Managerial Accounting Concepts and Applications
Added on 2020-02-05
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MANAGEMENT ACCOUNTING
Table of ContentsINTRODUCTION................................................................................................................................1P1 Explain management accounting and different types of management accounting system.....1P2 Explaining different methods used for managerial accounting reporting...............................4P3 Calculation of costs by applying marginal & absorption costing techniques.........................6P4 Explain the advantages and disadvantages of different types of planning tools used for budgetary control.........................................................................................................................9P5 Compare how organizations are adapting management accounting systems to respond to financial problems......................................................................................................................11CONCLUSION..................................................................................................................................13REFERENCES...................................................................................................................................15
INTRODUCTIONThe process under which financial information of the business assists top management inbusiness planning, policy formulation, executive control over the daily operations andappreciation of the effectiveness. In the management accounting, higher business authoritygather accounting related information from purchase, sales, marketing, finance and otherdepartments through reporting and analyze the same to frame better growth plans and informedorganizational decisions. It not only considers important for the large sized entities, but alsogains equal importance for the small and medium sized corporations who significantlycontributes in the economic growth & success. British retail industry is one of the fastly growingsector in the corporate world, therefore, the report has taken into consideration a small sizedretail firm, Nisa Retail Stores. It aims at supporting the community all across the UK byrendering them high quality of food items at competitive prices. The report presents a deeplyevaluation of distinguish reporting and systems of management accounting that assist managerswith regards to policy creation & business decisions. Besides this, cost calculation is animportant operational aspect, henceforth, the report will undertake the practical use of twocosting techniques, full as well as variable costing. Later, traditional as well as contemporarytechniques of budgeting formulation i.e. incremental, zero based and others will be discussed incontext to Nisa’s success. P1 Explain management accounting and different types of management accounting systemNisa retail store is selected for the current project report which is small scale retail storewho started their business at small level. This entity currently deals in grocery and food productswhich are essential requirement of an individual. This is located in the United Kingdom in orderto satisfy the higher expectations of various customers as they want variety of products orservices offered by an enterprise. This retail store is exists in the external market which hasexpanded their overall business (Kotas, 2014). The scope of retail industry is graduallyincreasing as this has attracted wide tuber of businesses in the current sector which is generatinghigher business revenues. An entity exists in the retail sector need to implement various business1
policies and practices in order to maintain their existence for long tie in the business to generatehigher revenue and income in the business environment.Several problems faced by an entity that started their business on a small scale level asthey initially require enough amount of finance to uplift their current working conditions of theiroverall business. Quality of all the products should be enough to retain all the consumers withthe business for long time as external market competition will decrease the market share byoffering affordable products to attract wide number of customers. Customer’s satisfaction levelwill be increases by an entity to beat all their rivals as primary aim of the business in the currentbusiness environment is to satisfy all the customers located in the external market.Management accounting principles are emphasized on reducing current costs incurred inthe business which needs to be identified first in reducing with the passage time. Cost sheets arethee to analyze the current figure of costs to be incurred in the business as managementaccountants are appointed for the betterment of an entity as they held responsible for analyzingof the current business performance of the business in order to gain competitive advantage overits variety of customers (Lukka, 2014). It is regarded as that important process in which sourcesof costs are analyzed in order to reduce all costs along with the proper management systems usedby an entity in order to improve the singular efficiency of all the business activities included inan entity. Some management accounting systems which hips Nisa retailer is given as below:Inventory management system- Inventories are important source of an entity that needs to beprocured in the business till it gets all the customers as this will not remain in the business for thelong time (Rossi, 2014). The inventories will not store in the business for long time as itincreases the overall warehousing costs in the organization which in turn decreases the overallincome earned by the business in a particular financial year. The management of inventory getspossible by adopting appropriate system of managing inventory. The management of inventorygets possible by evaluating the stock values as this helps in taking important business actions inthe favor of the current business performance. The proper valuation of inventory will help inincreasing the overall profitability of the business within a given time period as this would helpan entity in order to grab higher market share in the external market.FIFO- It is an acronym that stands for first in first out method which is important methodmanaging overall inventories takes places in the business which requires proper management of2
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