Management Accounting and Reporting Techniques

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
1.1 Explain management accounting and give the essential requirements of different types of
management accounting systems...........................................................................................3
1.2 Explain different methods used for management accounting reporting...........................5
1.3 Benefits of management accounting system and their application to an organisation.....6
1.4 Management accounting system and management accounting integration and importance
of different methods of reporting for the success of the organisation....................................6
SECTION 2......................................................................................................................................7
2.1 Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs......................................................................7
2.2 Range of MA techniques..................................................................................................9
2.3 Interpret Data..................................................................................................................11
2.4 Calculation of BEP.........................................................................................................16
PART 2..........................................................................................................................................17
3.1 Define and explain purpose of budget and prepare different types of budget................17
4.1 Compare how organizations are adapting management accounting systems to respond to
financial problems................................................................................................................24
4.2 Management Accountants solving these financial grievances.......................................27
4.3 Planning tools used in management accounting.............................................................27
4.4 Importance of variance analysis along with definition of material, labour and overhead
variance.................................................................................................................................28
CONCLUSION..............................................................................................................................28
REFERENCES..............................................................................................................................29

INTRODUCTION
Management accounting is an accounting which identifies, measure, evaluate, interprets
and then communicate the financial information of company and helps manager to check their
financial position and help in achieving the organisation goals. It helps in controlling the
activities of management and take suitable decision regarding and use resources alternatively and
efficiently. In this report, it is shown that how the accounting manager uses various techniques,
tools and adopt different accounting system so that they can maintain, track their financial
position and can also improve ,resolve the grievances and faced by the organisation which
disturbs their financial status.
The report is about a UK based UCK furniture is trading its two division and drawer
division. They provide woodwork sells the components to UCK Furniture and rest of the world.
In this report, topic like different accounting system, calculation, usage and benefits of budgetary
tools and approaches of management accounting is been discussed.
SECTION 1
1.1 Explain management accounting and give the essential requirements of different types of
management accounting systems.
As discussed above, management accounting is an accounting system which helps
company to measure their financial position, control their business activities by identifying,
evaluating, controlling and communicating the financial information to the managers. This type
of accounting generally needs to prepare reports including the expenditure and revenue
(Masschelein,Moers,2020) cash, current account, trade receivable and paybles etc. Such reports
are need to be shown to the internal investors of the company so that they are also aware of the
financial performance and position of the company so as to take decision related to further
investment effectively.
Management Accounting is a part of financial accounting only but there is a big
difference among the two. A difference table can be helpful to see the difference which is
discussed below:

Basis Financial Accounting Managerial Accounting
Usage This type of accounting is used
by the external stakeholders so
so to see the information and
make decision regarding
investment.
This accounting is used by
internal stakeholders of the
company(Guinea,2016) to
analyse and take investment
decision as per the status or
financial performance.
Laws Management accountants work
by abiding themselves through
various laws and follow the
guidelines while analysing and
making these finance accounts.
As this type of accounting is
basically used by the internal
management of the company
and that why they don't have
any regulations to be followed
by preparing such accounts.
Content Financial Accounting carries
information related to finance
only.
It is a part of financial
accounting and contains the
financial as well as non
financial information.
Management Accounting has different accounting systems which is used by the managers
wh(Nuhu,Baird,Appuhamilage,2017ich are discussed below:
 Cost Accounting System: This system is also referred as costing system or product
costing system. It helps organization to record, evaluate and report the various cost like
fixed cost, variable and semi- variable cost. This system (Guffey,Harp,2017)helps to
identify the loopholes and focus on the improvement for that, they need to take
corrective measures to make it perfect.
 Inventory Management System: It is a sequential way of placing and storing the
inventory of raw material, leftover stock, finished goods so as to use them in future. It
helps to maintain continuous flow of supply chain of goods in the organization so that

there is no shortage when there is requirement and does no affect the operations of the
business.
 Job Costing System:This system is also called as job order costing and it helps manager
to collect the information related to cost of production. This
(Nuhu,Baird,Appuhamilage,2017)type of cost includes all the expenses which is occurred
while producing and manufacturing a product. By calculating this cost manager can
analyze how much profit and losses are there while manufacturing any product.
 Price Optimizing System: It is a mathematical system which helps company to decide
the price for their product. This system help managers to make assumptions to set the
price of product. That is affordable enough and customer is (Cokins,2016)also ready to
pay the settled amount to buy it. This system helps company to increase their profit
amount.
1.2 Explain different methods used for management accounting reporting.
Accounting report showcase the financial status of a company in a period of time by
recording all the business transaction so as to find out the revenue generated by company. The
report helps to s them(Quattrone,2016) to take flexible and strategic decision for so as to achieve
the organisation goals efficiently.
There are different methods used by accountants for management accounting reporting are
detailed below:
Job Cost Report:This report depicts the total cost incurred in completing assigned work.
Connect catering services are preparing this report so that they can avoid any type wastage while
completing their task or projects and focus more towards the more revenue generating zone and
also towards less revenue generating zone,so as to improve them more and can increase their
profits and attain their organisation motive.
Order information Report: This report is prepared with a motive of analysing and judging the
on going trends of business so that they can work by following an applying the trends to
maintain effectiveness and efficiency in the organisation. This report contain the information of
the orders which is received by the company. In context to UCK Furniture the management

prepares a order information report so that they can keep a record of it and check the order
history if required in near future.
Performance Report: In this report, the performance of each ad every employee is been stated
to check their activities, task they are performing and monitor their performance. It helps to
improve it if they are lacking behind in some cases and take some steps to solve it and increase
the employee working efficiency to boost the overall (Phornlaphatrachakorn, 2019)performance
of organisation. UCK Furniture prepare this report to track the performance of tier workers and
check their working efficiency.
Budget Report: This report helps the company entities to know, measure and control the cost of
an organisation. The budget helps in identifying the approximate income and expenses which
could be there in the organisation so that they can predict their profits for that period of time.
UCK Furniture uses this report so as to predict their approx income and expense and then use the
resources accordingly (Clarke,2019).
1.3 Benefits of management accounting system and their application to an organisation
There are many benefits like high productivity, better flow of inventory, effective pricing
decision and better internal management. All these are important in respect to an organisation for
the purpose of success. Updated level of information through management accounting help in
effective decision making and bring coordination in departments.
1.4 Management accounting system and management accounting integration and importance of
different methods of reporting for the success of the organisation
There is direct level of integration between management accounting system and
management accounting concept. Not possible to apply anyone without the help of each other.
Systems are effective in direction of getting data and results while accounting concept is
important for implementation of systems. So, it is clear from the point that effective
implementation of system is possible when able to following accounting principles.
There are many importance’s of reporting that aid success of an organisation like
effective decision making, better planning, better inventory control, better cost control, better
internal management. All these aid in success through improvement of productivity and
profitability.