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UNIT 5 – Management Accounting (Core unit 5)

   

Added on  2020-06-04

17 Pages5254 Words101 Views
UNIT: 5 – Management Accounting (Core unit 5)UNIT 5 MANAGEMENT ACCOUNTINGTABLE OF CONTENTSIntroduction (page 4)TASK 1LO1 P1 Explain management accounting and give the essential requirements of different types of management accounting systems to the chosen scenario (page 5-6-7)P2 Explain different methods used for management accounting reporting (page 8-9)TASK 2 LO2 P3 Calculate costs using appropriate techniques of cost analysis to prepare an income statement of marginal and absorption costing as specified above (page 10-11-12)TASK 3LO3 P4 Explain the advantages and disadvantages of different types of planning tools that can be used for budgetary control for the chosen scenario. (page 13-14)LO4 P5 Compare how organisations such as yours should adapt management accounting systems to respond to financial problems. (page 15)References (page 16)

Introduction FORD is a global organization structure and it’s main focus is the car industry.FORD takes second place in the world as the largest US car manufacturer due to her business growth and the way it performs.The main functional steps in FORD’s organizational structure are: global manufacturing, marketing, sales, human resources, quality, finance, communication.Globalization and control is the biggest advantage that FORD has.FORD’s strategy is cost leadership and it’s vision was to create cheaper cars for the lower class people.The company then create a method to minimise costs and maximise productivity.FORD’s first growth strategy was to be able to launch itself into the market by creating a bigger amount of sales and dealership.

TASK 1LO1 P1: Management accounting and its various typesManagement accounting is the process of recording, summarising and controlling the financial transactions which are done by the company in its day to day operations. It is an important part for the company to record and maintain each transaction into the concern books ofaccounting in order to take crucial decision at the time of planning.Objectives: For the cited company, the main purpose of management accounting is to assists the administration in performing its operation and function in effective manner. As it help in discharging its control functions through the use of budgetary control and costing techniques. Advantages:It has been seen that owners of the business entity are facing curtness decisions in day to day basis. By using accounting system the collection provides data-given as input signal to these decisions that can be modify decision making for future.Management accounting has different types of systems which are: Cost Accounting, Manufacturing Process, Process and Controlling, Inventories.Cost Accounting is a process that determine and provide the cost data for managers so they can take control of the activities and operations and also plan the future of the organization.Cost Accounting includes both financial and management accounting.Cost Accounting main objectives are: - to determine the cost of the product- to control the cost and its competitors- to analyse the profitManufacturing process involves the transformation of raw materials into finished goods. Most of the companies nowadays require the implementation of ISO 9000 certified who is an international organization for standards and quality.Manufacturing process has a series of objectives to improve company’s strategy like:- Quality (maintain a high standard level of products)

- Safety (reduce the risk of injuries in the company and avoid that their products do not hurt customers)- Problems (discover the appearance of problems in order to avoid risks)-Cost and efficiency (if the company is more efficient then the prices will go down)Planning is a process of setting goals for the company in order to achieve business objectives.Planning process has the following steps:-Discovering/identifying the plan-Searching for information-Analysing the information-Set the plan/vision-Set goals and objectives-Apply the plan into the businessControlling it’s the way a company and it’s operation are been monitored to identify if the planning process objectives are being done.Control objectives:-To make sure that activities are being done according to standard rules of company-To discover what’s happening in the company-To take corrective action if any product requires that-Improve the efficiency of operationsInventory is the stock that the company keeps for future productions and selling .Most manufacturers uses the inventory system ( FIFO, LIFO).Inventory has some objectives such as :-The company should have a good supply of materials inside for trade- To maintain record of inventory - To reduce damages, losses of materials- To minimise the cost- To stabilise the priceJob costing represents a tool that is used for gaining costs at a small level. Job costing implements a few accounting activities such as:*Materials. It gains the cost of elements and then deliver these costs to a product after all the elements are being used.

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