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Methods Of Management Accounting : Assignment

   

Added on  2021-01-02

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Management Accounting

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and its types of management accounting systems........................1P2: Different methods used for management accounting reporting............................................3M1: Evaluate the benefits of management accounting system and its applications...................4D1: Management accounting system and its reporting are integrated within organisationalprocess.........................................................................................................................................5TASK 2............................................................................................................................................5P3: Calculation of cost using an appropriate techniques............................................................5D2: Data interpretation................................................................................................................8TASK 3............................................................................................................................................8P4: Budgetary control and advantages and disadvantages of planning tools used in budgetarycontrol ........................................................................................................................................8M3: Uses and applications of planning tools for preparing and forecasting budgets ..............10TASK 4..........................................................................................................................................10P5: Responses of management accounting system to deal with financial problems................10M4: Management accounting can lead organisation to sustainable success in responding tofinancial problems.....................................................................................................................12D3: Planning tools respond appropriately to resolve financial problems.................................12CONCLUSION .............................................................................................................................13REFERENCES..............................................................................................................................14

INTRODUCTIONManagement accounting has evolved to assist the management in performing itsfunctions of providing accounting information to management and assisting in performingmanagement function like planning, organising, controlling and decision making. This isprinciple used in preparing financial statements consists of profit & loss a/c, Balance sheet,statement of owner's equity and funds flow statements etc. for identifying company's financialposition and evaluate it's assets, liabilities and owners equity at a given accounting period(Ahmad and Mohamed Zabri, 2015.).Hichrom Ltd. is a growing company which is world's leading in high and ultra highperformance chromatography columns and accessories manufacturing and distributing chain. Inthis report organisation works on various management accounting systems, reporting methodsand evaluate their benefits on organisation performance. Management uses different costingtechniques for evaluating their financial statement. Hichrom Ltd. applies various planning toolswhich are used for controlling budgets and helps in forecasting. Accounting manager adoptvarious accounting systems to resolve company's financial issues so that manager can leadHichrom Ltd. to achieve success. TASK 1P1: Management accounting and its types of management accounting systemsManagement accounting aggregation of two words 'management' and 'accounting' wherethe term management means art of planning, organising, directing, controlling and decisionmaking and accounting refers to recording, classifying and summarizing of monetarytransactions. Therefore it is a systematic approach used as planning effectively, directing it'soperations and solving problems. Hichrom Ltd. products are used in forensics, frontiers ofscience and medicines as analysis of new drugs content, pharmaceuticals batch testing andidentify contaminants in blood, water etc. Pharmaceuticals, food, plastic and oil industries andagrochemical are the customers of Hichrom Ltd. Therefore it is important to prepare financialstatements in order to expand its business in global market. It can be complete by using variousmanagement accounting systems in way to make effective plans and decision to achievecompany's goal (Budding, Grossi and Tagesson, 2014.). Different management accounting systems are:1

Cost accounting systems: This is the accounting system used by company to estimatethe production cost for execution of different organisational activities like production anddistribution activities. Hichrom Ltd. is supplying to many countries through various distributionnetwork thus it important for management to optimum utilization of it's resources in manner toreducing the chances of wastage. It can be possible through using cost accounting system whichset a cost guidelines for company after analysing future uncertainties and their effectiveness.This system is analysis on the basis of actual, standard and normal costing. Actual costing is usedin determination of actual commodity cost based on product cost like actual material, labour andvariable overheads. Standard costing is based on pre-estimated materials, labour andmanufacturing overhead costs. Normal costing is derived on the basis of actual direct costs andstandard overhead rate (Cheng, 2012.).Price optimisation systems: It is another effective accounting system that helpsmanagement in makes best pricing policies for identifying the representation of targeted marketand knowing their willingness to pay for the services and product offered by Hichrom Ltd. Thiswill effect in maximizing the customer's faithfulness and satisfaction level of targeted market.Therefore increase in prices of product and services offered may leads to maximize the chancesof shifting faithful customers toward competitors which is not good for Hichrom Ltd. Thissystem is used as a tool which helps in improvement or recommends change in price that benefitscompany to achieve desired target.Job costing systems: It refers to such accounting system where manufacturing cost isassigning to single product or group of products which helps management in preparing animpressive budget. Hichrom Ltd. manager considering all activities performed in producingproduct and it's cost allocation basis which bring profits in coming future. Process coasting i.e.identifying product at individual level of manufacturing, standard costing i.e. an estimated costcompare with actual used in performing company's operation, contract costing are the various jobcosting systems . Hichrom Ltd. is using contract costing system for tracking their resources usedin production and marketing processes (Cleary, 2015).Inventory management system: This system company approaches in directmanagement of inventory to maintain sufficient inventory level and meet customer's needs andrequirements. Hichrom Ltd. is using this framework to manage their inventory on daily basis bytracking inventory level, creating material bills, production output and their sales. Company also2

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