Management Accounting: Techniques, Reports, and Cost Calculation

Management accounting

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
TASK 1......................................................................................................................................3
Management accounting system............................................................................................3
TASK 2......................................................................................................................................5
Management Accounting Reports (MAR).............................................................................5
TASK 3......................................................................................................................................8
Calculating cost using appropriate MA techniques...............................................................8
TASK 4....................................................................................................................................10
Different types of planning tools for budgetary control.......................................................10
TASK 5....................................................................................................................................12
Comparing the ways in which organization could use management accounting to respond
to financial problems............................................................................................................12
CONCLUSION........................................................................................................................14
REFERENCES.........................................................................................................................15

INTRODUCTION
Management accounting (MA) accounts for the accounting system which involves the
practice of identifying, measuring, analysing and interpreting the end result along with
communication the outcome to the end users. This is different from the financial accounting
in the context that it is being utilized by the internal managerial team for undertaking n
various business decisions. The accounting team provides relevant information to the
managerial accounting team, which then carries out the in-depth analysis of the information
which helps in identifying the areas of weaknesses or loopholes so that corrective actions can
be undertaken on a timely basis. This report is based on the Eastern Engineering Co. Ltd
(EECL) which is a medium sized organization into the manufacturing industry. This report
provides an in-depth insight into the concept of management accounting along with the
different methods used for the MA reporting purpose. It also involves determining the usage
of various MA techniques in cost analysis, in addition to the pros and cons of planning tools
and how organizations are adapting different MA system in order to respond to the financial
problems they face.
TASK 1
Management accounting system
Management Accounting (MA) is procedure of analyzing, summarizing and
providing information regarding financial data in order to make strategic decisions (What is
management accounting? 2021). Eastern Engineering Company Ltd. will be benefited by
implementing management accounting procedure in business. Management accounting
system (MAS) is used to provide relevant information to so that proper operational decisions
can be taken. The following are the types of MAS which will aid business to accomplish its
goals in effective manner.
Cost Accounting System:
It is one of the crucial systems of management accounting which aids firm to
estimate the cost of product so that profitability can be determined. Eastern Engineering
Company Limited (EECL) would be benefited by using this particular method in its business
process. Following are the benefits and drawbacks of implementing it.
Benefits :
 Estimation of cost can be exerted by EECL for getting deeper insights into
expenditures of firm

 Efficiency and measures can be increased by specified organization which will lead it
to identify the irrelevant expenditures
 Price determinations would be possible through implementing this system. EECL can
control cost with help of cost accounting system.
 Distinguishing between profitable and unprofitable activities can be done with help of
this system. Eastern Engineering Company Limited can get guidance in reducing the
expenses of unnecessary components of operational activity.
It is important to implement in organization due to its above mentioned benefits so
that EECL can derive various advantages to increase efficiency of working.
Inventory Management System (IMS)
This is related with planning, buying, monitoring, etc stock of company. The
purpose for executing this in Eastern Engineering Company Limited is to meet market forces
in effectual manner. It is one of the key determinants of success as assistance is provided in
cooperating with changing circumstances of industry (Krishnan and Pavithran, 2018). EECL
can increase its way of conducting operational practices by executing this management
accounting system. It is important to integrate with business activities to derive following
advantages of IMS:
Advantages Costs saving become possible for the Eastern Engineering Company Limited after
implementing this particular accounting system into its business procedure. It is considered to be significant for the purpose of avoiding excess stock will
ultimately reduce the storage cost and better planning for production can be exerted
(Swain, 2021). Increased profits is one of the essential character of IMS in turn better understanding
regarding inventory turnover can be obtained (Uyar, 2019). This leads EECL to move
towards right direction by evaluating the inventory turnover in effectual pattern. More organized Warehouse and customer experience can be attained with usage of
inventory management system in EECL.
Job Costing System (JCS)
JCS provide instructions regarding cost of each job or task established in
organization. It is important for EECL to establish the particular system in enterprise in
order to obtain clarity regarding each job’s cost and profitability (Drury, 2018). In
addition to this, unprofitable task can be eliminated for reducing expenses and increasing