Management Accounting Techniques and Tools
Added on 2020-10-05
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MANAGEMENTACOUNTING 1
Table of ContentsINTRODUCTION...........................................................................................................................3SECTION 1......................................................................................................................................3P1: Following various types of accounting system and their essential applications...................3P2: Different types of accounting system use in reporting.........................................................4P3: Different costing methods.....................................................................................................5SECTION 2......................................................................................................................................9Part 1...........................................................................................................................................9P4: Merits and demerits of using planning tools in budgetary control.......................................9Part 2.........................................................................................................................................11P5: Various financial issues and measure to resolve it.............................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................132
INTRODUCTIONManagement accounting is significant part of organization whether the operation of theorganization is small or larger. It is the heart of the internal management system which supportsin decision-making, preparing strategies and planning for business operations (van Helden andUddin, 2016). Management accounting controls the activities of the organization and also framesplan for each divisions of the organization. All the administration works are handling very wellby the management accountant by using the management accounting techniques. With the helpof these tools and techniques the management accountant evaluates the performance of entireorganization. The management accountant uses the accounting information in an appropriatemanner. NERO LTD. consolidates its organizational processes with the management accountingfor achieving the desire goals and objectives within the time period in an effectual manner (Lim,2011).SECTION 1P1: Following various types of accounting system and their essential applicationsThe various types of management accounting systems and their essential role andapplications combine with the different organizational activities associated to NERO LTD. arediscussed as below:1.Cost accounting system: - Cost accounting system is the system used by the organizationto estimate the cost of its products which includes cost control, profitability analysis, andstock valuation. In this accounting system, the cost apportionment and allocation islocated on traditional costing or activity- based costing system (Gates, Nicolas andWalker, 2012). This system measures individually and records the costs then comparesthe financial performance of the organization. Cost accounting system is very essentialpart of the management accounting because it provides the well-organized techniquessuch as marginal costing, standard costing, budgetary control and inventory control to themanagement accountant to minimize the cost and increases the profit margin.2.Job costing system: - Job costing is the costing where the manufacturing costs allocatedto the separate unit or bunches of the products. This system is applicable where theproducts manufactured are dissimilar from another one. It includes the cost datacollection which is related to the specific job. This cost data is utilized by the customer of3
the organization for the evaluation the cost of product than afterwards they place an orderto the organization. The job costing system needs to collect the three types of direct costsuch as direct raw materials, labour and overheads.3.Price optimization systems: - Price optimization system means the use of statistical toolsto determine the customer reaction towards the price of products and services which areoffered by the organization. This optimization system is used to determine the productsprice on which organizations want to increases the operating profits. While deciding theprice, management firstly evaluates the pricing policies of the competitors (Hiebl and et.al., 2015). 4.Inventory management systems: - Inventory management system is the system to controlthe wastages of stock, managing the stock level in the business operations. The inventorymanagement system includes the system which tracks the inventory level, reorder leveland minimize the overstock and under stock problems in the organization systems. Thestock or inventory is one of the main assets for the organization through which they makeprofits by converting into the useful products for the customers.5.Management information systems: - Management information system is a computerizedorganized database of financial information which produces the regular reports onoperations for every level of management in the organization. The most importantpurpose of MIS to give managers feedback about their own performance and topmanagement can easily track the organization as whole (Macinati and Anessi-Pessina,2014). The information which is displayed by the MIS i.e. the actual information overagainst planned and also shows year before results to the managers. The above accounting system helps the management to analyze the performance of thebusiness activities in most efficient and effective manner. These systems provide the opportunityto the organization to maximize their profits and minimize the costs and wastage in the activities.It also provides necessary accounting information to the various departments for their operations(Jalaludin, Sulaiman and Nazli Nik Ahmad, 2011). So, it is necessary to have these above systemin the organization to achieve the goals and objectives in best manner.P2: Different types of accounting system use in reportingThe report is a well- organized and orderly summarized the information about theorganization performance in the accounting year. These reports are utilized by management and4
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