The scenario of this report discusses that management accounting officer of Rowlinson knitwear has asked to determine the role of management accounting and its importance within firm. Thus, it is needed to construct an accounting report in order to evaluate its impact over business decision making.
- Provide a clear understanding over management accounting systems within Rowlinson knitwear.
- Analyse the application of management accounting techniques in Rowlinson knitwear.
- Identify the uses of planning tools of management accounting within Rowlinson knitwear.
- Evaluate how Rowlinson knitwear could use management accounting to resolve financial issues of firm.
Management accounting is utmost crucial aspects that can assist an organization in order to plan their operations in more reliable and accurate manner. This aim of managers is to make continuous planning regarding regulation of financial transaction that is done within an accounting year. This module used to target future goal and objectives which will be set by Rowlinson knitwear after making all analysis regarding their overall business functions. Accounting information is consider more crucial aspects for the investors and other shareholders that are responsible for making valuable investment planning in their ongoing project (Klychova and et. al., 2015).
The project report is all about various types accounting systems and reporting that are needed for making crucial decision making in near future time. While all types of costing method which are needed for calculating net profit for the company are discussed under this report. Examine advantage and disadvantage of using planning tools that are needed to control budget for the company. Lastly, comparison of various management accounting systems in respect to overcome all financial issues that are arises in an organization is discussed under this report.
P1: Concept of management accounting and their essential requirement in an organization
In the present scenario, it has been determining that companies are producing maximum number of products within an accounting period of time. During this process, they are incurring various amount of transactions, whether related with financial or non-financial at the same point of time. The role of managers is getting vaster as they have to make continuous planning for recording all those transactions that are incurred in a single day. They are held responsible for managing and controlling all vital aspects which are helpful for Rowlinson Knitwear company in order to attain their future aims and objectives in more effective manner. Management accounting plays a vital role in any business organization in current time and henceforth, they can make sufficient decision making in context of future growth of the company (Klemstine and Maher, 2014). It has been found that business in present time need to go with all kind of business wants through analyzing overall performance information that are goes beyond using management accounting system and other reporting methods those are valuable for the company for the longer period of time. The role of management is to provide all necessary services and standards those are crucial for an organization to increasing overall productivity of the department. While accounting deal with recording, summering and analyzing all financial information that are generated within a financial period of time. Mangers uses the provision of accounting data in respect to make better inform themselves before they make any decision within their organization. It is looks at those events that are going to be happen in and around a business while considering the needs of enterprises. By using this, data and predication gets emerged in proper manner.
: Management accounting is the one of the systematic process of analyzing business costs and data to formulate internal financial statements, records and account to assist managers to make decision more effective (JOSHI and et. al., 2011). This will help them to attain their aims and objectives in more crucial decision in coming future. In other words, this act of making sense with financial and costing information for management officers can be more reflex to get healthy return in near future period of time. There are certain important aspects which is needed to be taken into account. Some of them are discussed underneath:
It is an important part of planning which is needed for the future estimation and budgeting process. It would make relevant contribution to the company’s cash forecasting and long term financial planning.
: On of the major role of financial managers is to gather all vital information those are needed for planning. The management accounting system assist in setting standard performance of Rowlinson with the actual outcomes and make analysis all those variances out of them (Brewer, Sorensen and Stout, 2014).
The function of management accounting is to make valuable decision in order to get reliable outcomes in coming period of time. These are capable enough to make use of all resources those are crucial for the betterment of the company in near future.
Types of management accounting system:
Cost accounting system
: It is known as one of the effective system which is design by firm to estimate the cost of their product for making profitability analysis, stock valuation and control all those additions cost that are incurred by the company. The proper estimation of cost can be major aspects for attaining profitable operations. It is mainly used by produrcers to record all production related activities. The manager uses this system as internal reporting for an organizations own management for making future decision.
Inventory management system:
It is said to be one of the vital application uses by the company in order to track stock level, orders and sales or deliveries detail. It can also be helpful in the production units to formulate a work order, bill of goods and their manufacturing related documents (Bennett, Schaltegger and Zvezdov, 2013). It uses to track all product through the entire supply chain or portion of their business operation. There are certain aspects related with this system are mentioned underneath:
It is known as a specific number of units that Rowlinson company used to include to stock with each order to reduce the total cost of stock. Such as ordering cost, holding and shortage cost. It seems to be one of the oldest method of scheduling model use by the company’s
: It refers as accounting method that is used to categories cost to overhead activities and assign those cost to products. All those cost such as staff salaries and other vital expenses are few times hard to assign to a given product (Amoako, 2013).
Price optimization system:
This happens to be the process of determine that pricing spot or increasing cost against the customer perception to pay. It is mainly considering as mathematical evaluation done by company to examine how customer would react to various prices for their product and services from various channel. This is also used to analyses the prices that the company used to consider will be more effectively assess them to attain maximum profit in coming period of time.
Job costing system
: It is simply used to accumulate cost at very minimum unit level. It is appropriate system that is allotted to an individual product or group of product. Basically, the job order costing is reliable to make use of only those products that are produces will be sufficiently different from one another. There various techniques used in this process are batch costing, process costing etc.
Benefits of using
management accounting system
: In order to attain more reliable profit in coming period of time, managers need to make use of various accounting systems that are profitable for the company. Looking into the facts, all the above mentioned accounting systems are equally beneficial for an organization. Such as cost accounting systems is use by company to control all additional costs that are incurred during production process. While, inventory management systems are essential to manager and regulate their stock position in more effective manner. Likewise, job costing and price optimization is more reliable for increase better outcomes in coming period of time (Gond and et. al., 2012).
P2: Various types of accounting reporting method
Business reporting is one of the crucial reporting of operating and make financial data by a business enterprises and regular provision of data to make appropriate decision making within an organization to get more reliable outcomes near future time. By the help of report, a company would be able to detect all essential aspects those are affecting the business can easily be determining. It is considering more reliable aspect for investors to make proper analysis of reports and financial position of the company. There are various sources from which data can be collected those are considering for making future decision (Abdel-Kader, 2011). The reporting to administration is a valuable process of providing data to various level of the department so as to enable in budgeting the effectiveness of their role and responsibility centers and become a valuable base for taking necessary steps in case any urgency arises in the department. It would be well planned or organized so that better opportunities chances can be arises for the company for longer period of time. All the reports prepared is for attaining more reliable outcomes in near future. There are various sources of reporting systems which will be consider for analyzing performance of the company. Some of them are discussed underneath:
It is known as one of the effective report which is being prepared for the determine overall aims and objective of actual and standard performance of an organization. These are needed to be taken into account which will be essential enough to attain more reliable outcomes in coming period of time. It consists of specific evaluation of communicating project progress, disseminating project development and estimating future progress of the management plan.
Investment management report:
It is known as one of the vital report that is being prepared for the purpose of managing and regulation which stocks that are being kept by the company with them. There are various types of stock valuation methods which are needed to be taken into account while analyzing the position of stock. All the opening and closing information about the companies inventories are recorded into their respective statements.
Account receivable report
: As per this particular report which is being prepared in respect to determine total list of unpaid customers invoices and credit amount memo as per the memo data. These are more reliable in respect to analyze total time period of retain all outstanding amounts which are needed to collect from various debtors (Hiebl and et. a