Management Accounting: Types and Roles of Management Accountants

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Higher National Diploma in Business
Assignment Brief Number 1

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Contents
Section 1: Meaning of Management Accounting, its different types and role of management
accountants......................................................................................................................................3
Section 2: Classification of Costs that would help the Management decision-Making..................4
Section 3: Calculation of unit cost through using absorption costing and marginal costing...........4
Section 4: Costing method for special order....................................................................................5
4.1: Costing method.....................................................................................................................5
4.2: Calculation of cost of special order through using the job order costing.............................6
Section 5: Optimum Product mix....................................................................................................6
Section 6: Calculation of breakeven units.......................................................................................7
Section 7: Evaluation of proposal....................................................................................................7

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Section 1: Meaning of Management Accounting, its different types and role of management
accountants
The concept of management accounting can be described as the process of developing the
management reports for providing accurate and timely financial information to the managers for
taking short and long-term decisions relating to promoting the growth and development of a
company. The concept is significantly different from that of financial accounting that involves
developing financial reports for external users. On the other hand, the field of management
accounting involves developing the financial reports for internal audiences such as department
managers to provide them the stated goals and objectives to be attained. The major type of
information that are developed and provided by the management reports are amount of
availability of cash, sales revenue generated, amount of orders in hand, accounts payable and
receivable, outstanding debts, raw material and inventory information (Ward, 2012).
The different types of management accounting system can be described as follows:
 Inventory Management System: It can be described as a method of management
accounting that involves managing the information related to stocking of goods. This
type of management report is developed for tracking the inventory level, orders, sales and
deliveries.
 Cost Accounting System: This method of management accounting involves estimating
the cost of the business operations involved in developing the products and aligning the
costs with the determined goals and objectives.
 Job Costing System: The method of accounting involves assigning costs for the specific
job incurred and thus developing an estimate of the overall cost incurred in carrying out
job operations (Youngm, 2014).
The management accountants are involved in designing and presenting the financial and
cost control reports to be used at each level of management. As such, the different roles of
management accountant can be stated as follows:
 Planning of Accounting Function: The management accountant is involved in planning
the type of information that should be included within the management report.
 Controlling: This involves measuring the actual performance and comparing with the
standard report developed. The management accountants by identifying the goals in the
performance holds the responsibility of implementing adequate measures for overcoming
the gaps identified.