UNIT 5 - Management Accounting System
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Added on 2020-10-05
UNIT 5 - Management Accounting System
Added on 2020-10-05
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UNIT 5 Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A. Management Accounting and its different types of systems.............................................1B. Management Accounting Reports.....................................................................................2C. Evaluation of Benefits of management accounting system...............................................3D. Evaluation of management accounting systems and management accounting reporting.5TASK 2............................................................................................................................................5A.1 Absorption Costing and Marginal Costing methods......................................................5A.2 Preparation of income statement as marginal and absorption costing method................5B. Calculation of Break Even Analysis..................................................................................7C. Apply the range of management accounting techniques and produce appropriate financialreporting documents accurately..............................................................................................8D. Interpretation of data for business activities as shown in Task 2......................................9TASK 3..........................................................................................................................................10A. Advantages and Disadvantages of budgetary control......................................................10B. Application of planning Tools.........................................................................................11C. Management Accounting System response to financial problems..................................12D. Analysis of Management Accounting Techniques used to respond Financial Problems13E. Evaluation of planning tools to solve financial problems................................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................17
INTRODUCTIONManagement accounting field of finance lays high level of emphasis on the internalcontrol through the means of several tools and techniques. In simple words, it can be stated thatmanagement accounting includes both financial and non-financial provisions which in turn helpsaccount managers in decision making. In the following assignment, detailed information is givenabout management accounting and its systems in context of Qbic Hotel. Such small sized hotelunit provides accommodation services to the customers at cost effective prices. This projectreport contains various types of accounting reports that are used and implemented by anorganization. Criticism will also be done on benefits of different types of accounting system with theirtechniques such as marginal costing and absorption costing. Moreover, requirements and needsare contrasted for different types of management accounting. Further, practical aspects of projectare fulfilled by preparing income statement based on calculations of cost, calculating breakevenpoint, etc. Last part of project report will highlight suggestions and recommendations forimplementing management accounting techniques pertaining to respond monetary problems. TASK 1A. Management Accounting and its different types of systemsManagement Accounting could be termed as the process of managing reports andaccounts that are used to provide accurate financial condition of firm which helps in making dayto day decisions in an organisation (Agbejule, 2011). It is also known as cost accounting, aprocess of measuring, interpreting, identifying, analysing and communicating information tomanagers for achieving organizational goals. This process of communicating information helpsmanager of Qbic, a hotel to cope up with changes and to evaluate actual requirement of financialand non-financial provisions that are used in making decision. Different types of management accounting system that can be used by Qbic are as follows:It is a framework which is used to predict the cost of services for analysing profitability,cost control and inventory valuation. Following are some accounting system such as:Cost Accounting System: It is also known as product costing system, it is used by Qbichotel to identify the cost of their services for analysing profitability, controlling cost and
evaluating inventory. A firm focus on evaluating profitability of products by estimatingcorrect cost of the services and products.Inventory Management System: It is a system of tracking goods and services throughthe whole supply chain or a portion where a business operates (Baldvinsdottir, Mitchelland Nørreklit, 2010). In simple words, it enables Qbic hotel to see all moving parts of itsoperations activity by allowing them to make better decisions and investments. Job Costing System: This system tracks the cost, income of job and assists in identifyingprofitability in job. Qbic hotel uses this accounting system to allow number of jobs thatare assigned to every individual including items of expense and revenues. Price Optimization System: This accounting system uses mathematical tools to analysecustomer’s response to different prices of its products and services through differentmediums and channels. Qbic hotel use this system to determine the best methods ofachieving objectives such as profit maximisation from operations.B. Management Accounting ReportsThese reports provide hotel information for cutting down cost, rewarding highperforming employees and investment in goods that offer the best financial return frombusiness. Reports could be generated quarterly, half yearly, monthly or on daily basis. Followingare some types of management accounting reports that could be used by Qbic hotel:Budget Report: This report provides deeper insight to the management team about theextent to which budgeted figures are met. This type of report assist management inanalysing business as well as their own department and to control cost (Lee Jr, Johnsonand Joyce, 2012). This report is important for controlling different departments oforganization and to control cost services.Accounting Receivable Aging: This is a type of tool for managing cash flow afterextension of credit to business customers. Management team of Qbic hotel can use thistool to identify problems which are being faced by company's collection process. Thistool will assist hotel in solving problems related to collection process for smoothfunctioning of business transactions.Job Cost Reports: This reports displays expenses made in finance for a specific projectby business. Qbic hotel can easily match these with the revenue to evaluate job'sprofitability. From this, company can identify high earning areas of the business so that
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