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Understanding Management accounting and Financial Management - Dissertation Example

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Understanding Management accounting and Financial Management

The process of controlling is about eliminating any outliers from the firm’s cost structure and to point out whether the growth would be beneficial for the organization or not. Brigham and Erhardht (2004 pp. 343-350) state that budgeting can be very useful for a manufacturing organization like Omega Solutions Ltd. It is often used by managers are accountants to aid them in the control process of the organization. It guides the managers and accountant about the costs that are being inflated and are needed to be controlled for the efficient operations and profitability of the company. In the case of Omega limited, there has been increase in days of receivable as a result of company’s growth and contribution margin has fallen down. This is not an ideal scenario for the company and one can say that the expansionary plan or the new plan has done more harm than good to the company as it is now yielding lesser contribution margin. ...
(South-Western Pub, New York) Omega Solutions Ltd can also use this budget to see the possible cash flows arising from the operations of the company as a result of implementation of new plans. This would be extremely helpful for the organization as it can use these cash movements to determine the future position of the company. The company can also plan for the position by looking at the cash budget and can make important decisions like when to pay the suppliers and when to indulge in the process of capital expenditure without having to suffer cash flow or liquidity problems. Van Horne & Wachowicz state that there can also be conflicts in the budget preparation. These conflicts are a result of conflict of interests within the organizations. An organization is a set of different departments with each department and people within these department having different aims and goals. This will create problems as each department would try to point out its own goal’s in the organization. Most of the departments will ignore what is better for the organization and they would hardly be interested in knowing whether or not the other organizations would be able to meet their ambitious targets or not. This will lead to problems in the smooth functioning of the organization. For example, an ambitious target by sales department of the organization won’t do much good If the production department thinks they are unable to produce enough products to meet the targets of the sales department. This would not only lead to further conflict between these department, but it will also give bad name to the organization itself as many customers of the organization would become worried about the organization’s ability to meet their demand. (2005) ...Show more
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Summary

Running Head: Part A and B Part A and Part B: Financial Management Name: University Date Part A a) ? ? ? ? ? Receipts Oct Nov Dec Jan Feb Sales 405,000 405,000 405,000 405,000 405,000 Outflows Raw Material Costs 81000 81000 81000 81000 81000 Other Variable Costs 202,500 202,500 202,500 202,500 202,500 Fixed Costs 90,000 90,000 90,000 90,000 90,000 Total Outflows 373500 373500 373500 373500 373500 Net Cash Flow 31,500 31,500 31,500 31,500 31,500 Balance B/F 70,000 101,500 133,000 164,500 196,000 Balance C/F 101,500 133,000 164,500 196,000 227,500 b) Omega Solutions Limited produces a variety of products and is a growing organization…
Understanding Management accounting and Financial Management
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