to financial problems, management accounting can leadorganisation to sustainable success...........................................................................................13An evaluation of how planning tools for accounting help to solve problems and supportorganisations with sustainable success......................................................................................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONManagement accounting that also known as cost accounting, is an process for analysingor evaluating business cost and operations for prepare financial reports, records and systems tohelps managers in taking appropriate decisions for achieving goals and objectives (Arroyo,2012). On other hand it is an act of making financial sense and costing data to get usefulinformation for management and officers within organisation. This report is based on Airdriwhich is an small manufacturing company which produce hand dryers and other majoraccessories that helps to give suitability to organisation to gain large consumer base. This reportis based on management accounting and their management accounting system. It also includesmethods for management accounting reporting and appropriate tools and techniques for costanalysis by preparing income statement. Further it includes advantages and disadvantages oftypes of planning tools and budgetary control and adaptation of accounting systems to respondfinancial problems. Preparation of financial accounts and budgetary control are very importantfactors that give important evaluation about stability of an organisation and their future growth.TASK 1Explain management accounting and give the essential requirements of different types ofmanagement accounting systems.Management accounting is an chain of activities that helps in analysing kinds of cost andoperations by preparing internal reports, keeping kinds of records that proved beneficial formanagers in taking important decisions. There are various kinds of roles of managementaccounting that are as follows:Managerial accounting helps managers and other one to take important decisions and italso provides cost of goods and services in both condition whether product is profitable or not. Ithelps in when organisation taking important decisions such as open an new venture and theirimportant budgetary decisions (Boyns, Edwards and Nikitin, 2013). It helps in comparing actualdecisions with planned performance and evaluation and gives important decisions for criticalevaluation in success of an organisation.Long term and short term planning:Management accounting helps in both long term and short term planning while takingfuture decisions and plans. It facilitates at time of long term plans, strategic management and
their accounting and formulation of corporate strategy and at time of study of market trends andrelevancy. Role in developing management information system:Management accounting plays very important role at time of developing and taking longterm decisions making for forwarded to managerial staff or personnel at every level of anorganisation for taking important decisions.Different management accounting system:Management accounting system emphasis on collecting information and data with help ofexternal parties in which stakeholders, public regulators and lenders by following accountingprinciples (Contrafatto and Burns, 2013). There are some kind of management accountingsystem that vary from organisation to organisation and each system should be developed afteranalysing needs of management that helps in taking important decisions. The most basic types of management accounting system are:Cost accounting systemInventory management system Job costing system Price optimization system Cost accounting system:Cost accounting system that also known as product costing system which is anframework used by organisations for estimation or evaluation of costs of products forprofitability analysis, inventory valuation with controlling cost. Calculation of accurate cost ofproducts and services are very much crucial with critical for Airdri ltd at time of profitabilityoperations.There are various kinds of cost accounting system that are fixed cost, variable costand opportunity cost with sunk cost that are important part for an organisational growth andenhancement. With there are various costing techniques in which marginal costing, standardcosting with direct costing etc.. the main advantage of it that it disclose profitable andunprofitable actions with guide for production policies.Inventory management system:Inventory management system helps in track the goods and services by entire supplychain or by business operations operates under inventory management system (Grötsch, Blomeand Schleper, 2013). In that system it covers from production to retailing, warehousing to
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