UNIT 5 Management Accounting Assignment Solution - Doc
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Added on 2021-02-19
UNIT 5 Management Accounting Assignment Solution - Doc
Added on 2021-02-19
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UNIT 5 ManagementAccounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3LO1..................................................................................................................................................3P1. Explaining the concept of management accounting and essential requirements of itsvarious system........................................................................................................................3P2. Explaining various methods of management accounting that are used for reporting......5M1. Evaluating the advantages and the application of the management accounting systemwithin the organization...........................................................................................................6D1. Evaluating the integration between the system and the reporting of the managementaccounting...............................................................................................................................7LO 2.................................................................................................................................................7P. 3 Calculating the cost using various appropriate techniques............................................7.......................................................................................................................................................10LO 3...............................................................................................................................................10P. 4 Assessment of advantages and disadvantages of different planning tools....................10M. 3 Analysing use of different planning tools...................................................................13LO 4...............................................................................................................................................13P. 4 Comparing organizations which are adapting to various management accounting system...............................................................................................................................................13M. 4 Analysing how resolving to financial problems in management accounting helps infurther growth and success...................................................................................................16D. 2 Critical evaluation of the planning tools for accounting.............................................16CONCLUSION..............................................................................................................................17REFERENCES..............................................................................................................................18
INTRODUCTIONManagement accounting is an effective process of preparing accounts and reports in anaccurate and efficient manner. Management accounting helps in planning, organizing, staffing,directing, controlling and monitoring the activities of the organization which helps in effectivedecision making. Management accounting effectively helps in forecasting, margin analysis,constraint analysis, forecasting, valuation, variance analysis, profitability, break even analysis,new product analysis, etc. It helps in managing and analysing the cost of the business byeffectively preparing internal financial reports. This helps managers in decision making for longterm growth of the business. This study will highlight, different types of management accounting systems. This studywill also calculate the cost using various appropriate techniques which helps in preparing incomestatement by using absorption and marginal cost. Furthermore, this study will include variousplanning tools which are used for budgetary control. This study will also compare organizationswhich are adapting to various management accounting system, which eventually helps inresolving various financial problems. LO1.P1. Explaining the concept of management accounting and essential requirements of its varioussystemManagement accounting refers to the representation of the accounting information inrespect of formulating the policies that are been adopted by management and enables Arcadiagroup in managing their routine activities (Thomas, 2016). MA helps the company in performingthe managerial functions that involve planning, directing, organising, controlling and staffing.Unlike financial accounting, management accounting facilitates useful information to the internalstaff within Arcadia group and not for the outsiders. MA aims for providing both qualitative andthe quantitative information which helps the managers of Arcadia group in making suitabledecisions and seeks for the opportunities that generates larger profits. Management accounting is very useful for internal stakeholders of the company and doesnot have top comply with any rules and regulations. It is not compulsory to carry outmanagement accounting reports. On the contrary, financial accounting is performed based oncertain set of rules and regulations. Financial statements are compulsory to prepare every
financial year ending. Theses financial reports are distributed to both internal and externalstakeholders which helps in strategic decision making. There are various systems of management accounting which plays a significant role in efficientfunctioning of Arcadia group business that are as follows-Cost accounting system- It is the system that presents the information for analysing andclassifying the expenditure that is involved in producing the product. It provides systematicrecord of the cost ascertained in purchasing the raw material and the labour used in respect of theproduction process. The major objective of this system is to evaluate the cost, ensuring propercontrolling and the planning of the cost and assessing the cost for making managerial decisions.This system is adopted by Arcadia group in order to estimate product cost for makingprofitability analysis, cost control and the valuation of the inventory. Inventory management system- It refers to the system that tracks the goods throughentire management of the supply chain and the portion in which the business operates (Ismail,Isa, and Mia, 2018). It covers all the things that begins from the production to the retail,warehousing to the shipping and other aspects like movement of the stock and in between theparts. This system helps in proper management of the supply chain and assist the managers indeveloping focus to other critical parts of the business. Inventory management system plays anessential role in managing the stock items of Arcadia group and consistently tracing its deliveryto its ultimate customers. It also helps in analysing the requirement of the inventory and creatingautomated ordering. It enables the organization in understanding its assets and in makingoptimum use of the asset so that business operation could be improved and larger profitabilitycan be gained. Job costing system- It is the method of recoding cost that is been incurred in the job ofmanufacturing the product of Arcadia group. Through this system, manager of the companycould be able to track the cost for each job and in maintaining the data that is relevant for thebusiness operations (Nguyen, 2018). It is very important for the company as appropriateevaluation of the costing results in better estimation of the project, management decisions andthe financial reporting. It helps the business owners in determining the true cost that is attachedto every job or the service within its organization. Price optimization system- It is the mathematical tool that is been applied by Arcadiagroup in order to assess the response of tits customers towards different price level of its
products and the services. This system is essential because it helps in determining demand andfixing the best price so that sales of the company could be increased with larger customer base.Fixing the most suitable prices enables the organization in meeting its various objectives likeprofit maximization and reaching the sales target (Latan and et.al., 2018). This process helps insetting up the adequate retail value of the product that is affordable and reasonable for thecustomers. P2. Explaining various methods of management accounting that are used for reportingBudget report- This report refers the estimations of various aspects of the business suchas sales budget, purchase budget etc. Budget report helps in analysing the performance of thebusiness and assist the mangers of Arcadia group in keeping proper control over the cost orspending so that profit margin increases. The anticipations made in this report are based on theactual expenses from previous years. Budget reports are useful for Arcadia group in providingthe incentives to its employees.Accounts receivable report- This report relates with keeping the track on the receivablesthat are to be collected from the debtors of Arcadia group. Preparing this report is critical for theenterprise in order to maintain its cash flow that is timely collection of dues helps in meeting thecash expenses in the future. It prevents the collection department from overlooking of the olddebts and in managing the present dues (Quinn and et.al., 2018). Manager of Arcadia group usesthis report in finding out the problems if present in the collection process of the company.Account receivable report provides for tightening the credit policies so that average collectionperiod does not result in longer period. This in turn helps in maintaining the cash liquidity of thefirm. Performance report- It is created by Arcadia group for reviewing its overall performanceand also the performance of its employees at the end of the period. Departmental performancereports are also been formulated which helps in making the analysis of each department which inturn helps in performance management appraisal of the employees. Managers uses this report formaking strategic decisions relating to the future prospects of its business. On the basis of thisreport individuals are been rewarded against their commitment and the under performers arebeen given proper training. Performance report helps in identifying the flaws if any present in theoperation of Arcadia group and it plays a crucial role in keeping the accurate measure of thestrategy developed by an entity in achieving their mission.
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