Requirements of Management Accounting System
Added on 2021-02-20
18 Pages5553 Words163 Views
ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Defined about the management accounting and the requirements of managementaccounting system.......................................................................................................................1M1 Defined the benefits of management accounting systems and their application..................2D1 Integration of management accounting system and report within organisational process....3P2 Define different methods used for management accounting reporting..................................3TASK 2............................................................................................................................................5P3 Usage of the techniques of cost analysis to prepare income statement by using marginaland absorption costing.................................................................................................................5M2 Applying range of management accounting techniques.......................................................7D2 Produce financial reports and interpretation of above data...................................................7TASK 3............................................................................................................................................7P4 Defined advantages and disadvantages of different kind of planning tools which are usedfor budgetary control...................................................................................................................7M3 Analyse the use of different planning tools and their application.......................................9D3 Application of planning tools to respond financial issue along with attainment ofsustainable success ...................................................................................................................10TASK 4..........................................................................................................................................10P5 Compare how organisations are adapting management accounting systems to respond tofinancial problems.....................................................................................................................10M4 Analyse the contribution of management accounting in respond to financial problems....13CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement Accounting is explained as a practice of identifying, measuring, analysingand communicating all of the financial information to top management for the purpose ofachieving companies mission & vision(What is Management Accounting, 2019). It involvespresentation of any financial information for internal purposes so that key business can be takeneasily. With the help of management accounting, financial information can be collected throughwhich overall performance can be improved in short period of time. This project report is basedby considering Oshodi Plc which is one of the bigger manufacturing industry in the sector ofJOJO fruit juice. The main benefit of JOJO juice is that it can be consumed by every group agepeople. Number of concept will be covered in it which will start from the explantation ofmanagement accounting with several method of management accounting report. Different typesof planning tool will also be discussed with their major advantages and disadvantages. Also, filewill contain detail knowledge that how management accounting helps to resolve any sort offinancial problem which arises in the organisation.TASK 1P1 Defined about the management accounting and the requirements of management accountingsystemManagement accounting is explained as a method or even concept that helps associationbecause it collects all of the information related to financial activity through which decisions canbe taken easily(Parker, 2012). Different types of financial analysis such as product costing,forecasting, budgeting can done with the help of management accounting. In context of OshodiPlc, management accounting will play crucial role for them as it will give them idea that whattypes of decision are required to be taken by organisation for achieving goals. As Oshodi Plcperforms at greater level, it will be important for them to select different management accountingso that company can perform better. List of some management accounting system are:Price Optimising System: It is a accounting system which can play huge role fororganisation like Oshodi Plc because company gets opportunity to select suitable pricefor selling their product within the market. It has a huge impact on market becauseorganisation can easily identify that how slight changes in product price changes the
whole demand and supply structure. In order to increase the sale of JOJO fruits, it will beimportant for Oshodi Plc to select best price which can be affordable by customers.Cost Accounting System: Whenever organisation produces number of product they usescost accounting system because it helps to estimate the accurate amount of cost everyproduct(Otley, 2016). It is suitable because company gets the chance to calculate whetherthey are earning profit or not. Oshodi Plc can be benefited from cost accounting systembecause it will help them to prepare annual financial statement as it helps to keep recordsrelated to stock, WIP and finished goods. In short, it will give that what is the estimatecost to prepare any of the JOJO juice profit. Even cost accounting systems are of twotypes and they are:◦Job costing system: This accounting system is favourable for those businessorganisation which manufactures number of product because every single cost can becalculated easily in it. ◦Process costing: It is the accounting system which helps to find the cost ofproduction at each stage. This is costing method is necessary for those companywhich takes number of stages for manufacturing any of the product.Inventory management system: This is the accounting system which is used by OshodiPlc in order to find accurate demand any supply of market. This can be beneficial forthem because it will give them the idea that what should be the quantity of raw materialthat is need to be kept within the organisation through which demand and supply will notbe affected in any situation. There are different types of inventory management systemwhich can be used by Oshodi Plc such as LIFO, FIFO & AVCO. In order to reducewastage of raw material, Oshodi Plc should use FIFO method where first in product willbe manufactured at first for selling within the market(Fullerton and et. al., 2014).M1 Defined the benefits of management accounting systems and their application.Price optimisation systemFor the purpose of enhancing overall sale of a company, price optimisation system can beused by Oshodi Plc.It will give idea to organisation that at what price consumers want to purchase any of theJOJO juice product.
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