Management Accounting (MA) Solved Assignment
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Added on 2021-02-19
Management Accounting (MA) Solved Assignment
Added on 2021-02-19
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MANAGEMENTACCOUNTING
INTRODUCTIONManagement accounting (MA) is application of different skills and knowledge in a way forpreparing accounting data which assist management to formulate policies, and to plan and incontrolling of operations. In other words profession of management accounting involves part inplanning, decision making, performance management, providing financial reports and controlsfor assisting management in formulating and implementing of cost budgets and strategies.(Kaplan and Atkinson, 2015). It facilitates management pertaining to various aspects namelystrategic, performance and risk factors. In contrast, with the financial accounting, MA isconcerned about providing the relevant data and report to internal users like entrepreneurs andmanagers. This report is based on Oshodi PLC which is specialised in JOJO fruit across all agebrackets. This report will include MA and its necessary requirement of various accountingsystems. The report also highlights various methods that are used in MA reporting. It will alsodevelop understanding about costing system that can be used for preparing profitability statementnamely marginal and absorption. It also entails benefits and disadvantages associated withdifferent tools of planning which could be used for budgeting control. Further, reports providesdeeper insight about how organisations can use MA systems for responding to financial issues.LO 1P1 Explaining management accounting and its essential requirement within organizationalcontext.Management accounting: - The tool is used in business to analyse business and itsactivities. MA is “ Application of different skills and knowledge in way to prepare accountinginformation that enables management in formulating policies and to plan & control theoperations of organisations” (Otley, 2016).It also includes methods and concept that areessential for efficient planning to choose the best alternative among the available alternatives inbusiness for acting and controlling by evaluating and interpreting data. MA helps in planning,decision making, identifying the early signs of the problem, strategic management. It analysesthe financing and non-financing informations and conclude results through information.Management v/s financial accounting systemFinancial AccountingManagement AccountingFA has focus on the preparation ofOn other side, managerial accounting is1
information useful for external partieswho are, lenders, stockholders andpublic regulatory authorities inaccordance to generally acceptedaccounting principles.providing information useful to internalstakeholders about performance ofcompany. (Maas, Schaltegger andCrutzen, 2016). An efficient management accountingsystem expands to all the departmentaldivisions of company such as IT,finance, Human resource, operations &sales.Different management accounting system:-Job Costing:- It is system used to monitor expense and which assigns cost ofmanufacturing to each item and enable managers of company to keep record of expenses. This isa system which determines cost of manufacturing systematically by segregating them at directmaterial, labour & overhead cost which estimate the actual value of the products produced byJOJO fruit juice. It is used for the controlling usage of raw material, direct labour hours, andequipments by assigning cost of every customer’s order individually. It is most useful for JOJOfruit juice where the firm do not have identical products it is used for the allocation of eachproduct costing differently. It accumulates three types of information which is as follows.Direct material:- it is the cost related to material directly used in the production system.Direct labour:- it is the cost incurred on the labour and direct wages paid to the workers.Overhead:- This implies for the extra cost which is incurred over the production likeadministration such as depreciation, rent of building etc.Advantages DisadvantagesIt provides detailed analysis cost suchas raw material, wages and overhead inthe production of different products andaccording to different departments,nature of expense which helps todetermine the operating efficiency ofIt is an expensive process because itinvolves in great clerical work inrecording daily cost of material, wagesand overhead which incurred a cost onfirm (Schaltegger and Burritt, 2017).2
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