Report on Management Accounting- British Airways

Added on -2020-02-17

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MANAGEMENT ACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Understanding & Requirements of Management Accounting..........................................1P2 Methods used in Reporting of Management Accounting..................................................2M1 Benefits of Management Accounting..............................................................................3D1 Evaluation of Management Accounting with Present Scenario.......................................4TASK 2............................................................................................................................................4P3 Absorption & Marginal Costing........................................................................................4M2 Techniques of Management Accounting.........................................................................8D2 Financial reports & Data Interpretation............................................................................9TASK 3............................................................................................................................................9P4 Budget - Advantages & Disadvantages.............................................................................9M3 Planning Tools & Forecasting Techniques used in Budget...........................................11D3 Evaluation of Planning Tools.........................................................................................12TASK 4..........................................................................................................................................12P5 Comparison of Management Accounting With Financial Problem................................12M4 Management Accounting Aid to Financial Problems....................................................13CONCLUSION..............................................................................................................................14
INTRODUCTIONAccounting is from many years have been the key to the success of businessorganizations and always have facilitated in a systematic manner to take future decisionsregarding the financial of the company. Accounting having a history of uncountable years havemodified its practices as per time and nowadays accounting of a firm is divided into three sectorsthat is Financial accounting, Cost Accounting, Management Accounting, all this comprises thepractices that is being undertaken in the particular company(Libby and Lindsay, 2010). Thisparticular accounting practice is combination of the earlier two that is Cost and financial andmore emphasis is given on M.A for making the futuristic decisions. Thus, for the present report the kind of accounting taken here is Management Accountingand an enterprise which is British Airways is taken to make understand the reader the concept ofmanagement accounting in practicality and further how aims and objectives can be achievedthrough introduction of Management accounting practices. TASK 1P1 Understanding & Requirements of Management AccountingManagement accounting is that type of accounting in which lot of reports and financialdata is accessed on a particular interval or the periods. These periods can be weekly, monthly,quarterly and half-yearly. Management accounting is also used for making short-term decisionsand long-term decisions as well. Management of the company keeps the record of day to daytransactions of the operations of business through incorporation of this accounting in the system.Management accounting is a combination of Cost accounting and Financial accounting thatmeans it has a broader review in terms of coverage of the transactions and thus it is mostly usedby business to have a overall look at the financial as well as cost matters of the organization inorder to get insights on future being of the firm(Libby and Lindsay,2010). Further more it isowned by or the people who manages this department are highly professional and they are Chiefexecutive officers, Chartered Accountants, Senior accounting managers, etc. The reports whichare prepared in this set of accounting comprises accounts payable, o/s debts, raw material ,inventory, cash available in the business, variable and fixed expenses, etc. There are differentkinds of management accounting systems and those are:
Financial Accounting: This particular type of accounting is one of the traditionalapproaches that is used by various firms. Under this kind of accounting there are different driversof cost and it undertakes the process of collating information for the purpose of external financialreports, which is financial statements at the end of the year. Inventory Accounting: That type of management accounting in which if products orgoods is dispatched from one place to another then the cost involved in that transfer is alsoincluded in the accounts of the firm. Here, a firm has how many inventories and how much itrequires is studied.Cost accounting: This accounting helps in making the use of or helps in determining theconstraints which are used in system of production in the firm (Vosselman, 2014 ). This type ofaccounting is based on the principle of simplified management. Thus for British Airways togenerate profitability this accounting is great.Job Costing:This particular costing deals with the cost of those projects which areundertaken to customer's special requirement and each order is of comparatively short duration.In the system of organization like, due to changes in taste and preferences of customers productsfeatures vary from each other. Therefore, British Airways lay emphasis on Job costing. P2 Methods used in Reporting of Management AccountingSince management accounting is having a big and huge area coverage of the operationsof businesses thus it has different methods also which are used for reporting purposes ofmanagement accounting. There are three techniques or methods which are discussed below:Job Cost Reports: Job cost reports show the cost incurred for a specific project. Job costreports delivers the direction to every operation of business. They are usually matched with anestimate of revenue so that the company can evaluate the job's profitability.This method is thekey to every business success and so does it is the practice followed by British Airways over theyears and this adoption of method has made them successful. Job cost reports delivers thedirection to every operation of business.Inventory Management Reports:Business organizations with physical inventory can usemanagerial accounting reports to control and monitor levels of inventory. This report has beentaken by the organization in order to attain cost related information of the company in a

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