Role of Management Accounting System
Added on 2020-10-05
22 Pages5808 Words188 Views
Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1LO 1.................................................................................................................................................1Role of management accounting and different management accounting system ......................1Different methods used in management accounting system ......................................................3Benefits of management accounting systems in select company ...............................................5LO 2.................................................................................................................................................6Prepare income statement using both absorption and marginal costing ....................................6Produce management accounting reports that apply in range of different business activities ...7LO 3.................................................................................................................................................8Advantages and disadvantages of planning tools used in budgetary control..............................8Analysis of different planning tools and its application in preparing budgets............................9LO 4...............................................................................................................................................10Comparing the management accounting methods of Unilever with other organisation...........10Analysis of management accounting method...........................................................................12Evaluating the role of budget for resolving financial problem.................................................13CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................15.......................................................................................................................................................16APPENDIX....................................................................................................................................17
INTRODUCTIONManagement accounting is the display of analysis of business activities to the internalmanagement to facilitate decisions making. The procedure of making management reports andaccounts which provides accurate and timely financial and statistical data required by managersto prepare daily and short terms decisions. Management accounting generates monthly andweekly reports for inside audiences with the company (Elsukova, 2015). These reports showamount of available cash, generating sales revenues outstanding debts and also includes trendscharts, variance analysis and other applied mathematics. It is the also called as cost accountingwhich is procedure of recognizing, measuring, explanation and communicating info to managersfor the movement of objectives of organization. This study is based on Unilever. It is the BritishDutch transnational consumer goods organization in the UK. The products involve food anddrinks, beauty goods and personal care goods.Furthermore, this report will explain role of management accounting and differentmanagement system in the company. It will state the different methods utilised in managementaccounting system. It will prepare income statement using both absorption and marginal costingin the firm. It will explain use of planning tools utilised in management accounting in the firm. Itwill compare different ways of management accounting system by different companies. LO 1Role of management accounting and different management accounting system Management Accounting:Managers utilise provisions of accounting data in relation to better inform themselvesbefore they decide matters within their companies like Unilever that helps their management andexecution of control operations. Management accounting is the profession which includespartnering in administration in management decision making, making planning and performancemanagement systems (Beattie, 2014). It is the giving expertise in financial reporting and controlto help administration in the formulation and apply of strategy of company which is called asmanagement accounting. The aim of management accounting is to help managers for makingdecisions within the organization. It manages margin analysis to assess profits when weighedagainst varying kinds of costs. Role of management Accounting:1
Managerial accounting plays an essential role in helping managers to lead theorganization in effective manner. Make financial strategies:It is the necessary to formulate financial strategies utilising sales forecasts, budgets andjob costing tool between other managerial accounting methods. It also can integrate informationfrom financial statement of Unilever to develop strategies which increase gross income, netprofits and earning per share. Monitor expenditure:It can create static, flexible, rolling budgets along with another kind of reports whichenable senior leaders and departmental heads to monitor expenditure within Unilever. It is theessential because operation expenditure have direct effect on bottom line profits. Communicating: Managerial accounting plays important role in establishment and maintenance ofcommunication and reporting system. The report about performance equipped by accountantscommunicate essential info to manager (Mihăilă, 2014). It shows them different ways wellmanages their actions and highlighting those issues which requires more thorough enquiry bymanagement by exception action. Motivating:Managerial accounting plays essential role in relation to budget and performance reportswhich are prepared by accountants have an essential effect in motivating staff of organizationlike Unilever. The budgets are targeted intending to motivate managers to accomplish objectivesof company. The performance reports plan to motivate individual execution by communicatinginformation linked to the targets. Fewer number of situation:Managerial accounting does not have to follow norms and principles of financialaccounting within the Unilever. Still, it needs to be accurate, but accountants can presentinformation, so that non-accountant can easily compass what is going on in the organization.This aids take the financial information and utilization it to create future plans for operating thefirm ( Luft, Shields and Thomas, 2016).Looking to future: 2
Managerial accounting focus more on what is to come. Through this, trying to figure outbudget for coming financial year. Management accountant present with predictions of revenue orlist of expected expenditures. Unilever can utilise that info to work put the budget or make otherdecisions for the future. Different methods used in management accounting system There are different management accounting system like cots accounting, inventorymanagement system and so on. The aim of management accounting is to help the managers ofcompany in recognizing and evaluating the outcomes of their judgements. It is also called as costaccounting which includes preparation of financial reports and statistical data that can assist intaking long-term and short term management decisions with the organization like Unilever(Elsukova, 2015). The managerial accounting reports contains all the compulsory details aboutcash flow, generating the revenue, detail of stock, payable accounts, debts and other relatedstatistics. In relation to, there are many methods, tools and techniques used in managementaccounting. Also, there are different management accounting system like cots accounting,inventory management system and so on. Cost accounting system:It is also called as costing system which is framework utilised by companies to estimatethe cost of their products for profitability analysis and inventory valuation and controlling of costwithin the Unilever. Inventory management system:Inventory management means to the procedure of ordering, storing, and utilising thestock of firm. These involve management of raw material, elements and finished goods andwarehousing and processing the such items by Unilever. Methods for management accounting system:Financial Accounting:It is the tool which is used in management accounting within the firm. The main objectiveof any of business organization is maximising of profits. This aim is accomplished by makingproper financial planning with in Unilever. Therefore, financial planning is considered as thebest technique or method for accomplishing the objectives of company. Financial statement analysis:3
It is the tool which is used in management accounting within the firm. Profits & loss andbalance sheet are essential financial statements. These statements are examined for differentperiod (Beattie, 2014). This kind of investigation aids the management to know the rate ofgrowth of business concern. This examination is done through comparative financial statement,common size statement and ratio analysis. This kind of technique help to achieve the objective ofUnilever. Fund flow analysis: It is the tool which is used in management accounting within the firm. This analysisdiscovers the movement of fund from one period to another. Furthermore, fund flow analysis isvery useful to know whether the fund is properly utilised or not in year when compared to thepast year. The working capital modification and funds from operation are also discovered outthrough fund flow analysis. This kind of technique help to achieve the objective of Unilever. Cash flow analysis: It is the tool which is used in management accounting within the firm. The change ofcash from one period to another can be discover through cash flow analysis (Mihăilă, 2014).Also, the reason for cash balance and modification among two periods are also found out. Itstudies the cash from operation and movement of cash in period. This kind of technique help toachieve the objective of Unilever. Marginal costing: It is the tool which is used in management accounting within the firm. This technique ormethod is utilised to fix selling price, selection of the best sale mix, utilization of rare rawmaterial or resources for making the decisions, acceptance or rejection of majority order andinternational order. It is the based on fixed, variable cost and contribution. This kind of techniquehelp to achieve the objective of Unilever. Budgetary control: It is the tool which is used in management accounting within the firm. Future financialrequirements are estimated and managed according to an orderly basis under budgetary controlmethod ( Luft, Shields and Thomas, 2016.). It is utilised to control the fiscal execution ofbusiness concern. Business operations are managed in desired direction. This kind of techniquehelp to achieve the objective of Unilever. Ratio Analysis: 4
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