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Management Accounting: ABC Ltd

   

Added on  2021-02-19

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ManagementAccounting
Management Accounting: ABC Ltd_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Management accounting and its types....................................................................................1Different method of management accounting reporting........................................................2Benefits of different management accounting systems..........................................................3Management accounting system and reporting is integrated with organisational processes.3TASK 2............................................................................................................................................3Applying a range of management accounting techniques:.....................................................3TASK 3............................................................................................................................................6Planning tools used in management accounting:....................................................................6Uses of different planing tools in forecasting budget.............................................................8TASK 4............................................................................................................................................8Comparison of how organisations are adapting management accounting systems to respond tofinancial problems:.................................................................................................................8Analysis about how responding to financial problems, management accounting leadorganisation to sustainable success:.....................................................................................10Evaluation of how planning tools for accounting respond appropriately for solving financialproblems to lead organisations to sustainable success:........................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
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INTRODUCTIONManagement accounting is a kind of accounting system which is related to internalmanagement of companies(Ward, 2012). It consists a wide range of reports, tools and techniqueswhich are required for overcoming the various financial issues. This process provide raw data tomanagerial personnels for decision making activities. It provide a systematic framework forbusiness organisation for achievement of organisation goals and objectives. The project reportcontains detailed explanation about the management accounting and its types as well as benefits,various aspects of management accounting reporting, advantage and disadvantage of variousplanning tools along with their application to respond financial problems of ABC Ltd, an amedium sized manufacturing company. This report also exhibits integration of managementaccounting system and reporting within organisational processes, practical application ofmanagement accounting techniques and an explanation about how responding to financialproblem leads organisation to sustainable success. TASK 1Management accounting and its types.Management accounting may be defined as an accounting system which plays a crucialrole for internal management as well as for controlling the financial performance of companies.This accounting system contains all kind of information including financial and non financialinformation which becomes basis for the managers to take important decisions. This accountingsystem is used by the ABC limited company for enhancing the management of theirmanufacturing system. Herein, some types of management accounting system are mentionedbelow:Inventory management system- Inventory management system is a kind of system thatis related to management of raw material as well as of finished products. It is required fortrack the quantity of available stock the warehouses and with the help of this companiesmake decisions for the production. The ABC limited company use this system to analyseabout the quantity of raw material and prepared products.Price optimisation system- Price optimisation system provides a framework fordetermining the price of products and services. Apart from this, it is required in analysethe reaction of customers on different pricing levels(DRURY, 2013). Due to this1
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companies can assign an accurate price of their products which is affordable for both tothe customers and company. The ABC limited company sets the price of their productswith the help of this system which satisfy their customers as well as they can earn profittoo.Cost accounting system- Cost accounting system is a kind of system which is related tothe estimation of cost of products and services. Due to this companies can analyse theirprofitability by the selling of product and services. The main requirement of thisaccounting system is to control the cost which occurs during the production. The abovecompany ABC limited implements this system for right estimation of cost of products. Different method of management accounting reporting.Management accounting reports are those reports which consists all kind of informationthat is necessary for internal management of the companies. Due to these reports organisationscan evaluate their financial and non financial performance(Wickramasinghe and Alawattage,2012). The ABC limited prepares different kind of management accounting reports on the basisof various methods which are as follows:Budgets- Budgets are the estimation of income and expenses for a particular time period.Eventually, these are helpful in making comparison of actual performance with the budgetedtargets. It is an important method of the preparing management accounting reports. The ABClimited company prepares the budgetary reports with the help of different types of budgetsbecause these consists all needed financial informations.Variance analysis- Variance analysis is a kind of method which compares the actualperformance with the standard goals. If any difference occurs then it take appropriate actions toresolve the difference. With the help of this method companies prepares the managementaccounting reports because it provides a basis for that. Herein, the above company ABC limitedapply this method of preparation of the various kind of reports.Cost schedules- Cost schedules are the estimation of cost in any kind of budgets. Whilepreparing the management accounting reports, these cost schedules help a lot. This is whybecause if actual cost is below the cost schedule then it will be a positive mark in the reports.Same as if occurred cost is more then the estimated cost, it will be negative aspect for theperformance reports. The ABC limited company use this method for making accounting reports.2
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