Management Accounting and Types of Management Accounting Systems

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and types of management accounting systems...............................1
P2 Methods used for management accounting reporting.............................................................2
TASK 2............................................................................................................................................3
P3 Costs using appropriate techniques of cost analysis...............................................................3
TASK 3............................................................................................................................................5
P4 Advantages and disadvantages of different types of planning tools.......................................5
TASK 4............................................................................................................................................7
P5 Organizations are adapting management accounting systems................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is provision of the financial data to company for use in company
and also business development. This consists presentation of the financial information for the
internal purposes that mainly used through management in order to main business decisions.
Management account is procedure of the preparing reports related to management and accounts
which give the accurate as well as financial information to the managers for making the long
term and short term decisions (Ameen, Ahmed and Abd Hafez, 2018). Innocent Furnitures
considered entity for the project. It is a firm that manufactures various kinds of wooden products
including beds, desks, chairs and so on.
In the report, there is a discussion about the management accounting and provide
necessary needs of the various kinds of the management accounting. Benefits and the
disadvantages of various kinds of the planning tools used in the budgetary control will be
discussed in a detailed manner.
TASK 1
P1 Management accounting and types of management accounting systems
Managers use accounting provisions information to inform better themselves before they
decide the matters within company. In Innocent Furnitures, it is used only through internal team
of company and this things makes it varied from the financial accounting. The main purpose of
management accounting is to help internal users to firm in making informed business related
decisions.
Management accounting systems
Inventory management system: This is combination of the processes and technology that
oversee monitoring as well as maintenance of the stocked goods (Azudin and Mansor, 2018). In
context to Innocent Furnitures, inventory management system track the quantities effectively in
storing the location. Essential requirement of the inventory management system mention below:
 Categorising the material together with managing an inventory of Innocent Furnitures to
give the necessary inventory. To keep track of the available stock as well as manage the reorder level.
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Cost accounting system: It is a framework that used through organisations to estimate
cost of goods for analysis of profit, cost control and inventory valuation. Its essential
requirements given below:
 Allocate cost according to activity that is related to traditional costing and activity based
costing. Track the cost and also control them by making better decisions which are related with
enhancing profitability and productivity of the Innocent Furnitures.
Job costing system: This is system for accumulating and assigning the manufacturing
costing of person (Bedford and Speklé, 2018). It is used when different items are manufactured
different from the each other and has significant cost. Essential requirement of the Job costing
system mention below:
 Ascertain the reliable estimation for the monetary values concerned to overheads,
information labour and direct material in Innocent Furnitures.
 Applying the information and accumulating for assigning cost to process the goods.
P2 Methods used for management accounting reporting
Management accounting reporting is process of giving information to different
management levels as to enable judging effectiveness of responsibility centres and taking the
corrective decisions. This emphasize on the inside information that received by financial
accounting. In regards to this, managerial accounting reports are used for the planing, decision
making, measuring the performance and also regulating. The different methods of management
accounting reporting used by Innocent Furnitures mention below:
Performance report- This is related to the detailed statement that analyse outcomes
certain activities to its success within time period. In Innocent Drinks, management accounts
makes the use of budgets in order to comparing the actual expenditures with the revenues to the
budgeted variables. In context to performance report, managers plans the future demands of
furniture products of Innocent Furnitures and then make changes in the cost accordingly.
Budget report- Budget report is comparison of actual result of business to pre-
established objectives. It is mainly issues to the everyone that responsible line item in income
statement. It is used to identify that which of the expenditure level is too high so actions can
taken to bring the level of expenditure (Bui and De Villiers, 2017).
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