Management Accounting: An Analysis of JOJO and Dexter

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Management Accounting
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Table of Contents
Introduction......................................................................................................................................3
Scenario 1........................................................................................................................................4
Management Accounting.............................................................................................................4
Management Accounting System................................................................................................6
Management of Accounting Reporting.......................................................................................7
Applications of Management Accounting System......................................................................9
Integration of management accounting system and reporting in JOJO.....................................10
Tools of management accounting for solving the problem of finance in JOJO:.......................13
Scenario2.......................................................................................................................................14
Comparison of the use of management accounting system in JOJO & Dexter.........................21
Conclusion.....................................................................................................................................22
Reference.......................................................................................................................................23
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Introduction
The above assessment is based on the scenarios. There are two scenarios, which are based on the
management of accounting. Scenario one is dealing with the basic knowledge about management
accounting. Basically, management accounting is done to achieve the goal of the organization so
that the company can sustain its development in the market. It also deals with the type of
management accounting and its implementation in the different type of activity done in the
organization. It also very much useful to the company as it creates a chance of earning more
profit by proper allocation of the resources. It also helps in explaining the advantages and its
limitation for the organization. It will also lead to finding out the drawbacks of management
accounting. Scenario 2 deals with the types of cost on the basis of the practical question so that
the understanding can be made and concepts can be cleared regarding the types of costing and its
implementation on the organization.
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Scenario 1
Management Accounting
In today’s business environment, accounting plays a very important role. Accounting has been
used in each and every types of business environment. The information from the accounts is used
by various users. Different users use the information on the different types (Frischmann and
Hogendorn, 2015).
Accounting can be done by the following two types:
 Financial accounting
 Management accounting
Financial accounting provides the information of the accounts to the stakeholders and regulators
while managing to account is prepared for the use of internal organization for the purpose of
making a decision. Both the type of accounting is done for a period of time.
Administrative accounting uses the knowledge and skills of the professional in that way it can
help in plans and policies making for the organization. The purpose of executive accounting is to
serve the internal environment of the business. Business management is not regulated by the law.
The persons who use management of accounting are inside the organization. The objective of
accounting of management is to facilitate the internal decision-making process. The preparation
and presentation of the statement of financial are not necessary for every organization. Audit of
managerial accounting will not happen (Frischmann and Hogendorn, 2015). The frequency of
preparing to account is not fixed. Both the monetary and non-monetary data are presented in
managerial accounting.
Functions of managerial accounting:
1. Profit of the organization for a particular product will be determined.
2. The situation of no profit and no loss (break-even analysis) will be analyzed.
3. The function of forecasting will be performed (Frischmann and Hogendorn, 2015).
4. The deviations in the standard and actual cost of a new product will be identified.
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5. Both the direct and indirect cost of the stock will be identified and stock valuation will be
facilitated.
6. The requirements to acquire the fixed assets and the cost that will be incurred in doing that will
be identified and also the option of the financing sources for the same will also be analyzed.
7. The information provided by the business accounting will help in the preparation of financial
statements.
8. The function of variance analysis will be performed (Frischmann and Hogendorn, 2015).
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Management Accounting System
The requirement or managerial accounting system has been increased in every organization they
are required to reach into all the departments in the organization (Huang, 2019). The different
types of departments in the organizations can be finance, IT, marketing, sales, and human
resource. System of management accounting provides data of both finance and non-finance
which helps in preparing the financial accounts. The needs of the various systems of accounting
are:
1. Job costing system: This system is required to allocate the cost associated with each job. The job
here is the different activities that are performed to produce a product. This helps in evaluating
the profitability of the organization (Huang, 2019). It ascertains the accuracy of each job to
produce a product. To flexibility in the figure of the cost is very necessary and this technique
assured about the job flexibility.
2. Cost accounting system: To compute the profitability of the organization the cost of the goods
will be ascertained. It helps in improving efficiency and helps in calculating the cost of the
product. It identifies the activity which is not profitable for the organization and tries to eliminate
that activity (Frischmann and Hogendorn, 2015).
3. Inventory management system: Managing the level of inventory helps in the production process.
By combining the different systems inventory can be efficiently managed. By managing the
overall inventory in the organization it helps in reducing the lead time. Product flowing will
become smoother in the organization. Active management of the inventory will increase the sales
in the organization.
4. Price-optimization system: This technique is required to find out the demand variations due to
changes in the price level for a given product. It helps in fixing the price of the product by taking
consider the consumer behavior over the price level changes. It also helps in determining the
taste and preferences of the consumer and try to make goods according to that.
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Management of Accounting Reporting
The reports of business accounting are useful for performing the function of the accounts of the
management. Some of these functions are planning, organizing, coordinating, controlling.
Decision making and measuring performance.The accuracy of the reports is very important
because many decisions in the business are taken according to these records. Accountant of the
organization prepare these records (Huang, 2019). Managers convert the information provided
by these reports according to them and then use that information when and where required.Some
of its methods are:
1. Budget reports: They provide a basis for estimating the income and expenses of the organization.
these reports compare the performance of the organization. this report is useful for every
department in the organization but the preparation of these reports is depended on the size of the
organization. large organizations prepare on department wise but the small organizations prepare
a single budget for the overall organization (Huang, 2019). By using the past data of the
organization relating to the income and expenses the budget for future will be prepared for the
organization. the working of the organization will depend on the budgets prepared. By keeping
within the budget of the organization the company tries to achieve its goals.
