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Management Accounting Unicorn

Added on - 22 Nov 2020

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MANAGEMENT ACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1. Meaning of management account and its essential requirements for Unicorn.....................3P2. Different methods used for Management Accounting Report..............................................4TASK 2............................................................................................................................................6P3. Preparing income statement using marginal and absorption cost accounting......................6TASK 3............................................................................................................................................9P4. Advantages and disadvantages of different types of planning tools used for budgetarycontrol.........................................................................................................................................9P5. Presenting Unicorn adapting management accounting system to respond to financialproblem.....................................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting plays a key role in every organization. Every organization wantsto track performance information that goes beyond to cost based information of historic generalledger provided by additional financial accounting and this report helps to understand the use ofgood management accounting information. This report is based on Unicorn which is a smallretailer company in UK. It provides the entire grocery items with fresh quality of drinks and fooditems. The report explains the meaning of management accounting and gives the essentialrequirements of different types of management accounting system. It also deals with differentmethods which are used for management accounting reporting. The report uses appropriatetechniques of cost by preparing an income statement using marginal and absorption cost. It alsoexplains advantages and disadvantages of different types of planning tools used for budgetarycontrol for Unicorn and compared it how an organization adapts management accounting systemto respond to financial problems.TASK 1P1. Meaning of management account and its essential requirements for UnicornManagement Accounting refers to preparing and providing timely data related tofinancial status of a company to the managers so that they can take short and long term decisions.Management accounting includes complete details of cash available in a company to meet thefuture problems, sales revenue and many more (What is management Accounting,2018). Unicornalso uses management accounting system because this reports are basically use for internalpurpose only.There are various types of management accounting systems which are mentioned below:Cost Accounting:Cost Accounting System is used by Unicorn in order to know the priceof every product. It is used to track the position of raw materials moving from oneoperation to another and this system updates it in computer. For using cost accountingsystem, the owners and managers of Unicorn must know whether the product is going toearn profit or not (Labro and Hemmer, 2017). Actual Cost Accounting is the real cost of aproduct which includes real labor and expenses incurred during manufacturing. Normalcost is used to know the value of manufactured product in comparison of actual costwhich includes expenses incurred during allocation of product. Standard Cost Accountingis the basic difference between actual and normal cost of product. In order to prepare
financial statement of a company, cost accounting helps to estimate the values ofinventory of product and finished goods inventory.InventoryAccounting System:Unicorn used inventory accounting system which is aprocess which check the movements of products during shipping or for market purpose.Earlier, this system is based on cardex system but now whole system is based on systemsoftware that is computer Unicorn maintains perpetual inventory system because itshows all inventory movements during an accounting period whereas in periodicinventory system, the balance is not changed throughout the year and remains the sametill the end (Chenhall and Moers, 2015). Using inventory accounting system, managerscan improve communication skills and use the latest technology and this system easilyanalysis about the product shortage in a company.Job Costing System:Unicorn also uses job costing system as it divided themanufacturing cost into particular job such as direct material, labor and overheads. It isnecessary to use job costing system in a business because it helps to show an overallprofit in specific field of job but it does not show the complete profits earned during ayear. It is used when the products manufacture are completely different from each other jIf a company uses job costing then it must maintain job cost records for each item whichshows an overall profit of all departments of materials used, labor and extra expensesincurred during manufacturing (Oseifuah, 2018). Job Costing Accounting System isuseful to know the accuracy and performance of company by allocating normal prices inorder to maximize profits.P2. Different methods used for Management Accounting ReportUnicorn uses various types of accounting reports to know the exact position andperformance. These reports show whether the business is in profit or loss and presents an exactscenario of business.These are mentioned below:1.Budget Report:Unicorn uses this report in order to know how much money is neededby every department and this estimation is done based on the past experience. Budgetreport shows the exact cash flow and expenses incurred during a year. Using this report,Unicorn tries to achieve its goals and objectives by providing sufficient money to eachsector.
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