MANAGEMENT ACCOUNTING INTRODUCTION Introduction – First, give an overview of the assignment and discuss how you intend to achieve the learning outcomes. Second, give a brief background of your chosen organisation in terms of products/services, brief history, key competitors, key stakeholders etc. LO1: Demonstrate an understanding of management accounting systems give a good definition of … Continue reading “origin of management accounting | My Assignment Tutor”
MANAGEMENT ACCOUNTING INTRODUCTION Introduction – First, give an overview of the assignment and discuss how you intend to achieve the learning outcomes. Second, give a brief background of your chosen organisation in terms of products/services, brief history, key competitors, key stakeholders etc. LO1: Demonstrate an understanding of management accounting systems give a good definition of management accounting (MA) and reference it discuss a brief origin of management accountingdiscuss the differences between management accounting and financial accounting identify and discuss some of the management accounting systems, such as job costing system, inventory management system, price optimising systemyou are required to evaluate the benefits of these management accounting systems and their application in your chosen organisation. Then, you need to discuss the essential requirements for these systems to work effectively. For example, in inventory management, a company may determine their EOQ, re-order level, and have a closely link with the supplier. These are the essential requirements of that system. You should discuss the essential requirements of all the other systems. identify some of the management accounting reports, such as budget reports, investment appraisal reports, job cost reports, aged receivables analysis report etc. You need to discuss how these reports are prepared, their uses in your chosen organisation, what are the challenges and benefits?You should discuss why it is important to integrate the management accounting systems in an organisation. LO2: Apply a range of management accounting techniques. – You have to prepare profit statements using absorption costing and marginal costing principles. – To achieve this outcome, you must give the data used. For example, fixed cost, variable cost, production units, sales units, opening and closing stock etc. show all your workings – You need to discuss why the profits are different/same and you should prepare a reconciliation statement. You do not have to do these statements for more years, one year is enough.You must attach all financial data you use as an Appendix. LO3: Explain the use of planning tools used in management accounting You could discuss tools such as variance analysis, responsibility budgeting, standard costing, time series analysis etc. You are then required to discuss how these function as budgetary control tools and the advantages and disadvantages of these budgetary tools to your chosen organisation LO4: Compare ways in which organisations could use management accounting to respond to financial problems. Using your chosen organisation and another organisation, compare how organisations are adapting the following management accounting systems to respond to financial problems: § Benchmarking § Key performance indicators § Balance score card § Activity based costing (ABC) § Financial governance For each approach you need to discuss how they apply to your chosen organisation and compare with the other organisation and discuss how they are used to solve real problems LO2: Apply a range of management accounting techniques. Using your own data from your selected organisation, prepare income statements using both absorption and marginal costing. In addition, you should accurately apply a range of management accounting techniques to produce different management accounting reports relevant for an organisation. You must attach all financial data you use as an Appendix. This data must also be presented to your tutor for approval. You are also required to use management accounting techniques, to produce management accounting reports that apply in a range of different business activities. LO2: Apply a range of management accounting techniques. – You have to prepare profit statements using absorption costing and marginal costing principles. – To achieve this outcome, you must give the data used. For example, fixed cost, variable cost, production units, sales units, opening and closing stock etc. show all your workings – You need to discuss why the profits are different/same and you should prepare a reconciliation statement. You do not have to do these statements for more years, one year is enough.You must attach all financial data you use as an Appendix.Explain the differences between absorption costing and marginal costing and explain in which circumstances each is useful ABSORPTION COSTING In absorption costing the cost of sale is calculated using the variable cost per unit and also the fixed cost per unit (overhead absorption rate – OAR). The fixed cost for the period is not included as period cost, rather it is included as unit cost (see above). In absorption costing there is a need to check for over/under absorption of overheads. This is done by comparing the actual overheads with the overheads absorbed during the year using the OAR. Absorption costing is used for external reporting purposes. For examples, to report the profitability of a product or a project. Marginal costing In marginal costing the cost of sale is calculated using the variable cost per unit only. There is no need to include overheads. The fixed cost for the period is included as period cost, which is shown after the contribution. In MARGINAL costing there is NO NEED to check for over/under absorption of overheads. This is because OAR is not used in marginal costing and hence overheads are not absorbed in the year. Marginal costing is used for internal reporting purposes only. For examples, to report the contribution of a product or a project. For instance, when management need to decide whether to abandon a product or project. LO1: Demonstrate an understanding of management accounting systems Explain the role of management accounting, the different management accounting systems and their requirements. give a good definition of management accounting (MA) and reference it discuss a brief origin of management accountingdiscuss the differences between management accounting and financial accounting identify and discuss some of the management accounting systems, such as job costing system, inventory management system, price optimising systemYou are required to evaluate the benefits of these management accounting systems and their application in your chosen organisation.Then, you need to discuss the essential requirements for these systems to work effectively. For example, in inventory management, a company may determine their EOQ, re-order level, and have a closely link with the supplier. These are the essential requirements of that system.You should discuss the essential requirements of all the other systems. Identify some of the management accounting reports, such as budget reports, investment appraisal reports, job cost reports, aged receivables analysis report etc. You need to discuss how these reports are prepared, their uses in your chosen organisation, what are the challenges and benefits?You should discuss why it is important to integrate the management accounting systems in an organisation. You should also explain different methods used in management accounting reporting. Having explained management accounting and different methods used in management accounting reporting, you are required to evaluate the benefits of management accounting systems and their application in your chosen organisation. Demonstrate your ability to apply the management accounting systems, by critically evaluating how management accounting systems and management reporting is integrated in an organization, using your selected organization as an example.
