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Report on Management Accounting Tool

   

Added on  2020-06-04

16 Pages5179 Words65 Views
MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1TASK. 1...........................................................................................................................................1P1.................................................................................................................................................1P2 ................................................................................................................................................3M1 ..............................................................................................................................................4D1................................................................................................................................................4TASK 2............................................................................................................................................4P3.................................................................................................................................................4M2...............................................................................................................................................7D2................................................................................................................................................8TASK 3............................................................................................................................................8P4.................................................................................................................................................8M3: ...........................................................................................................................................10P5: ............................................................................................................................................10M4: ...........................................................................................................................................11D3:.............................................................................................................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................13Books and Journals...................................................................................................................13

INTRODUCTIONManagement accounting is the main tool which is used in the sourcing, analysis,communication and implementing the financial and non financial information regardingdecisions. Each organisation attempting to gain the competitive advantages over the others rivals.MA is also known as the cost accounting, and this is applicable usually on the manufacturingcompanies (Otley and Emmanuel, 2013). ABC Ltd is the drug manufacturing company whichopt the management accounting system in order to attain the maximum output so that the per- setobjectives could attain. However, the managers of the cited firm are being assisted to have therelevant information in order to have the business sustainable. Management accounting does notonly concern to the finance related information but also need to gather information overall.Managers build their policy as per their business need and respond accordingly. However, thereare so many methods in the management accounting, but there is need to attain the pre- setobjectives of the organisation (Tucker and Lowe, 2014). TASK. 1P1Management accounting is the process of defining entire accounting system of acompany that means it covers entire financial issues. MA refers to making overall accountingreports to manage and control the future related cost (Morales and Lambert, 2013). MA reflectsan adequate report that act as an effective and useful tool during planning period or to forecastthe estimated sales. As managing accounting refers to controlling entire monetary terms in anadequate manner through minimising their losses via taking accurate estimation. While, on theother hands, management accounting is to manage the additional cost via using the balance sheetso that the company needs to aware about their available assets and liability (Otley andEmmanuel, 2013). In this various processes will be required to be undertaken by the companywhich will be including identification, interpretation, and analysation of the data. The managerswill be able to make the best decisions with the help of the information that will be collected inall these processes (Macintosh and Quattrone, 2010). There is vast difference betweenmanagement and financial accounting. As in this the data that is collected is used by thecompany only and it will not be provided to the outside parties. There are various systems thatcan be used by ABC and some of them are:1

Inventory management system: Inventory is required in all the production processesthat are undertaken and for that various decisions are required to be made so that it can bemanaged in the most appropriate manner. It will be required that the quantity of the stockthat is required to be maintained should be identified so that the the level which should beordered should be calculated and by that the units that will be ordered will be such bywhich the problem of the shortage will be solved (Lukka and Modell, 2010). The costthat is incurred in storage of the excess inventory will also be saved by the company andby this the overall cost of the company will be reduced which will lead to increase in itsprofits.Job costing system: In any process there are different jobs that are performed so that thefinal product can be achieved and on them there will many expenses that will beinvolved. It is not possible for the company to calculate the per unit cost on the basis ofeach job so it is adopted by them that all the cost that will be incurred should be addedand then they will be allocated to different units and activities. For this it will be neededthat the cost should be divided by the units so that per unit cost can be calculated.Cost accounting system: This is one of the most important system in which the workthat is to be carried out is divided into various parts (Lukka and Modell, 2010). There arein all five parts that will be undertaken among which firstly the measurement of theinputs that will be used in the process will be required to be done. Secondly variousmethods that are available will be used in the valuation of the inventory. In the next partaccumulation of all the expenses will be done and the assumptions that are to be made sothat cash flow can be analysed and lastly the periodic methods will have to be used sothat all the capabilities can be recorded properly which will be helpful for the company.Price optimisation system: The main motive of any business is to earn more and moreprofits and for that it will be required that most profitable price should be charged fromthe customers. But in this it should also be taken care off that the price should be suchthat will be affordable for the consumers (Luft and Shields, 2010). This is required asthere is great relation between the price and demand as if the price is increased then thedemand will be reduced as all the customers are not willing to pay the high price for theproduct so the demand will be affected. So various methods that are available for thevaluation of price will be used and best price will be selected.2

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