Management Accounting Report Cost Classification

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| Jupiter LTD. |1 | | |Email: jupiter@ltd.com |

JUPITER LIMITED

Management Accounting Report

Prepared for:
Jupiter Ltd.
Chief executive officer

Prepared by:

Date: April 03 2012

TABLE OF CONTENTS

EXECUTIVE SUMMARY2

THE ROLE OF MANAGEMENT ACCOUNTING3

CLASSIFICATION OF COSTS4

INVENTORY VALUATION METHODS7

RECOMENDATIONS 11

Bibliography12

Jupiter Ltd.
Management Accounting Report

EXECUTIVE SUMMARY

1

2

This report discusses in detail the management accounting in relation to Jupiter Ltd. It starts by highlighting the role of management accounting in an enterprise such as decision making planning and budgeting. It then talks about the different cost and cost classification methods.

The report goes on to talk about the main inventory valuation methods and how different approaches can be useful in Jupiter Ltd.

The report then moves onto the sets of recommendations where a special advise about management accounting system are given.

Jupiter Ltd.
Management Accounting Report

THE ROLE OF MANAGEMENT ACCOUNTING

WHAT IS MANAGEMENT ACCOUNTING

Throughout history humans were producing goods. A trade among them often involve barter and sharing. As a time progress , trade has started to organize in a form of different companies. Such a companies in order to gain profit have to be organize properly. A first signs of management accounting are traceable back to Mesopotamia. Modern management accounting starts after first accounting revolution in 1950 where a direct costing mathematics was first introduced.

Nowadays, a main role of management accounting is to help organize a integral processes within an organization. It provides crucial data necessary to decision making process. This decision can be divided to strategic , tactic , planning and control decision. In order to support this activities an management accountants using very sophisticated methods such as budgeting, cost allocation , performance measuring or job costing.

According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the application of the principles of accounting and financial management to create, protect, preserve and increase value to the stakeholders of profit and not-for-profit enterprises, both public and private."(CIMA Official Terminology).

Weetman added that it is mainly direct to managers “.. because they have close involvement with the business, they have access to a wide range of information and will seek those aspects of the information which are most relevant to their particular judgements and decision..”

HOW MANAGEMENT ACCOUNTING MIGHT HELP JUPITER LTD.

A management accounting system is a system which is adjusted to a every company needs. Every organization is different so a methods of accountancy have to be different as well. A main aim of such a system is to provide a systematic information to top management which help in decision making process in a specific circumstances. Thus, management accounting is an integral part of organization and do not need to be present outside. Whereas, is a very idiosyncratic and sophisticated system it might help with : Reduce uncertainty f.e about cost allocation

To choose on which problems company should focus the most
Solving a problem. To choose a best way possible to perform an undertaking task To control a performance of particular tasks, plans and budget

A good managing of such a information might help an organization for proper costing therefore, might assist to produce better results. In a today's world where there is a big threat of competitors it might help...
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