Management/Managerial Accounting (Coursework Sample)
There were three questions in the assignment as mentioned below
1. Discuss the importance of management accounting concepts that covers the financial statements and reporting analysis. Choose an organization to justify your answer.
2. Define budgeting and explain its role in the management cycle with a suitable example with the proper referencing.
3. What is cost behavior? Explain with the suitable example. How to apply techniques/methods associated with cost management systems?
Discuss the importance of management accounting concepts that covers the financial statements and reporting analysis
Accounting is an essential part of any organisation since it is the aspect that ultimately determines how healthy a company's finances are and because it will ultimately be beneficial to the company (Indeed, 2020). There are several sub-specializations within the field of accounting; however, financial accounting and management accounting are the two that are most frequently seen. According to Rikhardsson and Yigitbasioglu (2018), management accounting is a type of accounting that identifies, measures, analyses, and interprets accounting information so that it may be utilised to assist managers in making informed decisions. This information can be used to help a company's managers make decisions. Management accounting's purpose is to provide assistance in decision-making by doing pertinent cost analysis, audience targeting, create or purchase assessments, defining budgets, and managing and planning activities (McLean, 2018).
Management accounting is used in the product marketing department at ASUS to assess and analyse how well our campaigns are performing, as well as to plan the next step that will be made, and it is also used to anticipate the amount of sales that will occur throughout certain times of the year. Accounting for management is extremely important to the functioning of businesses since it assists managers in making educated decisions.
According to Cooper (2020), there are four worldwide management accounting standards that need to be adhered to. These principles are as follows: impact, relevance, value, and credibility. These four principles will ensure that organisations have effective management accounting functions by providing a direct line of sight between the objectives of organisations and the practises of management accounting. This direct line of sight will ensure that organisations have effective management accounting functions. He went on to claim that the ideas may be applied to the job that management accountants conduct, which would have an effect on management accounting professionals, the performance management of businesses, and management accounting practises (Cooper, 2020). These principles will help ASUS management make better decisions by reflecting the realities of the company's operations and the resources that are employed in monetary terms. This will provide them a consistent basis on which to analyse the company's various business plans.
According to Codjia (2017), the practise of management accounting entails a number of essential operations, the most important of which are budgeting, internal financial reporting, cost analysis, and the monitoring of internal controls. All of these activities will be beneficial to the organisations that participate in them. The accounting processes of cost analysis and planning are two in particular that may prove helpful to ASUS. When these two processes are combined, managers are better able to estimate revenue levels based on economic trends utilising budgeting and also examine cost variations to identify business performance and compute return on investment (ROI).
The practise of management accounting is critical to the success of businesses in their pursuit of their objectives. When managers have access to a greater quantity of financial information on the state of the business's finances, they are in a better position to be able to make decisions that are in the best interest of the firm going forward.
Define budgeting and explain its role in the management cycle
Budgeting is most useful when it is used for strategic planning, decision-making, and management oversight. Predicting profitability, allocating resources and disseminating specific information about one part of an organisation to another part of the organisation may all be accomplished through the use of budgets. According to Bergmann et al., members of an organisation benefit from budgeting through exchanging information (2020).
The term "budget" refers to a prediction of a company's revenues and costs for a specific period of time. When an organisation has a budget, it is able to examine how much money it is producing and spending, as well as figure out the best method to distribute it among various divisions. The term "budgeting" refers to the process of putting together a financial plan. Budgeting is a process that impacts all companies, regardless of their size or composition, because budgets are essential management and planning tools. There are many companies that participate in budgeting in order to find the most cost-effective ways of producing money and increasing the value of its assets (Warren and Jack, 2018).
In management, Perpetua (2019) stated that budgeting helps an organisation use its limited resources in a way that maximises its chances of success. Incorporating business acumen into the budgeting process helps the company's management make better judgments about its overall performance. Even if budgeting is expensive and time demanding, it raises the awareness of expenses and coordination of operations that are directed toward the attainment of firm goals and objectives. (Redburn, 2021). It is essential for any business to have a well-defined budget that lays out the expected path it will take to reach its goals, as well as a mechanism for management to measure its progress toward those goals against the actual results (Douglas and Overmans, 2020).
The strategic management process should begin and be led by the highest levels of management. Afterwards, it keeps an eye on the implementation and makes sure it's having the desired impact. Making a decision on budgeting planning and management is not an easy one. The exercise must take into account a variety of aspects. Even more challenging is the fact that the variables being evaluated will change in the future. Entering the specialist field of planning and management necessitates a high level of foresight and knowledge of the past. It's impossible to discuss planning without including "forward-looking" and "more methodical" future analyses. Finding possibilities and foreseeing issues is done in a methodical, complete manner that is formal and structured (Sirojuzilam, Hakim and Muda, 2018).
Control ensures that the intended outcomes are being achieved and remedial steps are being implemented when deviations or shortfalls are detected (Bergmann et al., 2020), When a business does not have the proper controls in place, they are at the whim of both internal and external factors that can disrupt its efficiency, and they are unable to counteract these forces because they are not aware of their existence. To ensure that managers are held accountable for their actions in accordance with the company's general policy, budgets are prepared that outline their financial accountability. As a means of ensuring that management, policy, or even policy revisions are met, a constant comparison is done between the actual and budgeted outcomes.
What is cost behaviour? Explain with the suitable example. How to apply techniques/methods associated with cost management systems
Cost behaviour refers to the manner in which changes in company activities affect expenditures. Cost habits should be taken into consideration while creating the annual budget so that any increases or decreases in expenses may be anticipated. The sensitivity or reaction of total costs to fluctuations in the amount of sales or output is referred to as "cost behaviour." (Ko, Chung and Woo, 2021). The appropriate range is referred to as the range in which the cost patterns do not vary, and the costs that fall within this range are referred to as fixed costs. These are costs that do not vary no matter how much product is produced or how many units are sold. Costs that are changeable make up the ranges that lie outside of the applicable range. These are the costs that adjust themselves in accordance with the variations in production. For instance, if a person buys a car, the cost of making repairs to the tyres and the engine will grow as the person drives more miles, and the price of gasoline will also climb. Some instances of variable expenses include the following: Nevertheless, the price of cleaning the car won't change no matter how far it has been driven or how long it has been on the road. This is a consistent monthly expense. This serves as an example of how the cost behaviour system operates.
Project cost management encompasses all phases of a project's lifecycle, from conceptualization to evaluation of actual cost performance and conclusion. The Cost Management System will be implemented through a series of Project Cost Management phases and processes.
Step 1: Resource planning
Resource planning is the process of determining the future needs of an organisation or a specific project. These actions include assessing and making plans for the utilisation of the company's human, monetary, and informational resources in order to carry out the company's operations. Most activities rely on the use of human resources. Materials and consumables are required for some activities as discuss by Ali et al. (2021).
Step 2: Cost estimating
An investment choice, activity, project, or project scope's resource requirements are quantified, costed, and priced using cost estimation. Quantification of technical and programmatic data about an asset or project into financial and resource information is part of this process.
Step 3: Cost budgeting
Allocating resources into cost
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