P2. Management accounting reporting

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Unit 5 – ManagementAccounting L-4
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Management accounting systems..........................................................................................1P2. Management accounting reporting........................................................................................3M1. Advantages of management accounting systems................................................................4D1 Evaluation of accounting systems and management accounting reporting that areintegrated within organisational processes..................................................................................5TASK 2............................................................................................................................................6P3 Preparation of income statement by using marginal or absorption costing method...............6M2.Application of wide range of management accounting techniques and production ofappropriate financial reporting documents..................................................................................7D2. Financial reports which helps in interpreting business operational activities.......................8TASK 3............................................................................................................................................8P4. Planning tools........................................................................................................................8M3. Use of planning tools..........................................................................................................10TASK 4..........................................................................................................................................10P5. Examining how companies adapt to management systems in the face of financial issues.10M4. Management accounting in response to solve financial issue that can lead to thesustainable success.....................................................................................................................12D3. Planning tools to resolve the financial problems................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting includes various procedures that are associated with preparationalong with presentation of financial information in such manner that assist internal managementto plan for future, formulate policies and controlling business operations (Booth, 2018). Thefunction of such accounting is to assist managers while making decisions for the betterment ofcompany. It is not necessary for any organisation to adopt management accounting as itsrequirements are dependent on organisational objectives. To understand managementaccounting, the selected organisation is Cobell Ltd which is situated at Leigham Business Units,United Kingdom. The company was incorporated in the year 1999 and is famous for fruit alongwith vegetable juices, soft drinks and mineral water (Cobell Ltd. 2019). The company hasspecialisation in production of JOJO fruit juice and provides essential information to managers tofacilitate decision making. The report discusses about management accounting systems with theiressential requirements, methods of reporting, usage of appropriate technique of cost analysis forpreparation of income statement by using absorption costs as well as marginal costs. It furtherincludes planning tools with advantages and disadvantages, usage of management accountingsystems in order to responding to financial problems to lead sustainable success.TASK 1P1. Management accounting systems.Management accountingis a procedural activity which includes understanding,identifying, recording, examining, measuring and communicating financial and non financialinformation to key managers to take essential decisions pursuit towards organisational goals.Such accounting is also concerned with internal factors as well as assists financial personnelswhile preparing as well as presenting important financial statements. In addition, it is used bymanagers of Cobell Ltd while preparing short term and long term decisions to carry forwardoperations or activities without any hurdles.Management accounting systems:The concept of management accounting system is afuture oriented method which encompasses several practices and has wide scope that reachestowards various departments of business. Some of the management accounting systems used bymanagement of Cobell Ltd are as follows:1
Inventory management system: Inventory refers to the stock level of goods that areused at various stages to produce a final product and making it ready for sale. Such system isassociated with management as well as supervision of stocks of enterprises. A proper record ismaintained using such system which includes date and time of the quantity of inventory enteredinto the organisation as well as its warehouses along with the departure of bulk quantities forselling purposes which becomes easy to calculate and determine actual available stock as well asstock required for further operations (Boyns,Edwards and Nikitin, 2013). In context to CobellLtd, management uses such system to track the inventory at different organisational locations inorder to get accurate information related with existing inventory level that helps in takingdecisions for further required stock. Essential requirement of Inventory management system is tokeep detailed record of inventory level to eliminate problems associated with overstock or understock at various point of production.Cost accounting system:The framework that assists in cost estimation of variousorganisational products and analysing aspects related with profitability, inventory valuation aswell as cost control. It is very essential for production managers to estimate accurate costs thatare associated with products as effective estimation leads towards profitable operations. Themanagers of Cobell Ltd uses such system to estimate closing material inventory value, finishedproducts inventory along with work in process inventory. The managers with the help of thissystem maintain proper books of accounts by recording cost of raw materials that were utilisedwhile preparing final products of fruit drinks like quantity of sugar, fruits, glucose, liquidsubstance, flavours and so on. Cost accounting system is essentially required at workplace inorder to estimate costs of different inventories of organisational products as to prepare finalstatements.Price optimizing system:A mathematical analysis in which variations of demand arecalculated at different pricing level is termed as price optimisation system. It is used byoperational managers to control prices of key resources (Bragg,2012). Using such system,management of Corell Ltd determines response of customers towards different prices of fruitjuices, vegetable juices and soft drinks. It helps in deciding pricing that the managers shoulddetermine of various juices in such manner that results in maximising profits of the company. Itis essentially required to allocate prices of products in effective manner that results in meetingoperational as well as organizational objectives.2
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