The Role of Management Accounts Department

The Role of Management
Accounts Department

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Management accounting and different type of management accounting system..................1
1.2 Representing methods of management accounting reporting................................................4
1.3 Representing advantages of above management accounting system with its use.................6
1.4 Representing critical evaluation of system of management accounting along with its
integration by reporting with organizational process...................................................................7
TASK 2............................................................................................................................................8
Income statement as per absorption costing................................................................................8
Income statement on basis of marginal costing...........................................................................9
TASK 3............................................................................................................................................9
3.1 Representing benefits and limitations of planning tool with use of budgetary control.........9
3.2 Representing application of various planning tool for forecasting and preparing budget...12
TASK 4..........................................................................................................................................13
4.1 Representing comparison of organization for purpose of adapting system of management
accounting to respond on financial problems............................................................................13
4.2 Representing analysis to respond to financial problems, management accounting could
lead organization for sustainable success..................................................................................15
4.3 Representing evaluation of planning tools of account for solving financial problems for
leading sustainable success........................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Accounting is referred as process of measuring, identifying and communicating
economic data for purpose of allowing different judgements along with informed decision
amount users of data. The present report will give brief discussion about concept of management
accounting with its requirements and essentials. Further it will reflect various planning tools
which will be used for responding to financial problems. With context of planning tool, it will
represent merits and their demerits with their organization. In the similar aspect, it will show
managerial accounting reports with their importance in Jupiter Plc.
TASK 1
1.1 Management accounting and different type of management accounting system.
Management accounting implies for the internal financial business activities analysis
which assists manager in developing competent strategies and policies for day to day operations.
Management accounting is the process of preparing management reports that includes the
accounting information to the management of the organisation so that they make effective
strategies and policies for the long term and short-term objectives of Jupiter Plc. It helps the
management of the company to perform their basic function of managing, controlling, planning
and directing (Fullerton, Kennedy and Widener, 2014).
Management accounting system is crucial for the effective operations of Jupiter Plc. It is
a process which helps in formatting a managerial report with the company's financial information
for the managers so that they identify different ways and decision making to run the company
more efficiently. Management accounting system helps all the department of the Jupiter plc.
Management accounting system focuses on the expenses that are incurred to the Jupiter plc in the
production of the goods and services. There are different types of management accounting
system that are required by Jupiter Plc in their management system:
Cost accounting system:
it is process that helps in determine the company cost in producing a single product by
evaluating its overhead cods and fixed cost. It is very important to evaluate the cost of the
product in order to analyse the profitability of the products, inventory valuation and controlling
of the expenses. By ascertaining the profitability of the product, the management can determine
the actual cost of the product. Cost accounting system is of two types:
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 Standard costing: it is the techniques which are used to evaluate the variances of actual
cost of production and the cost that should be incurred in the production.
 Direct Cost: It is the cost or expenses that are assigned in the production of certain goods
and services. Direct cost is helpful to the manager in the process of making decisions
regarding the cost control.
Inventory management system:
It is process which helps in tracking goods in the entire process of the supply chain in
Jupiter plc. It helps in covering the flow of goods from the production process to warehousing,
and all other movement of goods until the final delivery to the client. It helps in evaluating the
total cost of the inventory which helps in generating high return of revenue to the company.
Inventory management system is important as it helps in evaluating cost that are hold with the
inventory produces. The inventory management helps in knowing the management how much
inventory needs to be produced, and the position of over stock and under stock in a store.
In regards to inventory management, business unit or management accountant can use
following methods:
 FIFO (First in first out): As per this method, priority is giving to selling inventory
which in turn purchased firstly.
 LIFO (Last in first out): It places emphasis on selling inventory first which purchased
in last.
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 AVCO (Average value cost method): Under this method, stocks is valued at the
weighted average cost of all the purchases.
Job costing system:
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In this system of management accounting, a cost is assigned to every product that will
help in determining the manager the actual expenses in manufacturing the product. It helps in
assigning the manufacturing cost to every single item systematically in overhead expenses, direct
labour, material to evaluate the actual process of the product. It is an important system which
helps the management in controlling the use of raw material, labour hours by assigning each cost
for different customer (Messner, 2016).
1.2 Representing methods of management accounting reporting
Managerial accounting focus on gaining internal information via financial accounting.
The managerial accounting reports helps in giving information with requirement of trimming
cost, rewarding employees for high performing, avoiding languishing product line along with
investing in goods for offering the best financial return of Jupiter Plc. There is huge dependency
on kind of project for undertaking business along with time sensitivity with reference to financial
information which helps in producing reports on quarterly, monthly, weekly, yearly and regular
basis as well. The methods of management accounting reports are:
 Accounts Receivable ageing: This report is replicated as critical tool for purpose of
managing its cash flow for extending credit to its business consumers. With context of
this report, it breaks down balances about duration of its ownership. Generally, this report
consists of single column of invoices about 30, 60 or 90 days late or more than it. It
extracts issues with collection process of business entity.
 Budget Report: This report is useful for business owners for purpose of analysing
business performance and managers for analysing the control cost and performance of
department. The budget period is estimated which is directly based on expenses of actual
aspect through previous year. The budget report helps managers and owners to give
incentives to Jupiter PLC's employees. The budgeted funds might provide bonus to its
employees for accomplishing the financial objectives.
 Job cost reports: It reflects expenses of project which is financed through small business.
Generally, these are matched with revenue estimation for evaluating profitability of job
and determines high earning areas of business to focus on its additional efforts rather than
wasting money and time on job with context of low profit margin. It is useful for
analysing expenses with progress in project for correcting areas of waste prior to costs
out of control (Types of Managerial accounting report, 2018).
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