Management Accounting: Systems, Methods, and Benefits

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Management accounting together with systems....................................................................1
P2 Different method that can be used in management accounting reports..................................3
M1. Benefits of accounting systems............................................................................................4
D1. Evaluating integration between accounting systems as well as reports with organisational
processes......................................................................................................................................5
TASK 2............................................................................................................................................6
P3. Income statements prepared by using marginal or absorption costing methods...................6
M2. Usage of appropriate techniques in order to produce financial reporting documents........12
D2. Financial reports to interpret business operational activities..............................................12
TASK 3..........................................................................................................................................13
P4. Planning tools to control budget..........................................................................................13
M3. Planning tools with application in order to prepare as well as forecasting budgets...........14
TASK 4..........................................................................................................................................15
P5. Comparison showing the ways organisations solve financial problems with the use of
accounting systems....................................................................................................................15
M4. Responding of management accounting towards financial problems for sustainable
success........................................................................................................................................17
D3. Planning tools usage to respond towards solving financial problems so to lead the
organisation towards sustainable success. ................................................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Management accounting is characterised to accounting branch associated with
identifying, recording, measuring, analysis together with interpretation of important information
to managers to frame decisions addition to managing business operations (Bagautdinova,
Kundakchyan and Malakhov, 2013). Using such accounting, accountants analyses events along
with operational metrics to translate statistical data into multi-purpose information. Some of the
management accounting techniques involves margin analysis, inventory valuation, trend analysis
together with forecasting, constraint analysis and capital budgeting. To better understand
accounting systems addition to techniques, Alpha Limited is selected which is a manufacturing
company. The report discusses about management systems along with essential requirements,
management accounting reports together with techniques to prepare financial statements. It
further includes usage of planning tools for budgetary control addition to the ways firm could use
accounting systems to respond towards financial problems to lead sustainable success.
TASK 1
P1. Management accounting together with systems.
Management accounting: Such accounting concept is defined to the practical
application of professional knowledge addition to tactics while preparing accounting information
in such manner that it helps management team to formulate procedures, plans together with
policies associated to manage organisational operations by developing decisions. It comprises
procedures of accounting in which decisions concerned with preparing final accounts along with
evaluating performances of workforce are taken within business structure. It provides accurate,
effective and timely financial statistical data or information that are required by managers to
frame short term decisions and managing daily operations (Ball, Grubnic and Birchall, 2014).
Management accounting is required at Alpha Limited to optimise prices, keeping records,
calculating receivable days together with inventory valuation within an financial year.
Management accounting systems: Systems that helps in measuring price levels together
with evaluating business procedures and are confidential to internal reporting mechanisms are
termed to management accounting systems. Such systems aids towards providing essential
guidelines along with supporting decision making procedures in order to improve overall
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efficiency and profitability of the company. Some of the accounting systems used by
management authorities of Alpha limited are discussed below:
Cost accounting system: In any enterprise, financial mangers maintains authentic
records related with critically estimating costs of distinct products so to control cost, analyse
profits together with inventory valuation. It is a accumulation of variable , sunk, fixed as well as
production costs. Production managers of Alpha Limited uses such system to measure values of
its products and accordingly set accurate costs to attain profits with huge margins. It is required
at selected company to record production transactions, reduce costs, maintaining profitable status
(Bryer, 2013).
Price optimisation system: Using mathematical analysis, companies determines
perceptions of targetted audiences towards distinct prices associated with products or services. In
Alpha Limited, such type of system is adopted to assign prices after understanding customer
perceptions and setting appropriate prices so to generate higher profits. Managers of the
company carefully analyse cost or resources utilised to manufacture specific product so to fix
suitable prices of particular product. Such system is essential required at chosen firm as to
determine valuable prices to distinct products addition to maximise operating profits.
