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University: Regent college
This assessment will provide:
1. Give the concept of management in accounting system.
2. Give all the reporting techniques implied in business.
3. What is the fruitfulness of management accounting system
The accounting influences in the work practice is comprised on various concepts, rules and regulation which have been making adequate records of transactions. In the present report there will be discussion made on the managerial accounting system and reporting techniques which will be beneficial to the Network Critical Solutions. There will be discussion based on various reporting, costing and accounting techniques which will articulate the valid information among the accounting professionals in decision making.
This report also consisting of various information and details based on management accounting methods in collecting information, recording in books and then communicating such information among the organisational personnel. Moreover, there will be calculation relevant with preparing the income statement by considering the marginal and absorption costing techniques. Along with this, break even analysis will be based to determine the level of supply and demand required in the operational practices.
To records the generated information in the various books of accounts there will be use of various techniques and accounting methods. Accounting is itself denoted as the method of recording transaction based on monetary influences. The income, expenditures as well as assets and liabilities had been recorded in the various accounts to have a summarised information regarding the financial stability and ability of a firm in meeting the financial challenges. On the other side, management is relevant with executing and directing the tasks in a manner which will enable the firm in attaining the targeted goals before deadline.
However, in relation with the management accounting, there is management of overall accounts which are being operated in the business in means of recording the reliable information and summarizing it to have valid outcomes (Shah, Malik and Malik, 2011). Thus, such results and outputs help the professionals in decisions making and planning for the future operational practices. On the basis of such detailed analysis there will be formulation of adequate framework and policies to reduce the costs implied in each activity as well as for the future gains. However, there have been various benefits and profitability through implication of management accounting practices in business activities of Network Critical Solutions.
This system consisting of accounting details relevant with all the units and areas of operations had been done in Network Critical Solutions. It helps the managerial professionals in articulating the business efficiency and encourage them to make innovative as well as accurate decisions for the future operations. However, management accounting system is costs of various elements which are to be considered by the accounting professionals such as:
This is a specific accounting methodology which is consisted of information relevant with activities performed by the organisation. Therefore, there will be analysis over the costs implicated in each operational activities of the firm. Mostly in the manufacturing units there have been use of costing techniques which is consists of the information such as cost of material, labour and overheads implied in producing a unit (Job costing, 2017). Thus, such ascertainment of costs will define the charges to be levied on the products it also articulates the prices which are to be charged from consumers. Along with this, it will also help the business in internal planning and policy making for reducing such costs. It can be through changing the suppliers, reducing the labour force as well as replacing them with robotic arms etc.
By considering the concept of job costing technique where batch costing is somehow similar to them. Therefore, there will ascertainment of costs such as indirect and indirect costs which are implied in producing the product in the business (Bebbington and Thomson, 2013). Network Critical Solutions will have effective operational practices as if the professionals analyse the costs implied in a batch of production. It defines the total expenses which have been made in such process as well as motivate the professionals for making relevant changes in the practices.
In this system there will be use of various techniques and operational analysis over managing the inventories as per the demands arises in the market. Therefore, there will be proper records of information such as total number of sales made in a period as well as efficiency of business in producing the units which will meet the consumer demands in the market. Network Critical Solutions will have accurate ascertainment of the demands and efficiency as they manage the accounts for inventory (Gupta, Pevzner and Seethamraju, 2010). Along aside, it will also highlight the innovative ideas and policies to be made by the professionals in terms of developing the techniques to enhance the business sales as well as improving the productivity.
This is the techniques which helps organisational professionals in analysing the consumer responses towards the products and services they are offering among them. It will be based on past records and the sales growth over the period. Thus, professionals at Network Critical Solutions will have appropriate information regarding the preferences and popularity of the products and services in the market (Saeidi and Othman, 2017). It will bound them in redesigning the products as well as making innovative changes in the operational practices which will help them in governing the business tasks.
By considering the past transactional records and the outcomes which will be planned for the future operational management. Therefore, the costs implied in the past activities as well as revenue retained by business will be discussed to have further planning. However, there are various reporting techniques which are needed to be implicated by professionals such as:
This is the most fundamental techniques of analysing the past records and planning for the upcoming costs implied in the business activities. Therefore, this report will help the manager professionals in making accurate analysis over the costs required in the activities on which they can develop policies and find alternatives to reduce the costs. This will also help the business in allocating the funds in each task and the surety also attached to it that there will be proper utilisation of funds (Managerial Accounting Reports, 2014). Thus, the chances of having manipulation of funds as well as imbalanced expenses will be reduced. Network Critical Solutions will have better financial control as they make budgets periodically.
