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Evaluation of Management Accounting Systems and Reporting

   

Added on  2021-02-20

18 Pages4527 Words51 Views
Management Accounting
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Table of ContentsINTRODUCTION...........................................................................................................................3LO 1.................................................................................................................................................3P 1. Systems of MA.....................................................................................................................3M 1. Benefits of MA system........................................................................................................4P 2 Methods used for Management Accounting Reporting ........................................................5D1 Evaluation of management accounting systems and reporting is integrated withinorganisational processes...............................................................................................................6LO 2.................................................................................................................................................7P 3 Calculation of net profit/(loss) under Marginal costing and absorption costing of KEF Ltd7M 2 Application of management accounting techniques produce appropriate financialreporting documents.....................................................................................................................9D 2 Application of financial reports and interpretation of data for complex business activities9LO 3 ..............................................................................................................................................10P4. Defining advantages and disadvantages of vatious planning tools. ...................................10M3 & D 3. Analysing uses and application of the different planning tools..............................12LO 4...............................................................................................................................................13P 5. Comparing management accounting system used for overcoming financial issues...........13M4. Evaluating use of management accounting system in organisation success......................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................16
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INTRODUCTIONManagement accounting (MA) is an effective process which helps internal managementof the organization to achieve desired results and outcomes on time by attaining organizationalgoals and objectives. MA helps in effective decision making and controlling cost for higheroperational standards. This study will highlight, various systems of MA and also determinedifferent methods of MA reports. Furthermore, this study identifies various MA techniques andinterpret the data using effective methods. This report further identifies various planning tools forbudget. This study also compare the MA tool to solve financial problems. KEF Ltd. Company is a manufacturing company which was established in the year 1961by Raymond Cooke and is headquartered in Maidstone, England. This company mainly deals inipod speakers, headphones, studio monitors, loudspeakers and drivers subwoofer. LO 1P 1. Systems of MA.Management accounting (MA)It is an effective tool which helps management of the organization in determining theperformance of the company and taking strategic decision which leads to higher operationalstandards and efficacy (Management Accounting: Meaning, Functions and Characteristics,2019). It also helps management in planning, forecasting the future and analysing the trends(Hiebl, 2018). Management Accounting SystemSystem of MA helps in strategic decision making and also identify the areas to criticallysolve various financial problems for smooth functioning of KEF Ltd. company. MA systemincludes capital budgeting analysis, future forecasting and variance analysis to determine thecause of the problem and take necessary measures to resolve the issue for long term sustainablegrowth (Otley, 2016). Cost accounting system: This tool helps in crucial analysis of the cost attached to theeach manufacturing unit of the production process in KEF Ltd. Company. This report helps inanalysing the profitability and controlling the cost (Fleischman and Parker, 2017). This systemhelps management in giving detailed information about the output levels, level of accuracy ofeach production and selling process, machines, labour, raw material, etc. This tool also helps in
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removing unnecessary cost and taking necessary measure for higher sustainable growth. Inventory management system: This MA system keeps proper track and record of theinventory levels, orders, sales and delivery for higher operational efficiency. This helps inautomating the records and tracking inventory which makes it easier for management to takestrategic decision (Maskell, Baggaley and Grasso, 2017). It is also useful in reducing manuallabour and focus on more skilled work for higher operational efficiency. There are variousinventory management methods such as LIFO, FIFO, JIT method, ABC methods, stock reviewand weighted average method. Job costing system: This system is useful in accumulating and distributing cost to eachindividual unit of production which leads to higher operational standards and attainment of goals.This helps management in determining the cost of the job and also analyse the most profitableunits in order to prioritize the job for higher growth of the KEF Ltd. Company (Maas,Schaltegger and Crutzen, 2016). This system helps management in keeping proper track of theexpenses of each job for strategic decision making. This can be done by accurately categorizingthe cost of manufacturing into direct material, labour and overhead cost. Price optimization system: This system is an effective process which helps in criticallyanalysing and predicting the behaviour of the consumers with the change in the price of theparticular product of the KEF Ltd. Company. This system helps in evaluating the accurate pricein order to attain greater profitability (Taleizadeh, Noori-daryan and Cárdenas-Barrón, 2015).This tool effectively evaluates the price of the varied products and services to meet theorganizational goals and objectives and generate higher revenues and profit. This system alsocritically examines the change in the demand and supply with the variation in price of the goodsand services offered by KEF Ltd. Company.M 1. Benefits of MA system.Cost accounting system: This tool is beneficial because it helps management of theorganization in evaluating the accurate cost of the production units in order to generate higherprofits (Fleischman and Parker, 2017). This system helps in determining the most profitable unitsof the company and have proper control over the materials for smooth functioning of thebusiness. Inventory management system: This tool is useful as it helps in increasing efficiency byusing ERP management tool and also helps ins saving cost by minimizing expenses and
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