>> Managerial Accounting
You are required to research one company that would be your ideal company to work for.
You should write a report to the newly appointed chairperson of the company, addressing the following issues.
a) identify six different groups of users of financial statements, who would be interested in this company (ensure that both internal and external users are fairly represented).
Provide a brief summary of these users and a brief description of the purposes for which they will use the financial statements
b) Obtain the latest five consecutive years of the published Income Statement and Statement of Financial Position (Balance Sheet) for this company; most importantly the company should be listed on the London Stock Market (these accounts should be included as an appendix to the coursework).
Your analysis should include
• A brief summary of the company.
• Calculations of various ratios which will be used to analyse the company's performance over the years, choosing at least two from profitability. liquidity, and working capital and solvency ratio
• Provide an analysis on each ratio calculated
• Summarise your findings in the conclusion
"Management accounting refers to a function of tracking internal cost for any business process that helps an organisation, firm or an individual in making decisions related to production, operation and investment in market.....The role of the management accountant includes collecting, recording and reporting financial data from several units of an organisation, observing and analysing their budget and suggesting their funding and allocation. This includes estimation of the cost of raw material, labour, manufacturing, sales, advertising and the company's internal operation costs " (C/MA, 2015).
For cost control and performance measurement, costs and revenues must be traced to the individuals who are responsible for incurring them. This system is known as responsibility accounting. Responsibility accounting involves the creation of a responsibility centre..." (Drury, 2015).
You are required to write a report on the role of management accounting, either as a function, or in the context of the person - the management accountant. Your report must address the following:
a) Discuss the role of management accounting in an organisation (make comparisons to financial accounting).
b) Discuss the classification of costs by function (production, non-production); by type (direct, indirect); by behaviour (fixed, variable, stepped fixed) and relevance. Provide examples and diagrams where necessary.
c) Discuss the FIFO (First In First Out) and LIFO (Last In First Out) methods of inventory valuation making comparisons between them.
d) Discuss the concept responsibility accounting. Your discussion must include responsibility centres - cost, revenue, profit and investment centres.
For part 1 the company selected is Domino's Pizza. Solution to part 1 provides six different groups of users of financial statements, who would be interested in this company, A brief summary of the company.ratio analysis, etc. The second part of the solution discusses the role of management accounting in an organization, classification of costs by function, FIFO (First In First Out) and LIFO (Last In First Out) methods of inventory valuation and concept responsibility accounting.
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The company is listed on the London stock exchange. It is a very big franchise of fast food chain of Dominos Pizza. The company is having right to operate in various countries such as United Kingdom, Switzerland, Luxemburg etc. The company is operating in the food service industry. The company was founded in the year 1957. The company is having its operations in 858 locations. The main products in which the company deals are Pizza, sides, desserts and drinks. The main service of the company is to work as the franchisee of Dominos Pizza. The revenue of the company was 316.8 million in the year 2015. The operating income was 73.2 million in the year 2015. The profit of the company was 49.7 million in the year ending 2015. The number of employees working in the year 2015 was 1083. The company is having high quality operative system in order to carry out the supplies from its various stores. The company is keeping up its high social responsibility and thus delivers high quality products to its various customers.
The six different groups of users of financial statements are:
1. Managers and board of directors: these are the people that are being appointed in the Company in order to manage the operations of the company hence they are concerned about the profitability of the company as they devote their time and energy towards the operations of the company.
2. Shareholders: they are the persons who make investment in the company hence they are concerned about the risk and return of the investment in the company. They evaluate the financial position of the company on the basis of the financial statements issued in the annual report of the company. They also take investment decision on the basis of the analysis of the financial statements of the company.