BUSINESS M L4083528HND Unit 5 Management Accounting.

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Unit 5: Management AccountingUnit 5 Management Accounting This assignment will look at the critical analysis of management accounting throughout an organisation and the methods that are used to plan ... and measure the growth within the operation by using different management accounting systems. The assignment will look what goes on in the planning systems that create the budgeting control that is needed to measure the performance of the business. These systems can sometimes be overlooked but are fundamental to ensuring the running of the company and its activities. This assignment looks at creating an understanding of how the management accounting system works and how different planning tools in preparing and forecasting budgets functions within a business. A comparison will be made through the organisation Econet Wireless Ltd; this business is one of the largest telecommunications companies in Africa is also engaged in the fibre optic production, to show how some organisations can use management accounting can take action to their financial problems. This comparison will provide a clear understanding regarding the business strategies and their planning which is used to develop the management accounting method for prospering the organisation to achieve their goals set out. LO1. Demonstrate an understanding of management accounting systems. P1. Explain management accounting and give the essential requirements for different types of management accounting systems. Management accounting is the process in which it allows an organisation to identify, measure, analysis, and eventually, communicate they financial data through the uses of their economic and cost accounting system. The process of management accounting uses the following method: • Identification • Measurement • Accumulation • Analysis • Preparation and interpretation • Communication The purpose of management accounting allows management to be able to plan, estimate and provide strategies for the business to ensure that a level of control is governed over each department so that the appropriate use of resources is accountability throughout the industry. Every company can follow different management accounting techniques; this enables them to develop the results that are obtained to optimise them in the best beneficial way. Management accounting is used for the following: • Plan • Evaluate • Control • Establish accountability • Short-term business decisions Kalpan & Atkinson, 2015, quoted that management accounting ensures to help management with the preparation of policies, decision-making process and in the day-to-day operations of the organisation. The below Graph shows an example of the top ten most used management accounting tools which are used by various organisations across the board and the percentage of their usage.Graph 1. Top ten management accounting tool Applications of management accounting: Measurement of performance Assessment of risk Allocation of resources Financial statement presentation To ensure the organisation is able to measure the performances and efficiency of their employee. This process will include a comparison of production which are not standardised but which sets out the differences for the necessary steps that have to be taken and implemented. To identify and assess the risk factors within the organisation and how this can be minimised through the effectiveness of management. To ensure that the organisations can become more efficient and effective by utilising their resources by allocating their resources to the right division/department within the business. This will foresee that there is a certain level of success within the business, as the objectives will be fulfilled, and effects will be made for the long-term sustainability of the organisation. The management accounting system ensures to provide a suitable demonstration of the financial position of the organisation. There will be various cost and economic data which will make it straightforward for the business to present their financial reports to ensure that critical decisions are made. Table 1. The applications of management tools As organisations grow and develop, their look towards products and service that will enable them to operate efficiently. One of these services are in the management accounting systems; the below will look at how this role is integrated into the organisational processes related to Econet Wireless Ltd:Job costing system: This system is assigned to look at the costing of manufacturing of the product and how the expenses are and will be monitored. Econet Wireless Ltd can use this system regarding products that they have on the market that is identical, and that can be easily trackable via their orders. The procedures involved in the bob costing accounting system is: • Receiving – customers who are concerned with the quality of the products that are sold to them. Pricing on the materials that are used to produce these products and the time frame to complete these products/orders. • Job costing – The accountant oversees the costing of jobs, they ensure to keep in mind the preferences and taste of the customers. • Ordering – Ordering is only placed when price assurances are received from the customer. • Production – The production process ensures the start of production. • Cost recording – To record the production process cost. • Job completion – The accounting department produces a completion report for the end costing of any project undertaken. The optimising pricing system: The optimising pricing system is exercised so that is can take control of the costing of all resources/products. The optimising pricing system can also be used to multiply the prices on products at a particular time; it will help management to be able to determine how customer demand for products will influence different prices. [Show More]

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