Management Accounting & Essential Requirements
18 Pages5993 Words200 Views
Added on 2020-10-22
Management Accounting & Essential Requirements
Added on 2020-10-22
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1 (LO1).................................................................................................................................1Explaining management accounting and essential requirements of various systems ofmanagement accounting.........................................................................................................1Explaining various methods used for reporting under management accounting...................3Evaluating the benefits and the application of the management accounting systems within theorganization............................................................................................................................3Evaluating the integration between the system and the reporting of the managementaccounting...............................................................................................................................5TASK 2(LO2)..................................................................................................................................5LO 3.................................................................................................................................................9Evaluating planning tools used in Management Accounting.................................................9LO 4...............................................................................................................................................13Ways in which organisation uses management accounting to respond to financial problems.13CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting refers to the concepts and the methods that are essential for makingthe planning function effective. These methods are used for selecting the best alternative courseof action for the business and for efficient implementation of the controlling function through theinterpretation and evaluation of performance of the entity. The present report is based on theABC Ltd company, a medium sized manufacturing industry deals in producing and providingproducts and services. Furthermore, the report includes the meaning of the managementaccounting and the reasons for the requirement of the management accounting systems. Thereport also describes the various methods of the management accounting reporting and itsevaluation with the description of the integration between the systems and the reporting. Profitsare evaluated through the application of marginal and absorption costing technique. TASK 1 (LO1)Explaining management accounting and essential requirements of various systems ofmanagement accounting.Management accounting is the practice of determining, measuring, assessing, interpretingand presenting or communicating the information to the managers of the ABC Ltd for attainingthe goals of the organization effectively and efficiently (Hiebl, 2018). The basic differencebetween the management and the financial accounting is that management accounting helps themanagers in making decisions within the company whereas financial accounting aims atfacilitating information to the external users of the enterprise. There are various systems that areinvolved in management accounting such as-Management accounting systemsEssential requirementCost accounting system This system involves the process ofidentifying, recording, categorizing, analyzing,evaluating and allocating the cost attached tothe processes for developing suitable action incontrolling the costs (Latan and et.al., 2018). Itis required by the firm for estimating theirproduct cost so that profit can be analyzed.Job costing system It is known as the expense tracking system that1
helps the ABC Ltd in assigning itsmanufacturing cost to each of its product sothat managers can monitor the expenseseffectively. It is essential as it improves thecontrolling over the expenses which in turnboost the profits of the organization. Price optimization systemIt is the system that mathematically analyze thevarying demand of the customers at changingprice levels so that price for the product can befixed accordingly (Horton and de AraujoWanderley, 2018). It is very important tool asit helps the enterprise in fixing the price as perthe demand and purchasing power of thecustomers so that large customers can beattracted towards the product and leads toincrease in sales. Inventory management system This system is the combination of thetechnology, procedures and the processes thatenables the managers in maintaining andmonitoring the inventory so that it can beevaluated that whether those products areassets, raw material or the finished productionfor the ABC Ltd (Curry, Hersinger andNilsson, 2019). It is essential as it tracks theinventory from the storing in the warehouse todelivering it to the ultimate users. Explaining various methods used for reporting under management accounting. There are different methods that are used by the ABC Ltd for reporting under themanagement accounting like-2
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