Report on Management Accounting Tools- Nisa

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Added on 2020-02-17

Report on Management Accounting Tools- Nisa

Added on 2020-02-17

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Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1) Management accounting and its requirements for different types........................................3P2) Various methods used for management accounting reporting..............................................5TASK 2............................................................................................................................................7P3) Costing methods and comparison between marginal and absorption costing.......................7TASK 3..........................................................................................................................................11P4) Merits and drawbacks of budgetary control system ...........................................................11P5) Management accounting systems to solve out financial problems.....................................13CONCLUSION..............................................................................................................................15REFERENCE.................................................................................................................................162

Report on Management Accounting Tools- Nisa_2

INTRODUCTIONManagement accounting is multidisciplinary approach for effective business operationsand increasing efficiency of organization. It includes costing, budgeting, financial statements andoverall management. The present report is based on understanding different managementaccounting tools for expansion of entity and improving service qualities of Nisa. It is small scaleretail sector organization of UK that provides groceries and food products. In this regard, varioustools and systems of management accounting can be described through this assignment. Inaddition to this, forecasting and decision making for further business operations and itsimplementation. Moreover, several costing methods and preparation of income statement is toexpressed. Along with this, advantages and limitations of budgetary control system can beexplained. Thus, through this study, learners are able to learn several management accountingsystems for sustaining entity position in market for long term sustainability.TASK 1P1) Management accounting and its requirements for different typesManagement accounting is one of great tool to manage business operations andexpansion of small business unit enhancing its quality services. It includes different systems forprice determination and decision making related to strategic and risk management. Includingthis, it is key component to build up relationship between employee and employer of the firm(Beatty and Liao, 2014). Therefore, effectiveness of organization can be gained at high level. Inthis regard, management accounting is composition of financial, inventory, production andperformance management. It influences efficiency and market value of organization to makeplace for long term sustainability. However, management accountant of small scale enterpriserecognizes business performance through different tools such as financial statements, costing,performance of employees and entity etc. It focuses on various aspects for critical evaluation ofbusiness operations and expansion of small business unit through proper planning procedure anddecision making regarding to implementing strategies for enlargement of firm and sustaining itsmarket position for long time periodicity. Apart from this, it is multidisciplinary unit that isuseful for forecasting and decision making by several components for example; costing andbudgeting. These are useful for optimum allocation of resources and fund therefore, all business3

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operations can be managed effectively. However, increasing in quality services of goods andservices provided by enterprise can be managed efficiently (Blaikie and et.al., 2014). Inaccordance to this, various tools and techniques are applied for enlargement of entity andimproving quality services at large scale. In accordance tot his, systematic management andbalance between production and distribution of products can be created. In this way, it is usefulfor reporting and forecasting for further years operations effectively. Hence, several kinds ofideas are generated through this system to manage entire business operations by decision makingprocess. Under this process, different management accounting systems can be described asbelow:-Job order costing:- In this method, expenses incurred for manufacturing products aremeasured. However, several ideas are generated for price determination and effectiveallocation of resources in systematic manner. Including this, job order costing includingmanufacturing, labor and overhead cost are evaluated that is useful for furtherexpenditures for example; production and proper price determination (Bogsnes, 2016). Inthis process, an adequate idea is created that is helpful for balance of expenses andincome. Thus, through job order costing, strategy is prepared related to pricing andpreparing income statement for expenditure and income balance.Processing costing:- Under this system, management accountant of Nisa Ltd determinesprice of goods according to segregated work divisions. Therefore, pricing is determinedin different segmentation such as production, labor and expenditure incurred on additionspending. Thus, pricing in processing includes stages of production and further expensescharged in several stages are reported. Hence, processing costing is interrelated withseveral planning systems for further expansion and increasing effectiveness oforganization for required essentials. It is decision making tool for price determination andmaintaining product value for long term sustainability (Chenhall and Moers, 2015).Throughput costing:- Management accountant of organization uses this costing for costcontrol system. Through this system, cost effectiveness is gained in efficient manner thataffects price determination and several aspects related to presenting business performanceincluding productivity and profitability of firm. In this regard, different ideas are4

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