This is the report which is consists of information regarding debtor collection period of the organisation. Thus, it determines that the time on which debtors will be recovered by the business. Network Critical Solutions will have effective operational management as if the duration of collecting accounts receivables will be shorter (Cooper, Ezzamel and Qu, 2017). Therefore, it is also a source of revenue on which the firm will have gains based on sold products among the individuals in the market. Thus, this reporting will help in analysing the potential debtors of the industry on which the firm could relay and make discounts. It will also help them in analysing efficiency of business in making qualitative changes in the operational practices.
To get the adequate information based on demands and the level of supplied made by the firm relation with meeting the targets. Therefore, this report will help the manufacturer in terms of analysing the costs implied in the production process such as material, labour and overhead costs which will centralize data and summarize is for having the adequate control over the operational practices and administration of activities (Nitzl, 2018). Network Critical Solutions can have information regarding opportunities stated in the market which will help them in making innovative changes in the products as well as redesigning the practices to have appropriate ascertainment of operations.
Implication of costs in the activities on which leaders have evaluated the profitability and specific types for managing the job activities. Therefore, there are analysis based on the costs such as material, labour and overheads used in the manufacturing or processing period (Ax and Greve, 2017). To analyse the costs required in such operations as well as the policies of the professionals in making drastic changes in the operational ascertainment will enable professionals in decision making and changing the plans for operations. Network Critical Solutions have to implicate this reporting technique which will bring the appropriate details regarding expenses and income generated in a unit.
In consideration with the management accounting techniques which have been analysed to be implicated in Network Critical Solutions, are associated with several benefits. Therefore, there can be various gains in the business as well as growth in this process. Along with this, the importance and fruitfulness of management accounting system can be analysed as:
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Network Critical Solutions will have implication of management accounting reporting techniques which will be assistive and helpful in terms of masking adequate operational increment and ascertainment of various business operations. However, as per the general principles and concepts have been awarded by international boards such as International Accounting Standard Board (IASB), International Financial Reporting standards (IFRS) and Generally, accepted accounting Principles (GAAP). Howe veer, these are the integrators or origins through which the concept of complicating the accounting techniques in the business practices have been determined.
The impact of costing system is for analysing the adequate and accurate outcomes which will be helpful in developing the strategies and making qualified changes in the operations. However, there have been use of two techniques of analysing profitability of the firm such as:
The marginal costing techniques is being used for analysing the outcomes which determined as per bifurcating the fixed and variable costs (Shah, Malik and Malik, 2011). Therefore, there will be use of only variable costs in the operations while fixed costs are excluded from it and are not being considered in analysing the profit and loss for the period.
This technique is known as the all cost system which analysis the profitability through implicating all costs in the process. Thus, there will be consideration of fixed and variable costs which have been denoted as the product cost.
Marginal Costing-:
Particulars |
Details |
Amount (in £) |
Selling Price |
55 |
 |
Units in numbers |
600 |
|
Total Revenue |
55*600 |
33000 |
Total Overheads |
||
Units in numbers |
600 |
|
Material Per Unit |
7 |
|
Labour Per Unit |
6 |
|
Variable manufacturing Overheads |
2 |
|
Variable revenue Overhead |
1 |
|
Total Overhead cost |
16 |
|
Total Cost of Production |
9600 |
|
Measurement of Contribution |
||
Contribution |
23400 |
|
Total fixed Costs analysis |
||
Production Overheads |
3200 |
|
Administration Overheads |
1200 |
|
Selling Costs |
1500 |
|
Total Fixed Costs |
5900 |
|
Net profit |
17500 |
Interpretation: On the basis of above measured analysis and income statement which have been prepared with consuming the marginal costing technique which will be adequate and helpful in terms of meeting the goals at the right time. However, in this technique there have been use of variable costs in the costs of product while fixed costs were not included in it. Thus, as per such influences the net profit has been retained by considering such technique is £17500.