Job costing system: The system to assign together with accumulating manufacturing
costs of particular output or individual job. Production managers of Alpha Limited uses it at the
time when homogeneous items are manufactured and have significant differences in which
different costs are associated with all items. It is also used to record information related with
distinct jobs which were performed at work place. Essential requirement of such system is to
ascertain that reliable estimates about monetary values of overheads, labour addition to material
that were spent on production of products or job.
Inventory management system: A system that is a combination of procedures,
technological devices and processes that helps in monitoring together with maintaining stocked
products. It ensures to the management by maintaining appropriate stock levels to to deal with
overstock addition to under stock conditions. Such system helps in recording inventory through
unique software such as barcode reader to track down inventory. Some of the inventory
management techniques are LIFO, FIFO addition to weighted average method. The managers of
Alpha Limited used LIFO technique to manage the inventory level (Cleary, 2015). The
requirement of such system at chosen business is to track all records by separating new and old
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inventory materials that enters or leaves warehouses addition to workplace at particular time
scale.
P2 Different method that can be used in management accounting reports
Management accounting reporting refers the report which is used to get information
about transaction and make profits. It is important for organisation is prepare reports by
analysing income and expenses of organization and maintain productivity and profitability of
company. This is continuous process which is used to prepare different reports to check the
position of business entity and make profitable decision. In Alpha Limited, manager prepare
different types of accounting reports for the purpose of keep track record of all operational
activity and manage all functions of business industry. Herein, various method which are used by
manager of Alpha Limited to generate several reports such as:
Budget reports - As the name given, budget reports are related with budget which is set
by manager to perform their business activities and maintain productivity. Manager use this
report to compare actual and standard results of business enterprises. This is also known as
internal report which is used by manager of Alpha Limited to assess the financial performance of
company and make improvement if performance is not good. This organization prepare new
budget reports every year and compare with past information in order to make right budget and
complete targets in stipulated time (Endenich, 2014).
Performance report – This report is essential within business industry because it helps
to keep records employee as well as company's performance. It helps to define which employee
is performing well and which one not. Companies analysis the performance of employees and
give them incentives and bonus. Such as Alpha Limited is juice manufacturing company in
which manager records employee's performance and appraise them for their good work. Hence,
this report is helpful for organisation as well employees that helps to attain goals by motivating
staff.
Inventory management report – Stock keeping is essential for company that helps to
make further business decision by tracking the record of inventory. All company are dealing
different types of products and services which is needed to manage and make profits. Inventory
management reports are generated by managers of Alpha Limited to keep records of fresh fruits
and other raw material which is used to manufacture juice. It is used by managers to track the
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inventory and place order accordingly. It is beneficial for all organisation as it helps to maintain
records of all stock and manage order according to customers.
Accounting receivable report - These types of report are build by management to keep
records of all credit sale which has been happened in particular period and payment is due are
consider as accounting receivable report. This report is used to keep record of credit sales and get
payment on maturity period. Company who sales their products and allows credit to purchaser
are recorded in such reports. In Alpha Limited, manager prepare this type of reports that is used
to record of those person who has purchased goods and not able to pay amount at that time and
promise to pay after some time. Therefore, it is beneficial for Alpha Limited to keep information
safe of outstanding amount and unpaid customers (Fleischman and Parker, 2017).
All of the management accounting reports are prepared by managers to know the
performance, budgets, manage inventory and also keep records of unpaid customers. It helps to
make right business decision and maintain profitability within organization. Alpha Limited need
to prepare these types of reports for the purpose of make future business decision and create
opportunities. These reports also need to show to stakeholders so they can make further
investment decision by analysing actual performance of company.
M1. Benefits of accounting systems.
Following are the benefits of management accounting systems:
Systems Benefits
Cost accounting system  Such system helps managers to measure together with
maintaining and improving efficiency by estimating and
controlling costs.
 Cost accounting system benefits managers of Alpha
Limited to reduce irrelevant costs while fixing
appropriate price of the product (Grabner and Moers,
2013).
Price optimising system  It helps in managing elements as well as setting
appropriate prices of distinct products.
 The production managers of Alpha Limited are benefited
with such system as it helps in understanding perceptions
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