Management Accounting Systems and Reporting

Management
Accounting

INTRODUCTION
Management Accounting refers to making the use of various types of financial provisions
in an effective manner to closely analyse and interpret the given financial information so that the
right decisions are taken by the managers (Bedford and Speklé, 2018). If it is used properly then
it can ensure that higher level of efficiency and effectiveness can be achieved without issues and
problems. Thus the managers can aim for maximizing the level of profits. In this report, focus
will be made on Innocent Drinks. which provides smoothies and juices to the customers in the
market. In this report, analysis will be made on demonstration of understanding of management
accounting systems, application of a range of its techniques. Additionally, explaining the use of
planning tools and comparison of ways in which organizations can make the use of management
accounting to respond to financial problems will also be done as a part of this assignment.
TASK 1
P1: Management Accounting Systems
Management Accounting is a process in which different types of reports are prepared and
data is closely analysed and monitored so that short-term and long-term decisions can be taken.
There are different types of systems under it. These systems are as follows-
Cost Accounting System- In this system, there is a close analysis of the various types of
costs which have incurred (Cooper, Ezzamel and Qu, 2017). When it is used by an organization's
managers it leads towards taking of decisions in order to reduce the level of costs effectively and
efficiently. Thus it will help an organization in targeting the maximization of its profits. Innocent
Drinks can make the right use of this system so that it is able to identify and assess the various
types of costs in an effective manner and therefore ensure that it can target the maximization of
profits.
Essential requirements-
 Identification and segregation of the various types of costs can be done by the
organizations when they make the use of this system in the right manner.
 The managers can make the use of this system so that identification of the appropriate
methods can be made which will thus be quite helpful for the purpose of targeting the
reduction in costs.
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Inventory Management System- With the use of this system, the managers are able to
identify the various types of techniques through which the inflows and outflows of stock can be
managed in an appropriate manner (Gogaev and et.al., 2019). For the managers of Innocent
Drinks, this system is useful so that they are able to ensure proper management of inventory
level in the company.
Essential requirements-
 This system must identify the ways through which the inventory level of an organization
can be managed effectively.
 The use of this system is required to ensure that a tracking system can be used for inflows
and outflows of the stock level.
Job Costing System- This system is used by the organizations so that a detailed track of
record of the various job orders is maintained in the right manner effectively and efficiently
(Hall, 2016). It enables the managers to be able to track the job orders and monitor their inflows
and outflows. In Innocent Drinks, this system is useful because it enables them to track and
manage their job orders in a better manner.
Essential requirements-
 The management and tracking of the various job orders can be effectively done through
the right use of this system.
 With the use of this system the managers should be able to ascertain the job costs and
reduce them by making use of different techniques.
Price Optimization System- This system is helpful for the managers in identifying and
optimizing the prices. With its use the managers are able to set such prices which can help an
organization in the enhancement of the profitability level. In Innocent Drinks, this method can be
used by the managers so that they are able to target the enhancement of the level of profits.
Essential requirements-
 The use of this system must be able to ensure that different types of mathematical models
are used for the purpose of forecasting the price-related data.
 By making the use of this system forecasting of demand of different products and
services can be made effectively. This will be helpful in ensuring that the pricing
strategies are changed as per the fluctuations which are witnessed in the demand level.
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