Management Accounting and Cost Analysis for Creams Limited

Management
Accounting

Table of Contents
Table of Contents.............................................................................................................................1
TASK 1............................................................................................................................................2
P1 Explaining management accounting and the essential requirements of different types of
management accounting systems.................................................................................................2
P2 Explaining Different methods that are used in management accounting report....................4
TASK 2............................................................................................................................................6
P3 Calculating costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................6
TASK 3..........................................................................................................................................12
P4 Explaining the advantages and disadvantages of different types of planning tools used for
budgetary control.......................................................................................................................12
TASK 4..........................................................................................................................................13
P5 Comparing how organisations are adapting management accounting systems to respond to
financial problems.....................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16
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INTRODUCTION
Management accounting is also known as managerial accounting which is defined as a process
that provide information and records to the managers of a company which helps them in decision
making and developing appropriate strategic plans for the long and short time period in the
future. Management accounting is conducted by the internal team of employees of a company
and it is only factor that makes it different from financial accounting (Cooper, Ezzamel and Qu,
2017). The most important and essential use of management accounting is to take the help of
statistical data developed by the internal staff for making accurate and the best decisions for the
enterprise and the business activities that moves towards success and growth. The report is based
on Creams limited which is a small business enterprise selling ice-creams, doughnuts, waffles
and other desserts in Greater London. The report consist an appropriate discussion about the
management accounting concept along with its requirement in an organisation. There are several
different methods of Management accounting which are also discussed and analysed a long way
calculating the cost of Creams limited with the help of absorption and marginal cost methods and
developing a income statement. Moving further There are several planning tools available in the
market which are used by organisation for budgetary controls these tools are also discussed along
with their advantages and disadvantages. Moreover, at the end comparison is developed amongst
creams limited and the furniture practice in relation with the management accounting systems
their uses for responding to the financial problems faced by the companies.
TASK 1
P1 Explaining management accounting and the essential requirements of different types of
management accounting systems.
Management accounting is a different from financial accounting as it focuses over developing
appropriate records and reports with the help of company’s financial information. The
Information which is used by Management accountants for developing appropriate records is in
decision making and identifying different ways the company in the most efficient and effective
manner. Management accounting system richest into all different business departments of a
company financial, marketing, human resource, IT, operations and sales. the most typical
financial data is used in managerial accounting and sometimes non financial information such as
of sales call per day, current sales report, delivery deadline dates, aging status of accounts
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receivable and payable and current inventory levels of raw materials and other finished or non
finished products also used as all this data forms a basis in front of managers to identify the key
performance indicators and the various parts of business. The nature of a Management
accountant is a forward looking and they use different reports for helping them and developing
their decisions have a use impact on the future of the organisation. Management accountants use
trend lines to forecast the future sales and prepare budgets for the administration of expense
profit planning operation cause and research and Development department. Therefore it is
suggested to every organisation and company that they focus over their management accounting
an application that helps in managing the business and controlling all the related business
activities in the most productive and the most efficient way. Creams limited is a small and
medium sized organisation that is its business by developing and managing appropriate
accounting records and also making use of proper Management accounting systems that are
essential for the organisation in order to create their future plans and develop a future strategic
objectives. These Management accounting systems are as follows which are used by the
management of Creams limited:
 Cost accounting system is potential system that covers all the related data and
information required by managers in relation with the cost of products and services which
are being provided by the entity and which it is going to provide in the future. A cost
accounting system is basically record used by entities for estimating the value of their
products and services for understanding their profitability cost control and inventory
valuation (Ax and Greve, 2017). It is very essential and important for a small or medium
sized businesses to have an accurate data and estimation about the cost involved in in the
products and more importantly it is used while ascertaining the yearly profit of the
organisation. This Management accounting system is used by creams limited for tracking
the cost of their offerings which they have already incurred and of those products which
are going to be e offered to the public in future.
 Inventory management system focuses over the management of the inventory required
by the entity for providing the best quality products and services to their customers. More
specifically inventory management system is a Management accounting tool used by
organisation to manage their inventory their raw materials and finished goods are
properly evaluated and recorded. The inventory management system is a computer based
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