Management Accounting: Systems, Techniques, and Budgets

Management Accounting

INTRODUCTION
Management accounting is defined as an activity of analysing financial information
available in financial records with an aim of making an effective decision for future
improvement in financial position of an organisation (Arroyo, 2012). It requires support from
finance department for recording accurate and reliable data that truly indicates the financial
position while overviewing financial statement of an organisation. It makes easy for stakeholders
to decide rather to stay with company or not according to their profitability. The present
assignment report is based on UCK Furniture which is engaged in manufacturing and selling
various designs of furniture in United Kingdom. The report explains the management accounting
concept with its different systems useful for chosen organisation. Along with this, the report also
describes the different costing methods along with calculation of net profitability, planning tools
to control budget and techniques to resolve financial issues faced by an organisation.
TASK 1
P1:
Management accounting is considered as a process of framing plans and making
decisions to enhance the performance level of an organisation by analysing the financial
statements prepared on annual basis (Badolato, Donelson and Ege, 2014). It is useful for
stakeholders to get information about the company’s present financial position on the basis of
which further investment decision should be made. It consists of various systems that
management of UCK furniture can adopt in order to maintain financial stability in competitive
market for longer period of time. These systems include:
COST ACCOUNTING SYSTEM
It is a system which used in manufacturing industries for purpose to evaluate flow of
inventory through various stage of production. Cost accounting involves various cost of product
in organisation which are measuring, recording and reporting cost with updated information of
cost (Christ and Burritt, 2013). Cost accounting system is a framework used by firms to estimate
the cost of their products for analysing profitability, stock valuation, control cost and accounts
for various manufacturing cost. Cost accounting system helps UCK Furniture to estimate the
closing value for material inventory, work-in-progress and finished goods inventory in preparing

financial statement of company. UCK Furniture can plan properly and take effective decision
with the help of cost accounting system.
PRICE OPTIMISATION SYSTEM
Price optimisation system: It is a mathematical analysis of the company which shows
the customer's approach in terms of different services and product cost direct with different
channel. Optimisation means to evaluate the best way out of all by which UCK Furniture gets the
profit and that will be evaluate by price distribution. Also defines the best result of pricing to
achieve the goals and objective of the company and adheres the profit (Dekker, 2016).
JOB COSTING SYSTEM
It involves primary expenses of material, labour and overheads. It is a system for
assigning and accumulating manufacturing cost of single unit of outputs. Job costing system is
evaluating the accounts of cost and revenue by individual job. Job costing system is also known
as job order costing which help to create unique products with tracking their cost. In job costing
system an accountant keeps all record of each job of cost and maintaining those data which help
easily operating business. Job costing system help UCK Furniture manager to calculate profit
earned on individual job. UCK Furniture can keep tracking records of individual or team job
performance by analysing their efficiency, cost control and productivity with job costing system
(Englund and Gerdin, 2014).
INVENTOTY MANAGEMENT SYSTEM
It is a system to maintain and record each inventories in every firm. Inventory
management system is the process that managing company's inventories in ordering, storing,
purchasing, shipping, receiving, tracking, warehousing, turnover and recording. It includes
management of raw material, work-in-process and finish products for a company. Inventory
management system help to control inventory of a firm by generating maximum profit from least
amount of inventory used to produce finished good with best quality and full customer
satisfaction. UCK Furniture should follow inventory management system which help the
company to minimise their inventory cost with maximise sales of product and generate profit.
Inventory management system can help UCK Furniture to manage their overall product cost by
less wastage of raw material (Hiebl, 2014).