Importance of management accounting in decision making process

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
1. Importance of management accounting in decision making process for improving
performance.................................................................................................................................1
2. Different kind of management accounting systems ...............................................................2
3.Application of different kind of reports and benefits of management accounting systems ....3
4. Application of cost accounting techniques for formulation of income statements.................5
SECTION 2......................................................................................................................................8
PART A...........................................................................................................................................8
1. Advantages and disadvantages of planning tools used for budgetary control .......................8
2. Application of planning tools to solve financial problems and to attain sustainable success
...................................................................................................................................................10
PART B..........................................................................................................................................10
1. Effectiveness of management accounting systems to deal with financial problems ............10
2. Contribution of management accounting to lead organisation to attain sustainable success11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is important principle which combines accounting and costing
concepts with business operations and techniques which adds real value to the organisation.
Accounting officer of the organisation has the duty to implement accounting provisions which
help in functioning of different activities like planning, controlling, monitoring, risk assessment
etc. It helps in development of all areas and performance of every department. Through
collection of such different statistical and non statistical information different kind of reports are
formulated which helps to drive sustainable success (DRURY, 2013).
Section 1 includes the description about different kind of management accounting
systems and reports which are used by accounting officer of Rollin son and its importance
regarding improvement of the decision-making power. Also, application of marginal and
absorption costing for development of income statements. Section 2 of the report present about
different planning tools used by Nero Ltd. For budgetary control. Also, about use of management
accounting systems to respond financial issues.
SECTION 1
1. Importance of management accounting in decision making process for improving performance
Accounting officer of Rollin-son uses the provisions of management accounting to
improve their internal decisions and formulation of important policies which improves overall
performance of organisation. With the help of these systems large number of reports are prepared
which helps in determination of the roles for each and every employees. It contributes regarding
providence of direction to employees while performing their functions. Large number of benefits
are gathered by the management of Rollin-son through application of management accounting
provisions which are defined below:
 Formulation of plan: Success of organisation is depends upon successful forecasting
and planning about future operations. It helps the production department of organisation
to produce the goods according to the needs of their customers. It helps in analysis of
present and future trend of business.
 Determination of objectives: Provisions of management accounting helps in collection
of information about the functioning of different departments. On the basis of such

information manager of organisation formulates the goals and provides the route which
helps in achievement of same.
 Better services to customers: Application of cost control devices helps in reduction of
the cost and expenditures of their products. It helps in development of the felling of cost
conscious among employees. This system provides more emphasis on the maintenance of
quality of their products and provides to their customers at affordable prices.
 Measurement of performance: The tools which are used by the accounting officer for
measurement of performance are budgetary control and standard costing. The method of
standard costing helps in determination of standards first and its comparison with actual.
Such comparison provides the information about deviations. It seems that performance of
organisation is good if actual cost not exceeds standard cost. On the other hand, method
of budgetary control helps in identification and measurement of efficiency of employees.
 Helps in attainment of maximum profits: Management accounting provisions helps in
controlling unnecessary expenses. It provides the opportunity regarding removal of
inefficiencies. New techniques are identified which helps in achievement of the
predetermined goals and objectives. This results in attainment of maximum profits out of
the capital which is invested in business (Zang, 2011).
 Forecasting cash flows: It is important for every organisation to improve their
understanding about the revenue which is going to ascertained in future period of time. It
can be analysed with the help of preparation of different kind of budgets and trend charts.
It helps in effective allocation of money and resources which provides opportunity to
attain maximum returns for their investments.
2. Different kind of management accounting systems
Management Accounting: It is the process which includes different functions like
collecting, analysing, reporting of information about the operations and finances of business.
These information is generally used by the the internal parties of organisation like manager for
proper operation of day to day functions and improvement of short term decision-making. It
includes the use of different kind of tools like budgeting, variance analysis, BEP etc. which
contributes in accomplishment of the common goals of organisation. It assist the manger of
Rollin-son regarding achievement of better planning and control through preparation of various
strategies and budgets.