Management Accounting and Planning Tools for Financial Problem Solving

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Management accounting and its essential requirement .........................................................1
M1 Benefits of management accounting ....................................................................................2
P2 Different types of management accounting reports ...............................................................2
Task 2...............................................................................................................................................3
P3 Calculation of cost by using appropriate technique ...............................................................3
M2 Application of range of management accounting technique and producing financial reports
......................................................................................................................................................4
Task 3...............................................................................................................................................4
P4 Explanation of advantages and disadvantages of planning tools ...........................................4
M3 Analyse the uses of different planning tools and their application ......................................6
Task 4...............................................................................................................................................6
P5 Compare how companies are adopting management accounting system to responding
financial problems .......................................................................................................................6
M4 Responding to financial problems ........................................................................................8
CONCLUSION................................................................................................................................8
REFERENCE ................................................................................................................................10

INTRODUCTION
For running a business and making profits there is needed to proper arrangement of
income and expenses which arises in workings. Accounting is the process of measuring,
communicating and processing of financial information that can be uses to set the goals in
relation to increasing profitability and maintain high brand image. It has been seen that is
organisation is not able to ready accounts, prepared income statement and matching the balance
sheet then there is gap in cash flows which affected the business negatively (Maas, Schaltegger
and Crutzen, 2016). Management accounting is essentialism for companies which can be uses to
set the accounting standard and knowing information how to manage the risks and profits. To
have good knowledge and skills about management, planning and accounting become easy for
owner to control over their income and expenses. This report is based on Aj and Sons, company
that is a consultancy firm providing information and consultancy services to customers and
increase the organisational profitability. Topics are involves in report management accounting
system and its essential requirement, reports in relation to accounting, planning tools which uses
to control over budget and financial problems that can be solved by managing the performance.
Task 1
P1 Management accounting and its essential requirement
Accounting is the term which involves number of transactions and accounting
information that uses to operate the business and increase the business performance by
identifying income and expenses. This is mainly required in all sizes of business who wants to
get right information about their income and expenses. The management of organisation is
responsible to provide accounting data and transaction to accountant so they can exactly tell how
to control over expenses. In Aj and Sons company management is preparing different types of
management accounting system that are as explained:
Inventory management system– This system is mainly uses to track the inventory and
stock level of an organisation that can help to keep records of all data and stock. This is
important for organisation to understand the needs of customers regarding demand of products
and maintain proper records so right information about availability and unavailability of
inventory provided. This is essential required for management of Aj and Sons to track the
inventory level and manage the orders (Quattrone, 2016).
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Cost accounting system – This is defined a framework which uses by organisation to
estimate and check the cost of their products so profitability can be maintain. It provides the
information about what cost of product can be arises and how they can manage properly. Aj and
Sons uses cost accounting system for tracking the cost and managing the performance by
identifying costs. This is essential required to make the economical to organisation and get the
profits by managing expenses.
Price optimisation system – The model of price optimisation is considered as a
mathematical programme that mainly uses to set the prices of products and services which are
produced by organisation. Aj and Sons set the prices of their products and services which they
are providing that can help to analyse profits. The essential requirement of price optimisation
system is to decide the prices and fill the customer's demand by offering them products and
services (Armitage, Webb and Glynn, 2016).
M1 Benefits of management accounting
System Benefits and application
Cost accounting This provide benefits of estimating the cost of products and
services so it become easy to calculate profits. Aj and Sons
applying this, to get information about investing money and
receiving income on this business.
Inventory management This can help to track the inventory level and provide right
information about availability and out of stock. The management
of AJ and Sons uses this to get information about inventory and
services which organisation has produced.
Price optimisation This can help to set the right cost of products so customer can
feel good by paying reasonable amount of products. Aj and Sons
is applying this to set the prices of their services and get the
profits.
P2 Different types of management accounting reports
Accounting reports are prepared to collecting the information and transactions that can be
use further to make right business decisions. This is important for organisation to understand the
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