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Management Accounting Solved Assignment

   

Added on  2020-10-05

13 Pages3992 Words252 Views
MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1:Demonstrating management accounting and requirements of systems of managementaccounting...................................................................................................................................1P2: Different methods used in management accounting reports.................................................3TASK 2 ..........................................................................................................................................5P3: Calculating cost using appropriate techniques and preparation of income statement..........5TASK 3 ...........................................................................................................................................7P4: Various types of budgets and their merits and demerits.......................................................7TASK 4 ..........................................................................................................................................9P5: Adapting management accounting systems in responding to financial problems................9CONCLUSION ...............................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONManagement accounting is the process of accounting that is implemented in theorganisations for the internal management of the companies. The managers and supervisors ofthe company uses the reports made by the management accountants for the decision making andfor formulating policies for the organisations. Management accounting reports consists of thesummaries of financial statements of the company, and the future economic and non economicactivities that may be implemented in the markets in future. The management accountingreporting is quantitative in nature. This project report will discuss about the the variousmanagement accounting systems and their requirements in the companies. Methods used in thereporting of management accounting reports( Amoako, 2013 ). Analysing the techniques that areused in the estimation of costs using marginal and absorption costing in preparing statements ofprofit and loss. The merits and demerits of using planning tools that are utilised in budgetarycontrols. And finally analysing how the management accounting systems helps the companies inresponding to financial problems.TASK 1P1:Demonstrating management accounting and requirements of systems of managementaccountingManagement accounting, as the name implicates is the accounting that is done for theinternal management of the company. The management accounting is done by analysing andsummarising financial statements of the company and also uses the estimations of the futureeconomic and non economic policies in its reports that may be implemented in the markets andwhich will impact the company.(Management accounting and its importance [Online]) Themanagers then uses these reports in the decision making process and formulation of policies forthe companies according to future trends of the market. The essentials of managementaccounting systems are discussed as under:Planning: Planning is done by every company for the attainment of the objectives of theorganisation. It is done for the achievement of the short term as well as long term objectives ofthe companies( Bushee, Carter, and Gerakos, 2013 ). The management accounting process helpsthe mangers in the formation of the different budgets that are required to analyse the estimates ofcosts and expenditure in the operations. These budgets also assists in setting performancestandards for the company as a whole and for the individual employees.1

Organizing: This organisational process deals with managing the people of the companyin order to formulate well defined framework for the organisation and defining the roles andresponsibilities for each department and employee. This process assists in creating andmaintaining a proper hierarchy for the workplace and this is done with the help of managementaccounting.Controlling: This process of the companies deals with measuring the performances ofthe departments and employees in the organisation by comparing their actual performances withthe standard performances as per pre-stated in the budgets of the companies. The controllingprocess also measures the actual sales of the companies with standard sales then finding thevariations and taking corrective measures if required. This is all done because of themanagement accounting as it helps in the preparation of budgets. Decision making: The main purpose of management accounting reports is to assistsinternal managers of the companies in the decision making process and making policies andregulations for companies taking into consideration the market trends that may impact theoperations of the company by using the management accounting reports.( Chiarini, 2012 ) Different Costing systems: Actual costing: This system of costing involves the measurement of actual expenditurethat is incurred in the process of production and other operations. This method of costingconsiders the costs that is incurred in each job including the costs related to direct labour, directmaterial and other overheads.Standard Costing: This costing system estimates the standard cost that should beincurred in the production process . The standard cost of various operations are analysed in thecompany for different overheads such as material , labour etc. and then these are uses ascomparing tool for analysing the actual performances. Normal costing: This method considers the original rates that are assigned to themanufacturing heads such as labour, material etc. at the initial stage of the year. The material andlabour are assigned the actual rates and only overheads rate is fixed as earlier determined.Inventory management systems: The management of inventories is very essential in theorganisations as it is necessary in the efficient production process and meeting customerdemands. The raw material inventories management helps companies to provide productiondepartment with the goods as and when required without hindering the process. And finished2

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