P1 Management Accounting System
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Added on 2020-10-22
P1 Management Accounting System
Added on 2020-10-22
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1 ...........................................................................................................................................1P1 Management accounting system and its types.......................................................................1P2 Management account reporting and its types.........................................................................2M1 Benefits of management accounting system........................................................................4D1 Management accounting system and its reporting are integrated within organisationalprocess.........................................................................................................................................5TASK 2............................................................................................................................................5P3 Calculation of cost using an appropriate techniques..............................................................5M2. Various types of accounting techniques:.............................................................................7TASK 3............................................................................................................................................8P4. Advantages and disadvantages of different planning tools used for budgetary control.......8M3 Uses and applications of planning tools for preparing and forecasting budgets..................9TASK 4............................................................................................................................................9P5 Responses of management accounting system to deal with financial problems...................9M4 Management accounting can lead organisation to sustainable success in responding tofinancial problems.....................................................................................................................11D3 Planning tools respond appropriately to resolve financial problems..................................11CONCLUSION .............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is a process of preparing various management reports andaccounts that provide accurate financial information to the management. It provides informationto the internal authorities of company. These reports mainly show the amount of revenues, cash,payable, receivables, accrued incomes and outstanding expenses of the enterprise. Managementaccounting system helps the company to get the proper information of the business executionprocess and its operations. This system helps the management of the company to evaluate costand to make various strategies to maximize profits of the company(Banerjee, 2012).Ovation Systems Ltd is a UK based manufacturer, designer and supplier company ofvideo surveillance products. This report is mainly based on management accounting system andconsist various informations such as management accounting reports, various planning tools thatare used in budgetary control and discussed about financial problems that a company has to faceand the ways to resolve them . TASK 1 P1 Management accounting system and its typesManagement accounting is a decision making tools that provide various information tothe management to make appropriate decisions according to the requirement of the company.Ovation Systems Ltd use management accounting system to provide exact information ofcompany's performance to insider and outsider parties of the organisation. The main objective ofthis system is to get the insider information of the business operations and its execution process.This system is used to form policies and strategies for the business in order to maximise itsprofitability. It makes decision making process easy and convenient by reducing workload ofmanagers (Bouten and Hoozée, 2013). There are four type of management accounting systemthat are used by the managers of Ovation Systems Ltd. These systems are explained below:Cost accounting system: This system is used by the management of Ovation SystemsLtd to determine the cost involved in the manufacturing process of the products. Itmeasures and records the cost individually then compare input results to the output andactual results to the budgeted. This comparison helps the managers to get the actualknowledge of financial performance of the company. It also estimate the profitability ofthe business and helps to achieve planned goals of the company. It will be more easy for1
the managers to use a cost accounting strategy for definite projects to find out the bottomline. This system is very helpful for the company because it helps to track the internalcost and keep the record of every activity of enterprise. Price optimisation system: This is a method that is used to analyse customer's reactionto the different prices of products. Ovation Systems Ltd use this system to determine theprices that will help to reach the objectives of the company. This system mainly focuseson the customer's willingness and the responsibility of the managers to find the price thatcustomers are willing to pay for their product and set the price according to them. It helpsthe company to attract the customers and win their loyalty by providing them valuableproducts with appropriate price that they can afford (Cadez and Guilding, 2012).Inventory management system: It is the system that keep the record of moving productsin and out of the company and it records all the inventory related information. Thissystem is used by the managers of Ovation Systems Ltd to supervise the flow ofinventory from business concern to storage warehouses. Inventory management systemhelps the managers to get the overall information of inventory whether it is in warehouse,transit or in market. It include storing, controlling, monitoring and ordering inventory forthe business. It also help the company to reduce the risk of improper management ofinventory.Job costing system: It is a system that is used to record the cost of a manufacturing jobrather than process. With the help of this system the managers can keep the track recordof the cost of each job. This is used within Ovation Systems Ltd in various situationssuch as when each job is different and performed to the customer's definition. It providesthe idea of direct and indirect cost involved in production process. It also determines themanufacturing cost consistently by dividing them in overhead, direct material and labour.It helps to estimate the cost at their actual value. Ovation Systems Ltd use this method tocontrol the use of raw materials, labour work time and cost of equipments (Contrafattoand Burns, 2013).P2 Management account reporting and its typesManagement account reports consist that information which is collected through theaccounting records of the company. These reports show the accurate informations to themanagers and stakeholders of the company. The reports are very transparent, so the stakeholders2
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