Unit 5 Management Accounting
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Added on 2020-10-22
Unit 5 Management Accounting
Added on 2020-10-22
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Unit 5Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Management accounting and need of various types of accounting systems..........................3P2 Methods used for management accounting reporting............................................................5M1 Benefits and applications of management accounting systems............................................7D1 Critical analyses of accounting reporting system..................................................................7TASK 2............................................................................................................................................8P3 Calculation of costs and net income using marginal and absorption costing........................8M2 Types of management accounting techniques....................................................................10D2 Interpretation of data...........................................................................................................10TASK 3..........................................................................................................................................11P4 Advantages and disadvantages of various planning tools used for budgetary control .......11M3 Applications of planning tools of budgetary control .........................................................12TASK 4..........................................................................................................................................13P5 Comparison on how organisations are adapting management accounting systems............13M4 Analyses of financial problems..........................................................................................14D3 Evaluation of planning tools...............................................................................................15CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting is a core function while managing an organisation, whichincludes various systems and techniques to prepare managerial reports and other documents sothat it can reflect a true and fair managerial and financial position of an organisation which helpsinvestors and other related parties to access accurate management reports and records.Rowlinson Knitwear is a retail clothing company which deals in personalised knitwear, whichuses cost analyses techniques like marginal and absorption costing to prepare their incomestatement and uses planning tools for the preparation of the budgets which are the futureestimates of their expenses and profits (Banerjee, 2012).This project focuses on management accounting and its tools and techniques which helpsan organisation like Rowlinson Knitwear in the preparation of their managerial accounts andreports for efficient decision-making process. Accounting techniques like marginal andabsorption costing used to determine net income and profitability by charging various expensesincluding variable or fixed.TASK 1P1 Management accounting and need of various types of accounting systemsManagement accounting refers to the process of preparing management accountingdocuments and reports and extract the information from those reports to analyse, interpret andrepresent the information in an understandable form. Management accounting is different fromfinancial accounting as it has a wider scope, it controls all management issues including financialissues.Rowlinson knitwear is a clothing retailer company based in United Kingdom which dealsin personalised knitwear, Rowlinson is the leading manufacturer in United Kingdom which usesmanagement accounting systems to improve their decision-making process. For an effectivemanagement organisation uses various management accounting systems and they are:Types of various management accounting systems and their requirements in anorganisation Management accounting systems are the methods of recording and analysing which anorganisational manager to understand true and fair position of the organisation, these systemsare:
Price optimisation systems – Price optimisation system is a management accountingtechnique which helps an organisation to allocate different prices to their differentproduced products and analyse the reaction of the customers, so that effective pricingstrategy can be developed. Rowlinson Knitwear delivers personalised school wear due towhich they have different prices for their various products due to which they uses priceoptimisation system to satisfy all their customers and at the same time can earnreasonable profits (Burritt, 2011).Activity based costing – Activity based costing or system is a process of determinationof costs involved in an activity performed by the organisation. For example, in case ofRowlinson knitwear they determine the costs of their various activities likemanufacturing, packaging etc. by activity-based costing as it delivers accurate andreliable results which can be trusted for preparing of financial and managerial reports.Inventory management system – Inventory management system is a process ofmanaging and controlling the issues related to inventory stocked in an organisation.Rowlinson Knitwear is a retail store in United Kingdom and delivers number of clothesevery year due to which they requires an efficient inventory management system and thismanagement accounting system provides a framework to manage and control theirinventories including raw material and goods engaged in work in progress so that theirorganisational objectives like customer satisfaction and profit maximisation can beachieved.Cost accounting system – Cost accounting system is a method which helps anorganisation to determine all their costs involved in an organisation so that they canestimate their profitability, here Rowlinson Knitwear also uses cost accounting system toestimate all the costs which can be included in their processes so that a clear profit can beascertained.Job costing – Job costing system is a process of determining the cost involved in anspecific job, job costing helps an organisation to determine costs for various job thissystem is appropriate for the organisations where there is production of customisedproducts like Rowlinson Knitwear which deals in personalised products (Christ, 2013). Product costing – Product costing system is a method of determining all the costsinvolved in a product which is manufactured by an organisation including all direct and
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