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Management Accounting [pic] INTRODUCTION

   

Added on  2019-12-28

17 Pages4543 Words367 Views
MANAGEMENTACCOUNTING
Management Accounting [pic] INTRODUCTION_1
Management Accounting [pic] INTRODUCTION_2
INTRODUCTIONManagement accounting is a process in which various kinds of financial as well as nonmonetary transactions and informations are to be recorded, interpreted as well as analysed by thefinancial employees. It is one of the most and highly required aspect in each and every kind offirm whether it is on small, medium or large scale. It requires for the business entities in order tomanage the overall firm and its process in highly effective and appropriate manner. In order toanalyse and explain management accounting in context to small firm there is Nisa retail storecompany is selected which operates in retail industry of UK. The present study focuses onvarious systems and reports which are used in the company for management accounting andreporting. Further, it shows preparation of profit and loss account using two costing methods thatare marginal and absorption along with their differences. Apart from this, it describes aboutnumber of planning tools and techniques and their merits demerits as well. At the end of study,uses of management accounting systems for reducing and overcoming financial shortfalls andconstraints.TASK 1P1 Management accounting and its systems along with essential requirements in Nisa retail storeManagement accounting is the highly and mostly used method by each and everycompany for analysing day to day transactions and informations whether these are related tofinancials or non financials. In the current case Nisa retail store company is using themanagement accounting approaches which is highly helpful in smooth functioning kpof theentity process. On the basis of management accounting the company able to utilize data andinformations as well as resources which are available in the firm in effectual way. Apart fromthis such kind of accounting is helps to the company in order to allocate all the financialresources in adequate manner to each and every organisational departments and functions(Management accounting – What is management accounting?, 2017). Cost is a key and sensitivefactor of all the companies and on the basis of this aspect prices to sale products and services areto be determined. If Nisa retail store is not able to derive total cost of production in appropriatemanner then cannot charge effective selling price of its products and services. Hence, with thehelp of management accounting process it easily able to know cost and expenses incur in thewhole operation process. In addition to this, there are list of management accounting system isused by the Nisa retail company in order to resolve various kinds of problems by which it able to1
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become more financially sound. Further, list of approaches of management accounting used bythe chosen business entity are elaborated as below:Cost accounting system: Another method which is used by the Nisa store is accountingfor cost which is the most important for it. In the business world, cost plays an integralrole and helps to the company for assessing selling price of goods and services which aremanufactured by firm (DRURY, 2013). By using the respective aspect and approach Nisaretail company can easily know that in order to manufacture various items and servicesthere are how many amounts is incurred as a cost. Apart from this, when level of totalcost is identified high then management can take corrective actions to overcome suchkind of constraints.Budgetary control: Another system of management accounting is budgetary controlwhere level of budget for the further year will be comes into control. On the basis of this,resource allocation is done to every function of organisation in effectual as well asadequate manner. When the management of Nisa retail enterprise implement the currentsystem then can make future strategies and tactics as well. Because future profit and losssituation is to be estimated.Batch costing: The system or approach apart from above which is used by the selectedfirm Nisa retail store is batch costing where every division of the firm is to be evaluatedin terms of cost. For instance, the company produces three kinds of food products anddishes then divisions will be total three (Strumickas and Valanciene, 2015). Further, ithelps to know cost which are arisen in each division or batch of the entity.Job cost system: It is a management accounting system which shows and describes aboutthe several costs which are associated and incurred with the particular or specific process.According to the respective system the entrepreneur of Nisa retail firm is highly able toanalyse those expenses which related to the each business process. Essential requirementof the job cost system for the business entity is to accumulate and analyse expenses ofevery process which is associated with the whole firm. The job cost system requiresmainly three types of data and informations which are such as direct labour, expenses ofdirect material and various overhead costs.2
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