Process of Management Accounting | Report
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Added on 2020-02-05
Process of Management Accounting | Report
Added on 2020-02-05
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Meaning of management accounting and different types of management accountingsystems...................................................................................................................................3P2 Different methods that are used for management accounting reporting...........................5M1 Benefits of management accounting systems.................................................................7D1 Evaluation of management accounting systems and management accounting reporting7TASK 2............................................................................................................................................7P3 calculation of cost using marginal and absorption costing and explaining the differencesbetween them..........................................................................................................................7M2 Application of the range of management accounting techniques..................................11D2 Interpretation of data for the business activities.............................................................11TASK 3..........................................................................................................................................12P4 Different types of planning tools that can be used for budgetary control.......................12M3 Uses of different planning tools and their application for preparation of budgets........14P5 Adoption of management accounting systems in order to solve financial problems......14M4 sustainable success of the organisation by management accounting............................16D3 use of planning tools for solving financial problems.....................................................16CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
INTRODUCTIONmanagement accounting is the process by which timely and accurate reports are preparedby the management in relation to statistical and financial data. The information recorded in theprocess of management accounting is important for the management as this is used for thepurpose of making important decisions in relation to business (Kaplan and Atkinson, 2015). Thereports prepared in management accounting are required to be made on weekly or monthly basisand they are only for the internal authorities such as chief executive officer or mangers ofdifferent departments of the company. Unicorn Grocery is the co operative grocery store. It wasestablished in 1996 and is located in Manchester, England. The main purpose is to provide thecustomers with range of fresh, affordable food. In this report, the matters in relation tomanagement accounting in Unicorn Grocery will be included. The various aspects that will bediscussed in this report will include meaning of management accounting, different types ofmanagement accounting systems, and ways of reporting about management accounting.TASK 1P1 Meaning of management accounting and different types of management accounting systemsIn order to achieve the goals that are set by Unicorn Grocery, various processes will berequired to be followed which will include measurement, identification, evaluation, interpretationand communication of the relevant information (Macintosh and Quattrone, 2010). Theinformation which is obtained and the reports that are made in management accounting are donefor providing the managers of organisation with the relevant information that will help them intaking the correct decisions for overall benefit of the company. Management accounting isdifferent from financial accounting as in it various financial aspects like balance sheet, taxationare dealt with and also the reports of financial data are provided to the external world. There arethree main areas where management accounting extends and those areas are performancemanagement, risk management and strategic management. There are different types ofmanagement accounting systems which are discussed below:-1.Job costing system: - In the production process that is undertaken in any company, thereare various activities that are undertaken. In relation to them different types of jobs areperformed in respect of which various costs are incurred. The cost will be made oncumulative basis and in order to calculate the per unit cost it will be required that all the
expenditure that have been made will have to be added. After that the total that will bearrived will be needed to be divided by the total number of unite that are produced bywhich per unit cost of the product will be ascertained.2.Inventory management system: - In the manufacturing process, inventory is the mostimportant aspect that is required to be taken into consideration. There are various thingsthat should be controlled in this such as the quantity of stock that should be maintainedand the ordering time and level. It will be identified that how much inventory is neededand at what time. On the basis of this orders will be placed. By this the problem ofshortage and surplus stock will be solved and there will be cost saving that will beachieved.3.Cost accounting system: - Perpetual accounting system will be used in the process ofrecording. In the conduction of this system, five parts are present that are required to bedone in order to complete the whole process. At first the input that is required in themanufacturing process will be required to be measured. Then the inventory that is usedwill be valued by using various methods such activity based costing. All the cost that areincurred will be accumulated in the next part of the system. After that all the assumptionsin relation to the cash flow will be made like which system to use in respect of inventorythat is FIFO or weighted average. At last all the capabilities will be recorded by usingperpetual or periodic methods.4.Price optimisation system: - This system covers the price related aspect in which themost profitable price will be fixed. After the cost will be ascertained, it will be requiredthat on the basis of that such price will be decided by which company will be able tomaximise its profit level together with the maintenance of demand. This is needed as therelation between price and demand is inverse which means that with increase in price,demand will be reduced and vice versa. So it will be required that appropriate method isused in deciding price by which both company and customers will be benefited.P2 Different methods that are used for management accounting reportingThere are various methods that can be used for the purpose of management accountingreporting. Some of them are discussed below:-1.Job costing report :- in case of management accounting by taking into consideration allthe cost in relation to various aspects such as production cost, overhead cost, labour cost
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