Management Accounting and Its Types

The project report on management accounting provides an in-depth analysis of the subject, including its importance in internal company management. It highlights various types of management accounting systems such as inventory management, price optimization, cost accounting, and variance analysis. The report also emphasizes the benefits of these systems, which include improved tracking of raw materials and products, accurate pricing, and enhanced profitability prediction. Furthermore, it is noted that management accounting systems and reporting are integrated with organizational processes, enabling smooth functioning of company functions.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
1. Management accounting and its types.....................................................................................1
2. Different method of management accounting reporting..........................................................2
3. Benefits of different management accounting systems...........................................................2
4. Management accounting system and reporting is integrated with organisational processes...3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Management accounting is a kind of accounting system which is related to internal
management of companies(Ward, 2012). It consists a wide range of reports, tools and techniques
which are required for overcoming the various financial issues. The project report contains
detailed information about the management accounting and its types as well as benefits of these
for companies. To understand detail about this accounting in the context of organisations, ABC
limited selected which is involved in the manufacturing sector.
LO 1.
1. Management accounting and its types.
Management accounting may be defined as an accounting system which plays a crucial
role for internal management as well as for controlling the financial performance of companies.
This accounting system contains all kind of information including financial and non financial
information which becomes basis for the managers to take important decisions. This accounting
system is used by the ABC limited company for enhancing the management of their
manufacturing system. Herein, some types of management accounting system are mentioned
below:
 Inventory management system- Inventory management system is a kind of system that
is related to management of raw material as well as of finished products. It is required for
track the quantity of available stock the warehouses and with the help of this companies
make decisions for the production. The ABC limited company use this system to analyse
about the quantity of raw material and prepared products.
 Price optimisation system- Price optimisation system provides a framework for
determining the price of products and services. Apart from this, it is required in analyse
the reaction of customers on different pricing levels(DRURY, 2013). Due to this
companies can assign an accurate price of their products which is affordable for both to
the customers and company. The ABC limited company sets the price of their products
with the help of this system which satisfy their customers as well as they can earn profit
too.
 Cost accounting system- Cost accounting system is a kind of system which is related to
the estimation of cost of products and services. Due to this companies can analyse their
1

profitability by the selling of product and services. The main requirement of this
accounting system is to control the cost which occurs during the production. The above
company ABC limited implements this system for right estimation of cost of products.
2. Different method of management accounting reporting.
Management accounting reports are those reports which consists all kind of information
that is necessary for internal management of the companies. Due to these reports organisations
can evaluate their financial and non financial performance(Wickramasinghe and Alawattage,
2012). The ABC limited prepares different kind of management accounting reports on the basis
of various methods which are as follows:
Budgets- Budgets are the estimation of income and expenses for a particular time period.
Eventually, these are helpful in making comparison of actual performance with the budgeted
targets. It is an important method of the preparing management accounting reports. The ABC
limited company prepares the budgetary reports with the help of different types of budgets
because these consists all needed financial informations.
Variance analysis- Variance analysis is a kind of method which compares the actual
performance with the standard goals. If any difference occurs then it take appropriate actions to
resolve the difference. With the help of this method companies prepares the management
accounting reports because it provides a basis for that. Herein, the above company ABC limited
apply this method of preparation of the various kind of reports.
Cost schedules- Cost schedules are the estimation of cost in any kind of budgets. While
preparing the management accounting reports, these cost schedules help a lot. This is why
because if actual cost is below the cost schedule then it will be a positive mark in the reports.
Same as if occurred cost is more then the estimated cost, it will be negative aspect for the
performance reports. The ABC limited company use this method for making accounting reports.
3. Benefits of different management accounting systems.
Different types of management accounting systems are very crucial in the context of
organisations. Benefits of these accounting systems are as follows:
 Benefits of inventory management system- The inventory management system is
important because it helps in the tracking of raw material and prepared products in the
warehouses. Herein, the ABC limited company it is important for evaluate the quantity of
2

available material for the production. This helps them in tracking the movement of goods
in entire supply chain system.
 Benefits of price optimisation system- This system helps to the ABC limited company
in assigning the accurate price of their manufactured products. Additionally, it provides
them a framework to analyse the customer's reaction at different price levels.
 Benefits of cost accounting system- Cost accounting system is beneficial for the above
mentioned company in making prediction about the cost. Further, it becomes a basis for
evaluation of profitability.
4. Management accounting system and reporting is integrated with organisational processes.
Management accounting system and reporting both have a link with organisational
process. Basically, this is possible because different kind of accounting systems become basis for
the preparation of the accounting reports(Otley and Emmanuel, 2013). Due to this integration,
various functions of companies can implement smoothly. Herein, the ABC limited company they
use different kind of accounting systems like price optimisation system, inventory management
systems which plays an important role for the effective use of different available sources. Same
as different methods of management accounting reporting like variance analysis, budgets etc. are
linked with the organisational process as well as with the success.
CONCLUSION
From above project report it has been concluded that management accounting is key of
internal management of the companies. Eventually, it is a wide term which consists different
kind of accounting systems like price optimisation, inventory management etc. All these have
own importance in the context of companies. Additionally, various kind of accounting reports
methods are important for the preparation of reports. Apart from it, management accounting
systems and reporting are integrated with the organisational process which is important for
organisational success.
3

REFERENCES
Books and journals:
Ward, K., 2012.Strategic management accounting. Routledge.
DRURY, C .M., 2013.Management and cost accounting. Springer.
Wickramasinghe, D. and Alawattage, C., 2012.Management accounting change: approaches and
perspectives. Routledge.
Otley, D. and Emmanuel, K. M. C., 2013.Readings in accounting for management control.
Springer.
4