P1 Essential Requirement of Different Type of Management Accounting System

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
Part A...............................................................................................................................................1
P1 Essential requirement of different type of management accounting system.........................1
P2 Different methods used for accounting reporting ................................................................3
M1 Benefits of management accounting system and their application by the organisation.......4
D1 Critical evaluation of management accounting system and management accounting reports
.....................................................................................................................................................5
P4. Different planning tool used for budgetary control with their advantages and
disadvantages..............................................................................................................................5
P5 Comparison in which management accounting systems are used by the organisation..........7
M3. Different planning tools and their application for preparing and forecasting budgets........8
D3. Evaluation of planning tools to respond financial problems................................................9
CONCLUSION:...............................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Management accounting refers to the process of analysing various sections of
organisation and providing information related to finance to managers (Bennett, and James,
2017). This provides help in forecasting future and making effective decisions. The major
purpose of this tool is to plan appropriately for the future requirements. The company which has
been selected is Jaguar Land Rover engineering company. It is one the most reputed company of
UK that deals in designing, manufacturing and sales of vehicles. It was founded by William
Lyons in the year 1933 and it's main headquarters is in Whitley, England. Topics which has
been discussed in the following report are different types of management accounting systems
used by the company to handle variety of functions such as Price optimisation, Cost accounting,
Inventory and Job costing along with accounting reports, planning tools advantages and
disadvantages. Further comparison between the two organisation while dealing with financial
problems using such system. This Report will explain how applying these tool can help the
organisation in achieving growth.
Part A
P1 Essential requirement of different type of management accounting system
Management accounting is a method that analysis financial information of organisation in
order to plan effectively for the future requirements of business. It is vital for every company to
adopt this process as this helps in providing strong base to the organisation and helps in
achieving the goals. Being an accountant of Jaguar it is compulsory to manage company's
finances and making plans for the purpose of further growth (Christ, 2014). Jaguar is a well
known established brand it has variety of functions that are handled by different systems of
management accounting, their essential requirements in the company are discussed below:-
Cost accounting- This system is concerned with estimating cost incurred on various
stages of production which are later being compared with the revenue generated on output.
Jaguar design,produce and develops vehicles therefore this system is used by the company to
estimate the expenses occurred in every phase so that managers can decide strategies that needs
to be adopted to generate higher returns so that cost can be covered and profits will maximise.
This systems also essential as it helps in ascertaining the financial position of business by
keeping track of every cost that has been put in terms of money, time and efforts.
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Price optimisation System- It is a system that uses mathematical analysis and keeps
check of customers response towards the changing prices. This is used for setting appropriate
prices for the products and services offered by the company. Thus it is based on the cost of
manufacturing product their demand and level of competition in the market. Jaguar has adopted
this system to set charges for the different models of cars and gaining customers attention. This
system is essentially required as it helps in determining what expectations does customers have
from the brand (Drake, Roulstone and Thornock, 2016). It is very important to adopt this system
as organisation suffers from losses due to ineffective pricing. This is used to maintain the
appropriate balance between the value and profit.
Job costing System- It is a system of managing cost associated with different jobs that
are being performed by employees in the organisation. This system is being adopted by Jaguar
for the purpose of handling and maintaining expenditure associated with manufacturing of cars.
Different types of cost such as direct material, labour and overhead are required to be retained by
using this system. It helps companies in reducing expenditure and effective management of
funds. Cost accountant analyse the cost allotted to each job and providing that information to
billing department for the purpose of issuing invoices. Decisions are then taken by the managers
weather to increase the cost or decrease it.
Inventory Management system - It refers to the process of keeping track of raw
materials, assets and supplies along with finished products. This system is used by the Jaguar to
manage the inventory level of company by listing orders their deliveries and sales of products. It
is essentially required for maintaining the complete information of items such as their location,
availability and prices. For example various online shopping websites this system to track the
inventory and sync it with the sales for the shipment purpose. Therefore organisation needed to
adopt this method in order to control the storage of goods. There are three types of inventory
system such as Last in First out in which goods that are recently received used first for the
production purpose. Second is First in first out under which goods received previously are used
for production, last is Average cost method where cost of inventory is calculated on the basis of
average cost of goods that are being sold.
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