Management Accounting and Different Types of Management Accounting Systems

Management
Accounting
1

2

INTRODUCTION
Management accounting is an activity and procedure of financial information and consists
different process that are connected with research and management of financial data in such
manner that help inner organization to plan for upcoming time, devise policies and make control
over company’s activities or functions. The utility of such accounting is to help administrators
while devising assessments for the development of organisation. It is not essential for any
company to accept organization accounting as its needs are based on aims of the firm (Weetman,
2019). To appreciate management accounting, the chosen firm is A’nead Hand Knitwear which
is a manufacturing company and operates its business with the help of approx 33 employees and
has revenue of $2.6m. The assignment will define about administration book-keeping systems
with their important needs, methods of reporting, process of effective method of cost analysis for
preparation of income statement by utilising amalgamation costs as well as subsidiary costs.
Moreover, it engages planning tools with benefits and drawbacks, use of administration
accounting systems in order to answering to financial problems to direct sustainable
achievement.
TASK 1
P1. Explain management accounting and different types of management accounting systems
Management accounting
It is a technical action which consists accepting, finding out, recoding, investigative,
measuring and corresponding monetary and non-monetary data to key administrators to take
necessary decision search regarding aims and objectives of the firm. It is also disturbed with
inside factor and helps financial personals at the time of designing and presenting essential
financial statements (Ameen, Ahmed and Abd Hafez, 2018). Along with this, it can be used by
administrators of A’nead Hand Knitwear while developing short and long term determination to
carry familiar processes of firm with any issues.
Management accounting systems-
The conception of administration accounting system is a future oriented system that
includes different activities and has wide scope that reaches towards different division of
business. The description of some administration accounting systems in context of A’nead Hand
Knitwear is under:
3

Inventory management system- Inventory indicates to accumulation rank of goods that are
utilised at different phases to produce an ultimate product and prepare it for sale. This
organization is related to administration and management of stocks of venture. A correct record
is maintained by utilising this method that consists date and time of the amount of catalogue that
penetrated into the firm and its warehouse (Ameen, Ahmed and Abd Hafez, 2018). In addition
the exit of bulk quantity for selling motives which becomes ease to estimate and monitor actual
accessible distance that needed for further operations. In references to A’nead Hand Knitwear,
administration can use this method of management in term of tracking the inventory in order to
get precise data associated with current catalogue extent that assist in making determination for
further needed stock. Appropriate need of inventory administration system is to maintain
completed record of inventory rank to remove issues which connected with overstock or under
stock at several direct of manufacturing.
LIFO(Last in Last out) – This system mention that inventories which come in last used in
production process of the goods and services.
FIFO(First in finst out)- In this inventory management system, he goods and commodities
that are received early that will firstly utilise by the firms for organise production process.
AVCO(Average cost)- This system of inventory management stock is used for bringing out
fundamental cost on the basis of average cost.
According to above all system of inventory management, the management of A’nead Hand
Knitwear can adopt FIFO tool as it beneficial for manufacturing pharmaceutical items for the
consumers and provide satisfaction their need by offering better quality commodities to them.
Price Optimization system- It is a numerical examination in which difference of command are
intended at diverse pricing extent that is period as price optimisation system. This tool is utilised
by functioning administrators to make manage over prices of input origins (Hiebl, 2018). In
A’nead Hand Knitwear, the administrators can analyse consumer’s response regarding different
process of products that are manufacture of this firm. It assists in setting prices of the
commodities that are manufactured by the firm in such manner that outcomes in increasing
profits of organisation. IT is crucially needed to assign price of goods in appropriate way that
outcomes are able to accomplish business objectives.
4