Management Accounting Systems and Techniques

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P2: Management Accounting Reporting......................................................................................3
M1: Benefits of Management Accounting Systems....................................................................4
D1: Critical evaluation of Management Accounting Systems.....................................................4
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
M2: Application of these techniques...........................................................................................9
D2: Producing of financial reports...............................................................................................9
TASK 3............................................................................................................................................9
P4: Advantages and Disadvantages of planning tools.................................................................9
M3: Analysis of the use of planning tools.................................................................................11
TASK 4..........................................................................................................................................11
P5: Comparison of organizations in the use of management accounting systems to solve
financial problems......................................................................................................................11
M4: Analysis of response to financial problems........................................................................13
D3: Evaluation of planning tools...............................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management Accounting refers to the use of different types of financial data and
information in an effective manner so that the managers are able to take appropriate decisions in
the future time period leading towards achievement of goals and objectives (Alsharari and
Youssef, 2017). Its use is recommendable for the management so that they are able to manage
their funds and analyse and interpret the financial statements in a better manner leading towards
drawing of conclusions and recommendations. It is a branch of accounting which relies more on
using techniques so that an organization maintains strong financial position and raise its level of
profits in the future time period. This report is based on Innocent Drinks. It is a company which
provides smoothies and juices to its various customers in the market. In this assignment, detailed
focus will be made on demonstration of understanding of management accounting systems,
application of its techniques. Additionally, analysis of planning tools and comparison of ways in
which organizations can make the use of management accounting to solve their financial
problems will be discussed as a part of this project.
TASK 1
P1. Describes management accounting system
A Management Accounting is systematic process where the specific managers can
approach their decision making through overall analysation and evaluation as per the situation
which it arises to provide financial information. There are different kind of system under
management accounting. Some of systems are as follows :
Cost Accounting System: According to this accounting system, it allows different types
of techniques and tools which allows to assort in such a manner where a manger could calculate
the cost in effective way (ter Bogt and Scapens, 2019). As per the situation in Innocent Drinks,
from this technique of system a manager used to measure their business activity costs effectively
as well as it support to reduces the unwanted expenses. Through this process company would
generates optimum profits from their investment.
Essential Requirement:
 Through this accounting system the company's manager would easily evaluate the
various type of costs in the organisation that ensures some favourable outcomes. In the
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case of Innocent Drinks, their manager would proper optimise the costing which
implemented for production in overall perspectives.
 To proper utilising the cost accounting system, the Innocent drinks managers could
easily able to find the way to cut down the further cost that unnecessary incurred in the
production.
Inventory Management System: It is the part of technology, processes and procedure
that ensures the monitoring and high maintenance of assorting good amount of assets, raw
material and excellence suppliers or finished product that are essential to provided to the
customer point of view (Yigitbasioglu, 2016). As per the consideration of Innocent Drinks, this
sort of system is been utilised by their working activities through from mangers is because they
could investigate their inventory requirement and make order according to the unit or quantity
manner.
Essential Requirement:
 To making use of this system for organising the stocks with the support from proper
management procedure. This exercises to identify shortage of stocks and tries to make it
available in before the time.
 On the practises of this system it very helpful for managers where they could easily
reduces the cost of maintenance of the inventory. Through this their overall cost ca be
managed and it helps to lead toward the maximisation of profits.
Price Optimising System: As per this system, there would uses of different types of
mathematical calculation as well as techniques to evaluate the price, where the manager could be
identify the right price of the product. Through this company can figure out their optimum profit.
For Innocent Drinks, this system is utilised for assuring the profit which generates on the basis of
setting the product price.
Essential Requirement:
 On the basis of this system it helps to identify the demand level of various goods in the
organisation.
 According to this system it help to the manager to fixing the prices through that profit
could arises or raise in maximisation manner.
Job Costing System: In this factor of system, the organisation manager are able to
scrutinize the cost in different jobs or at the time of recruitment. In the context of Innocent drinks
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