Task: LO1- Demonstrate an understanding of management accounting systems. LO2-Apply a range of management accounting techniques LO3- Explain the use of planning tools used in management accounting LO4- Compare ways in which organisations could use management accounting to respond to financial problems Assignment Brief and Guidance: Learners need to have read carefully the instructions before attempting any of the questions. The assignment is to be addressed with reference to the scenario addressing all learning outcomes. The learners will be assessed through the written report submitted by them addressing the Pass, Merit and Distinction criteria. Contribution: 100% of the module. Scenario 1 Management accounting plays a key role in organizations today and therefore decision makers in the organization must understand how to create and use good management accounting information. In today’s business environment, business wants to track performance information that goes beyond just the cost-based information of historic general ledger systems provided by traditional financial accounting information. Good management accounting involves responsibility to manage a wide variety of critical management accounting information using management accounting system and management accounting techniques such as cost-volume- profit (break- even) analysis, budgetary control, cash budget, marginal costing and absorption costing to produce relevant management reports for informed decision making. You are applying to work as a Trainee Management Accountant in a medium sized financial consultancy organization that has a client base of 50 small and medium sized business. The organization serves clients operating in a variety of sectors such as Manufacturing, Retail, Hospitality or Construction and provides them with the crucial information they need for managerial decision-making. As part of the selection process, you are required to write a report demonstrating your knowledge and understanding of the management accounting function and management accounting systems as well as the importance of presenting information to internal stakeholders such as the management. They also want to see your understanding of planning tools and how planning tools help organisations to resolve their financial problems. Guidance In completing the report, you must explain what is management accounting and the requirements of different types of management accounting systems. Also explain the different methods used for management accounting reporting. Furthermore, your report must evaluate the usefulness of using management accounting systems and its application in an organization. The report must critically evaluate how management accounting systems and management accounting reporting are integrated within your chosen organization.The second part of your report must explain the advantages and disadvantages of various planning tools used in budgetary control and analyse their use and application for preparing and forecasting budgets. You must also be able to evaluate how planning tools in accounting help the organization to respond appropriately to solving financial problems leading to sustainable success for organizations. Scenario 2 Based on your report in relation to scenario 1 the firm has now hired you as a Trainee Management Accountant. Your line manager now wishes to assess your ability to apply a number of management accounting techniques and how organisations can apply management accounting as a solution to resolve financial problems. Guidance The report should demonstrate your ability to calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costing techniques (See Appendix 1). After appropriately applying a range of management accounting techniques, you must also include appropriate financial reporting documents and interpret the data in the report for a range of business activities. In your report, you must show a comparison of how organisations are adopting management accounting systems to respond to financial problems. The report also requires you to analyse how management accounting tools can be adopted by organisations to respond to financial problems (See Appendix 1, Tables 1and 2). The module will be assessed and graded against the Pass, Merit and Distinction criteria as specified in the assessment grid below issued by the awarding body, Pearson Edexcel. Galway Plc manufactures and sells a single product .The following budgeted/ actual information is provided in relation to the production of this product: All costs are in GBP. Show all workings very clearly. Selling price per unit 50.00 Direct materials per unit 8.00 Direct labour per unit 5.00 Variable production overheads per unit 3.00 Details for the months of May and June 2018 are as follows: May June Production of Product 500 380 Sales of Product A (units) 300 500 Fixed production overheads are budgeted at £4,000 per month and are absorbed on a unit basis. The normal level of production is budgeted at 400 units per month. Other costs Fixed selling £4,000 per month Fixed Administration £2,000 per month Variable sales commission 5% of sales revenue There was no opening inventory of Product A at the start of May. You are required to prepare a profit statement based on both absorption costing and marginal costing techniques and show the reconciliation of profits between the two methods. In order to produce this single product, Galway Plc uses two raw materials – metal and plastic of which metal is an expensive item of material and Galway Plc is interested in the cost variances of this raw material. The information pertaining to budgeted and actual costs of the raw material (metal) is given below and you are required to show the calculation of material variances. Table 1: Budgeted and actual cost of metal used in producing Product A Budgeted material cost per unit of the product 2kg at £10/kg Actual output 1000 units Actual material purchased and used 2200kg Actual material cost £20,900 During the month of May, the following purchases and issues of the raw material (metal) were made and the store assistant wishes to know the closing value of the raw material inventory at the end of the month. He provides you with the following information relating to the purchases and issues during the month. You are required to show the inventory ledger record for the month of May using the LIFO and Average Cost methods of inventory accounting. Table 2: Purchases and issues of raw material (metal) during the month of May May 1 Opening Inventory of 40 units @£3 each May 12 Bought 20 units @ £3.60 each May 15 Issued 36 units May 20 Bought 20 units @3.75 each May 23 Issued 10 units May 27 Issued 25 units May 30 Issued 5 units The financial report produced must accurately apply and interpret data for a range of business activities in Galway Plc.
Subject Name: Accounting
Level: Undergraduate
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