Management Accounting Systems and Costing Techniques

Management
Accounting

Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
P1. Management accounting systems................................................................................................3
P2 Different methodologies used in management accounting reporting;...........................................4
TASK 2.................................................................................................................................................6
P3 Appropriate costing techniques to prepare income statement.......................................................6
TASK 3...............................................................................................................................................11
P4 Advantage and disadvantage of different types of planning tools...............................................11
TASK 4...............................................................................................................................................13
P5. Management accounting systems to respond to financial problems:.........................................13
CONCLUSION...................................................................................................................................14
REFERENCES....................................................................................................................................15

INTRODUCTION
In business world the concept of management accounting is defined as the systematic
approach that collect, analyse, report crucial business operations so that essential decision are
made by management in order to grow entire performance and profitability of business
(Abdelmoneim Mohamed and Jones, 2014). To better recognise the importance of
management accounting LVS Small Plastic Parts Ltd is selected which is a client company of
Aon Consulting. Company use to manufacture plastic product that are further used in
producing essential goods.
The reports cover importance of management accounting, different types of report and
system that are helpful in dealing with various financial problems. In this report several
costing techniques are used to calculate net profit for the year. In Addition, advantages and
disadvantages of planning tool and benefits of management accounting in dealing with
various financial problems are defined in detail.
TASK 1
P1. Management accounting systems.
The process of collecting, gathering, analysing, reporting and evaluating meaningful
information to internal manager in order to make effective decision are known as
management accounting. Each kind of financial and non-financial information is presented
which help manager to estimate budgets, plan accordingly and focuses on analysis of
business activities. There are different kinds of effective management accounting systems
that support in decision making and improving overall productivity of company. Some of
these in the context of LVS Small Plastic Parts Ltd are discussed below:
Inventory management system: One of the most crucial system for Manufacture
Company as it help to maintain a valid record of Inventory Company holds during a specific
period. This system aids manager of company to forecast inventory, materials tracking,
automatic reordering etc. It is recycled for defining goods accessible through whole supply
series along with business processes events (Bloomfield, 2015). In respective company
manager use this system to keep a valid record of entire inventory available during a period.
This helps them to produce goods accordingly and make order for raw material in case of
shortage of good. This system also benefits them supporting required inventory, real time
movement and various kinds of inventories essential in achievement of customer demands.

Cost accounting system: In large or small companies it is essential to maintain an
authentic record of overall cost included in maintaining inventory, cost utilised in production
process etc. thus cost accounting system is very much essential. Approximation of definite
cost is very essential for any industry as it support to calculate overall profitability of
business. It includes events founded on accepting, recording, examining, grouping and
summarizing costs related with valuable goods and services. In LVS Small plastic Part Ltd
cost accounting system is useful to calculate the total; cost included in running different
production operation, cost incurred of workforce and other miscellaneous cost. This further
useful to calculate and measure the entire profitability of business and in case of any miss-
happening improvement are made to attain desired results.
Price Optimisation system: It is also consider an important system, used by
companies that help to analyse the perception of customer in respect to price of different
goods offered by company. With the support of Price optimisation system manager are bale
to calculate the best possible price of their goods that will attract large number of customer
and support them, top maintain desired profit. In Respective company manager first analyse
the entire cost utilised on producing a specific product then the use to set the best possible
price so that cost can be covered and profit are maintain during an year. Appropriate price are
beneficial to draw the interest of customer and build an effective relationship that further
support in increasing overall profitability of business (Bagautdinova, Kundakchyan and
Malakhov, 2013).
Job costing system: This system is used for accumulation of information related to
cost associated with particular job or service. In LVS Small Plastic Part Ltd this system is
beneficial to determine the expenses related with particular job involved in production
process and other department. Thus it motivate the employees as they received the best
possible pays due to systematic record maintain by company with the help of Job order
costing.
P2 Different methodologies used in management accounting reporting;
Cost accounting report: Companies are not able to maintain desired profit unless
and until they have an accurate record of total cost involved in entire financial and non-
financial operation. Cost accoutring system is a method this tis related with gathering,
examining, grouping and posting important cost related traction into accounts so that compete
cost can be calculated. In LVS Small Plastic Part Ltd this report maintain a detail record of