Management Accounting and Global Change

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explaining management accounting importance of management accounting systems... .1
P2 Explaining methods used in management accounting reporting.......................................4
M1 Benefits and implication of the management accounting systems..................................6
D1 Critically examining the integration of management accounting reports and systems....7
TASK 2............................................................................................................................................7
P3 Calculating cost to prepare income statements.................................................................7
M2 Applying management accounting techniques and financial reporting documents.........9
D2 Interpretation of accurately applicable financial report for Putney Enterprise................9
TASK 3..........................................................................................................................................10
P4 Explaining the advantages and disadvantages of planning tools used for budgetary control.
..............................................................................................................................................10
M3 use of various kinds of planning tools in producing adequate budgets for Putney
Enterprise..............................................................................................................................12
D3 Analysing Planning tools leads to the sustainable success.............................................12
TASK 4..........................................................................................................................................12
P5 Comparing methods adapted to respond to financial problems......................................12
M4 Evaluating the importance of management accounting systems in sustainable success and
overcoming financial obstacles............................................................................................13
CONCLUSIONS............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a process which help a company to identify, measure,
interpret and communicate the important information which will assist them in making
decision regarding long and short-term planning. This helps the management to formulate the
future plan by analysing the present performance and future growth of business. Management
accounting also aids the business to identify, monitor and then control all its functional area.
The present report will cover Putney which is a small-scale enterprise operating in UK and
dealing in generic prescription of drugs for pet and earning a revenue of about £19.2 million
with about 57 employees working. The report will be covering different methods used for
making management accounting reports and various cost techniques used to prepare the
income statements using marginal and absorption cost. It will further conclude the advantages
and disadvantage of all type of planning tools used in budgetary control.
TASK 1
P1 Explaining management accounting importance of management accounting systems.
Business Report.
From: Management Accounting Officer
To: General Manager
Putney Enterprise
Subject: Systems of management accounting
Date: 7th December 2017
Introduction
Management accounting is that type of report which is only used by the internal
stakeholders of the company like management, employees etc., In addition to this, it is that
type of reporting system which enable the business to work and operate on daily basis by
preparing income statements, taking out cost of all functional areas of business and the ratios
of the company. This is also important for Putney Enterprise to make out the profit and loss
of the firm. There are various kinds of management accounting system which are used in the
cited company.
1

[Source: System of management accounting. 2017]
Cost accounting system
There are various types of cost which is incurred by the organisation at various levels of
their operations. Cost is the most essential element in the day to day working of Putney
Enterprise as with the help of this only, the enterprise set price of its various products and
services to make a good amount of profit. The accountant of the firm will make out what are
the total cost of the firm in producing and selling retail drugs for pets. This is a costing
system which is used to estimate cost of different types of product to take out profitability,
inventory valuation and control cost (Cadez and Guilding, 2012). In this type of accounting,
accountant need to record, classify, analyse, summarise, allocate and evaluate all actions and
control regarding cost of Putney Enterprise. The main purpose of cost accounting in the
system is to manage effectively and efficiently the cost of company over its products.
Job costing system
In this type of management accounting system, the cost of each and every job, department or
project is allocated in a different form. The total cost of production and the sale of those
goods are determined in a separate manner so that management can make the desired cost.
In this, all costs are of different types of project are assigned differently which will include
material, labour and overhead in manufacturing environment.
Price optimisation system
2