Management Accounting: Techniques and Analysis

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Management accounting and essential requirements of different types of management
accounting system........................................................................................................................1
P2 Different method used for management accounting reporting...............................................3
LO 2.................................................................................................................................................5
P3 Techniques of cost analysis to prepare an income statement utilizing marginal and
absorption cots ............................................................................................................................5
LO3..................................................................................................................................................8
P4 Advantages and disadvantages of planning tools used for budgetary controls......................8
LO4................................................................................................................................................11
P5 Comparison of organisations adapting accounting systems for responding to financial
problems.....................................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is essential for any organisation as it helps in providing both
qualitative and quantitative information to manager so that accurate decision can be taken for
growth and development of organisation. It helps in improving overall performance of firm,
support strategic goals and objectives, facilities decision making which contributed in effective
achievements of company goals. This report is about Innocent Drinks that makes coffee,
smoothies and juices to be sold in supermarket in order to earned maximum profit margin.
Report has highlighted crucial information related to definition of management accounting and
its essential requirements of different types of management accounting system. It also discussed
about method used for management accounting and advantages, disadvantages of different types
of planning tool used for budgetary. At last, it compare and contrast the way organisations are
responding to financial problem by adapting management accounting system for sustainability of
business.
LO1
P1 Management accounting and essential requirements of different types of management
accounting system
Various account of company need to be effectively managed and controlled so that
manager can plan for future by taking accurate decision regarding operation of business. It
makes use of information related to cost of products and services, actual expense company have
incurred and profit earned during particular years (What Is Management Accounting, 2019). Key
principles associated to management accounting which are followed by managers of Innocent
Drinks are as explained:
Principle of causality: The principle enables modelling of costs related to organisation
which is based on relationship among inputs together with outputs of resources to manufacture
products and services. In context to Innocent Drinks, need of the principle is for analysing cause
addition to effect insights.
Principle of relevance: As per the principle, information is precious and valuable for all.
With this principle, managers of Innocent Drinks gets grips with requirements of all shareholders
and the most relevant information is shared for making decision are determined, collected
together with arranged for the purpose of evaluation.
1