2. Account receivables aging reports: These reports are prepared by those organizations that will
depend largely on credit sales. The record of the creditor is maintained and evaluated on time.
The time at which the amount of credit will be received by the organization will also be
recorded. Regularly checking of the reports will be taken to check the amount received by the
creditors on time. The credit period will be decided by the manger in the organization (Huang,
2019). The defaulters of the payment will be shown as the bad debts in the reports.
3. Performance reports: The performance of the organization will be measured. Its measurement
will be done for the overall organization, on department wise in large organizations and also of
the individual employees. By using these reports the mistakes in performing according to will be
analyzed and the defaulter activity will be cured or removed. Likewise, the individual performers
who are not performing well will provide the training to them or may also eliminate them. To
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analyze the performance of the organizations these reports are very important for every type and
nature of the organization.
4. Cost managerial accounting reports: The cost allocated in the performance of each activity for
producing goods will be managed by these reports. All the cost incurred in the performance of
the activity will be calculated in these reports and will be compared with the budgeted cost and
the deviation that will find out will be removed. The profitability of the organization in
producing activity will be analyzed (Huang, 2019).
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Applications of Management Accounting System
1. Decisions of the business: There are many types of decisions that have to be taken in the
organization. Some of these decisions are related to financial and managerial decisions. The
information executed from this system is used in taking the decisions in the management.
Information derived from this system is derived from various techniques. Variance analysis is
one of the techniques used for this (Bush, et. al., 2018). Variance analysis is used for the
comparison of actual expenses with the financial limits of the budget. This analysis also helps in
evaluating the profits for the organization. When the expenses are more than the budgets than the
expenditure creating excess will be eliminated and vice-versa.
2. Planning for operations: Budgets are created for taking operational decisions. Each department
of the organization has different budgets and the budget provides data for planning of the
expenditure that will be incurred in the activities of the organization. Budgets will be created
once in every year. They are created by evaluating the historical data related to revenue,
expenses and the cost of overhead. The information on the system of managerial accounting will
be used in the creation of the budgets for the organizations.
3. Keeping a record: Executive accounting system is used in recording the transactions of the
business. Helps in measuring the results of the performance of the organization and evaluating
the changes in the results. The reports for the internal business environment are prepared by the
managing system. This helps in evaluating the organization's performance while comparing them
with the competitors (Bush, et. al., 2018).
4. Decision making: For pricing function, the cost that will incur in the production process will be
evaluated. Likewise, the investment in the capital and the marketing decision will also be taken
by using the information of the business management system. This also helps the company in
evaluating the income of the company by analyzing the market and the product information. In
the last, the effect of the plans and strategies used in the organization will also find out and if
there is any negative result than that will be eliminated (Bush, et. al., 2018).
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Integration of management accounting system and reporting in JOJO
1. Price setting: By the merging of both the system and reporting the price for the product will be
fixed by using the information from both the system and reporting.A business management
system helps in price-setting like the job costing, price optimization their merging with the
reports helps in setting it (Bobryshev, et. al., 2015).
2. Decision making: By using the various methods of system and reporting manager will easily take
decisions in the organization and there are many fields onto which the decisions in the
organization have to be taken.
3. Budget preparation: Budget for the large organization will be made on two basis one will be on a
department basis and the other will be on an overall basis. The departmental budgets will help in
comparing the performance of each department. Different departments will have different
budgets and their performance of different departments will be evaluated differently on the basis
on their budgets. The budgets for the overall organization are also known as central budget and
this will be the main motive of the whole organization (Bobryshev, et. al., 2015).
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Planning tools used in JOJO
1. Standard costing: This relates to comparing the actual cost incurred in the organization with
standards cost and then finding the variance between them (Bobryshev, et. al., 2015).
Advantages:
 Facilitates comparison of the actual and standard cost.
 Tries to correct the variations occurred
 Has to control over the production cost
 Management of the inventory
Disadvantages:
 Non-material variances has also considered
 Focus on unfavorable variance
Applications:
 Helps in decision making
 Helps in cost control
 Helps in measuring performance
 Basis of preparation is a standard costing system
2. Time series analysis: Standard time interval is the basis of this analysis. Data will be allocated in
proper time intervals.
Advantages:
 Helps in future forecasting
 Based on the past data (Bobryshev, et. al., 2015)
 The present performance will be compared with the budgets
Disadvantages:
 Results may be inaccurate
 Time series will be changed on the basis of time
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Applications:
 Helps in sales forecasting
 The decision process will be facilitated
3. Variance analysis: This analysis compares current performance with the budgets.
Advantages:
 Reason of the deviation will find out.
 Cost controlling will be done
 The inefficiency of the business will find out
Disadvantages:
 Past performance will be focused rather than future
 The reason behind the variance in the performance will not be focused.
Applications:
 Uses in the process of forecasting
 Helps in the comparing process (Bobryshev, et. al., 2015)
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