Absorption Costing
Particulars |
Details |
Amount (in £) |
Selling Price |
55 |
|
Units in numbers |
600 |
|
Total Revenue |
55*600 |
33000 |
Total Overheads |
||
Units in numbers |
600 |
|
Material Per Unit |
7 |
|
Labour Per Unit |
6 |
|
Variable manufacturing Overheads |
2 |
|
Variable revenue Overhead |
1 |
|
Total Overhead cost |
16 |
|
Cost of Production |
9600 |
|
Less Closing Inventory Sales Variable Overheads (200*1) |
200 |
|
Total Cost of Production |
9400 |
|
Measurement of Contribution |
||
Contribution |
23600 |
|
Calculation of Total fixed Costs |
||
Production Overheads |
3200 |
|
Administration Overheads |
1200 |
|
Selling Costs |
1500 |
|
Total F C |
5900 |
|
Net profit |
17700 |
Interpretation: By considering the above listed analysis of the income stamen through influences of absorption costing technique on there have been use of all the costs which are implied the in business. Therefore, this technique consisting of using all the costs to be analysed and charge and which have brought the net profit as £17700.
This is the technique which will be helpful in analysing the efficiency of the business in terms of enhancing the sales or production to meet the profitable level (Bebbington and Thomson, 2013). Therefore, this indicates a point where the number of units will be produced by the business which will help them in meeting the official targets at the right time.
Particulars |
Details |
Amount (in £) |
Selling Price |
40 |
|
V C |
13 |
|
Contribution |
Sales â v c |
27 |
Break Even Point |
F C/ Contribution per unit |
6000/27 |
Break Even Sales (in units) |
` |
222.22 |
Interpretation: In relation with analyzing the break-even analysis over the analyzed outcomes on which there have been influences of the fixed and variable costs in the practices. The selling price is as £40, variable cost as £13 contribution have been analyzed through this as £27. However, the fixed costs of 6000 have been considered in analyzing the BEP pointy which is absorbed as 222.22 units.
2. Sales Revenue
Break Even Units * Selling Price
= £40*222.22
= £8888.88
3. Desired revenue to retain profit of £10000
Desired Profit
= (Fixed Cost + Desired Profits) / Contribution per unit
Particulars |
Details |
Amount (in £) |
Amount (in £) |
Fixed Expenses |
6000 |
||
Desired Profits |
10000 |
||
Contribution per unit |
27 |
||
No of Units that are required to achieve desired profits |
(6000+10000)/27 |
592.60 units |
4. Margin of Safety if 800 units were sold
Margin of Safety
= (Actual Sales- Break Even Point)/Actual Sales
= (800-222.22)/800
= 0.7223
In relation with analysing the application of the management accounting techniques which will be assistive and adequate in terms of making effective decision and changes in the operational tasks and planning in the organisation (Gupta, Pevzner and Seethamraju, 2010). However, in an approach towards it can be said that there are various accounting techniques which are required to be implicated by the professionals at Network Critical Solutions. In preparing reports there are various financial reports which are to be prepared by the professionals in relation with meeting the gains. It includes:
This is the reporting techniques which will be used under managing the inventories of the organisation which is comprised of managing the inflow and outflow of the inventories from the stores as well as managing the level of stock as per the demand generated in the market. It helps in reducing the all kinds of inventory costs such as material, WIP as well as finished goods costs. Therefore, Network Critical Solutions will produce the number of units which are being demanded in the market. Moreover, it will help the organisation in having proper allocation of resources as well as utilization.
This method considers techniques to improve the quality of the product and services which are being offered by the firm among consumers (Saeidi and Othman, 2017). Therefore, the motive of firm is for retaining the consumers for the longer period as well as they are must conscious regarding the brand image. Network Critical Solutions has to make implication of such techniques which will help them in managing the quality level of the products and services which are being used by them in manufacturing the products.
There have been implication two methods of costing in analysing the profitability of Network Critical Solutions. Therefore, accuracy of methods has been determined as per the variations in the outcomes of marginal and absorption cost. On the basis of above measured analysis and income statement which have been prepared with consuming the marginal costing technique which will be adequate and helpful in terms of meeting the goals at the right time. However, in this technique there have been use of variable costs in the costs of product while fixed costs were not included in it (Cooper, Ezzamel and Qu, 2017). Thus, as per such influences the net profit has been retained by considering such technique is £17500. By considering the above listed analysis of the income stamen through influences of absorption costing technique on there have been use of all the costs which are implied the in business. Therefore, this technique is consisting of using all the costs to be analysed and charge and which have brought the net profit as £17700.
