Management Accounting and Cost Analysis

Management
accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Defining management accounting and its essential requirements..........................................1
P2. Management accounting reporting different methods...........................................................2
M1. Describing benefits and application of management accounting system.............................3
D1. Evaluating the integration of management accounting reporting and management
accounting system........................................................................................................................4
TASK 2............................................................................................................................................4
P3. Preparation of income statement using marginal and absorption cost using cost analysis
technique......................................................................................................................................4
M2. Application of management accounting techniques for financial reporting documents......8
D2. Explanation of financial reports that apply and interpret data for business activities..........9
TASK 3............................................................................................................................................9
P4 Explanation of advantages and disadvantages of different types of planning tools used for
budgetary control.........................................................................................................................9
M3. Different planning tools and their application for forecasting and preparing budget........10
TASK 4..........................................................................................................................................11
P5. Comparing how entities adapts management accounting systems for responding financial
problems.....................................................................................................................................11
M4. Explaining that management accounting can lead organisation to sustainable success by
responding financial problems...................................................................................................12
D3. Explanation of planning tools that solves financial problems so that firm could be
successful...................................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a process of identifying the aspects that affects the working of
the business directly or indirectly and then making a report with reference to the data that is
collected. Capital Joinery Ltd is a firm that deals in various products an services and is operating
since 2008 in London. This report covers various topics such as different types of management
accounting system and techniques. Apart from this it also covers topics of planning tools, cost
analysis, and different types of costs. Also the way in which an organisation deals with the
problems that are of financial nature.
TASK 1
P1 Defining management accounting and its essential requirements
Management accounting refers to a process of critically identifying and evaluating the
information related to accounts so that it can be precisely used by the managers to take decisions
which is in accordance with the information provided so that it can help a business to grow and
prosper in its industry. It is very important for a business as it helps management to take
decisions which can either be short or long term that helps a firm to improve its financial
stability. Capital joinery Ltd is a carpenter and joinery firm which provides made to measure
doors, double gazed, stairs, sash windows, etc. though the firm has been established in 2008
only, but it has gathered a pool of customer base (Abba, 2018). It is very essential to have a
improved and sophisticated version of management accounting system so that decisions taken
could be well directed and thus helping the firm to grow and capture a larger share of market.
Management accounting originated during 1900's from financial management but it is a lot
different from it in all aspects. Role of management accounting is to collect relevant data and
then analysing it so that it can be beneficial for the company. Principles of it includes that there
should be credibility of the data that is given, as well as it should influence the working of firm
in a positive way. Management and financial accounting differentiation is done below briefly-
Management accounting Financial accounting
 It is optional in nature as it involves
decision making concept and a firm has
to decide about it accordingly. Capital
 It is mandatory for a firm as it involves
communicating the financial position of
the business. Capital joinery Ltd does
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joinery Ltd has a business of public
dealing so the firm uses it to ensure that
decisions are taken effectively and
efficiently which act as a benchmark in
increasing the profitability.
 It is used internally to analyse the
position of the business mainly by
managers and employees. Capital
joinery Ltd has a expertise team of
management that helps in this process
(Alabdullah, 2019).
financial accounting so that the
performance of the firm can be
analysed. This helps in increasing the
scope for the company in the long run.
 It is done for external use so mainly for
outsiders that are directly or indirectly
interested in the working of the firm
like shareholders, lenders, banks, etc.
Capital joinery Ltd does a detailed
analysis in this regard so that it could
not hamper the working of the firm.
Different types of management accounting system are explained in detail below-
Cost-accounting system- It is a system in which cost is analysed of a product so that the
profitability level could be decided on which a firm can operate effectively. Capital joinery Ltd
employs a specialised team of experts that do research and analysis so that a perfect cost of the
product can be decided which can prevail in the market without any problems.
Inventory management system- In this system entire supply chain is tracked and so that
goods are safely procured and then supplied to the desired customer. Capital joinery Ltd has a
intact supply chain that is the backbone of the firm that helps it in working efficiently and
effectively (Askarany, 2016).
Job-costing system- This is a system in which costs regarding jobs are analysed so that
unnecessary expenses can be cut down which is beneficial for the firm. Capital joinery Ltd does
an intensive research in this aspect and reduces the wastage in its process if there is any.
Price-optimising system- In this system different prices are compared that can prevail in
the market at different levels so that a perfect decision can be taken. Capital joinery Ltd is very
precise in analysing different prices and thus helps the working of the firm in long run (Bedford
and Speklé, 2018).
P2. Management accounting reporting different methods
Management accounting reporting can be defined as a report that is given to the internal
team after rigorous evaluation so that it can help in better decision making and thus benefiting
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