Management Accounting System and Reporting in KEF Ltd

BUSINESS

INTRODUCTION
MA is a concept which assist organization in creating statement and various other papers
and documents assisting the managers of company in making effective decisions (Cooper,
Ezzamel and Qu, 2017). MA helps the business organization in making effective decision as this
will assist the business organization in recording and analysing of all the different types of data
and information. Ongoing study is grounded on the KEF Ltd which is a company in the
manufacturing industry and was founded in 1961 and deals in loudspeakers, iPod speakers,
headphones and many other related gadgets and equipment.
The present study will initiate with the discussion over the different system of accounting
for management and with it the different types of report for MA will be analysed. After this the
different types of techniques like absorption and marginal costing will be used to calculate the
cost and then prepare income statement. Further the various advantages and disadvantages of the
different types of tools for planning will be analysed. At the last the use of different system of
accounting for management will be used to analyse that how it assists in dealing with financial
problem.
LO 1
MA and requirement of different MA system
MA system
MA is referred to as concept which assist business organization in managing the decision
making for the business keeping all the financial information as a base and data being in use.
This is essential because of the fact that if the financial information will not be in good condition
then this will have a great impact over the working for the business. accounting for managers is
required by the business as this helps in rising working capacity of business. For using this
branch of accounting there are different types of system of MA system which KEF Ltd can use
in order to manage the accounting system.
Cost accounting system- the type of system wherein KEF ltd uses the systme of
accounting for cost in which the business allocates to all the business activities so that the cost
can be calculated in easier manner (Maas, Schaltegger and Crutzen, 2016). this sytem of cost
accounting is a framework through which the business organization estimates the cost of

producing the goods and services. This is essential that with every activity of production some or
the other cost is attached and it is essential for the company to appropriately measure it.
This is applied within the KEF ltd as the cost is very essential to be analysed and
calculated as this will only help in assessing the overall profit being earned by the business
during the normal course of business that is one financial year.
Soderstrom, Soderstrom and Stewart, (2017) states that the major benefit of using this
cost accounting system by KEF Ltd is that this assist the business in assessing the whole cost
incurred by the company and in against of that how much profit has been earned. Also, this
system assists the company in managing the overall accounts of the company and this will assist
the company in managing the activities which are not working in proper manner.
Inventory management system- this is an important type of MA system wherein the
company manages the whole process of inventory and manages the time when it comes in and
when it is finished and need to be reordered. This is very essential system as if the inventory will
not be available on time then this will affect the working of whole production process.
This system is applicable in KEF Ltd as here the company places the order for the
inventory and then they use that inventory for the production. For this the system used by KEF
Ltd is economic order quantity which is a model which assist the company in managing the
inflow and outflow of the inventory.
In the views of Qian, Hörisch and Schaltegger (2018) inventory management helps in
order the inventory automatically as the level of inventory reaches to the specified level. The
main benefit of this system is that this reduces the carrying cost as now the company has not to
store the raw material as they will come as and when there is requirement.
Job costing system- this is yet another necessary system under the MA system which is
helpful for the company. Under this system the process of accumulating the information relating
to different types of cost for the different types of job or activities under the whole production
process. This includes the cost levied on all the different jobs that is like material, labour,
overhead and other activities.
The major application of this system for KEF Ltd is that this assist the company in
differentiating the cost of each of the activities (Chiwamit, Modell and Scapens, 2017). This is
important because of the reason that this will help company in bifurcating the cost of each and
every activity on basis of the job being performed by them.