This is the technique of measuring costs implied in each activity on which professionals make plans with respect to make alteration and changes in expenses incurred in each business activities. There have been operational enhancement and increment in the goals of entity. However, it consists of considering the past records and the costs implemented in each activity which helps the professionals in governing the adequate tasks (Nitzl, 2018). Therefore, professionals at Network Critical Solutions have to make implication of such techniques which will assist them in allocating the accurate amount of funds in each business activity.
Advantages:
Disadvantages:
These are the budgets which starts from zero base. There will be no consideration of past records which would affect the operations. therefore, due to such impacts all the budgets have been start from the zero base on which each activity in the business will have appropriate amount of funds.
Advantages:
Disadvantages:
This is the budget which is consist of analysing the past records on the basis of which the accounting professionals will make further planning (Bui and De Villiers, 2017). They estimate the cost of each activities will be more than the past records.
Advantages:
Disadvantages:
To analyse the inflows and outflows of the cash on which there had been ascertainment of effective cash balance (Shah, Malik and Malik, 2011). Therefore, these are the budget which have been made on the basis of consisting the budget made in each period.
Advantages:
Disadvantages:
There have been implication of various plans and policies which will be helpful in defining the adequate targets and managing the operations of firm (Bebbington and Thomson, 2013). Professionals st Network Critical Solutions must make implication of the planning tools such as cash budget, sales and production which will help them in analysing the costs as well as efficiency of firm in meeting the targets in the required time.
Cash Budget: It will be the best source and budgeting techniques which will help the professionals in developing policies and making changes in the plans of the organisation(Gupta, Pevzner and Seethamraju, 2010). Professionals at Network Critical Solutions will have reliable information based on costs such as fixed, variables and overheads which will be analysed and necessary changes have been made to improve the efficiency of the firm.
Example:
Particulars |
January |
February |
March |
April |
May |
June |
Cash inflows |
||||||
Opening balance of cash inflow |
4000 |
7300 |
10488 |
13764.8 |
17131.2 |
20587.9 |
Sales |
8000 |
8160 |
8323.2 |
8490 |
8659 |
8833 |
Other sources of income |
1500 |
1500 |
1500 |
1500 |
1500 |
1500 |
Total cash inflows |
13500 |
16960 |
20311.2 |
23754.5 |
27290.6 |
30920.5 |
Cash outflows |
||||||
Direct Material |
1000 |
1224 |
1248.48 |
1273.45 |
1298.92 |
1324.9 |
Direct Labour |
1000 |
1000 |
1000 |
1000 |
1000 |
1000 |
Other expenses |
1200 |
1248 |
1298 |
1350 |
1404 |
1460 |
Administration expenses |
3000 |
3000 |
3000 |
3000 |
3000 |
3000 |
Total cash outflows |
6200 |
6472 |
6546.4 |
6623.29 |
6702.75 |
6784.88 |
Cash deficit / surplus or closing cash balance |
7300 |
10488 |
13765 |
17131 |
20588 |
24136 |
Particulars |
Network Critical Solutions |
Freestyle IT |
Financial governance |
It has been helpful in managing the costs implied in each activity |
Proper allocation of funds in each department |
Variance analysis |
It has been analysed through determining the gap between actual and budgeted costs |
Variance between actual and budgeted costs will be used for decision making and further ascertainment of costs |
Key performance indicators |
It helps in motivating the workforce in encouraging them to make qualitative efforts in the operational practices. |
It helps in attaining the business targets on the right time. |
To manage the operational activities which will be assistive in making appropriate planning for meeting the financial obstacles at the right time. Professionals at Network Critical Solutions will have proper detail relevant with the costs in each activity such as cash, sales and productivity budgets.
The planning tools will be helpful in making strong decisions which will bring innovative changes in the operational gains of the firm.
On the basis of above report, it can be concluded that, management accounting will be helpful in making records of all the transactions in summarized way. Network Critical Solutions have been suggested various budgeting technique planning tools and the methods of making development in the policies of organisation.
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