Management Accounting Systems and Reports

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Management accounting systems and its essential requirements.....................................3
P2. Different types of management accounting reports .......................................................5
TASK 2............................................................................................................................................6
P3. Calculate net profit by using different costing methods..................................................6
TASK 3..........................................................................................................................................10
P4. Different plaining tools along with advantages or disadvantages..................................10
TASK 4..........................................................................................................................................13
P5. Comparison of organizations that how they respond to any financial problems...........13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Every entity in today's competitiveness industry and changing environmental scenario
wants to achieve their defined objectives and targets within scheduled time-frame. Management
in every trade and business enterprise put their efforts towards accomplishment of targets and
other short term goals (Arena and Arnaboldi, 2014). Management accounting is only the crucial
aspect which provide an assistive framework to managerial personnel for attaining goals within
planned time-frame. Management accounting is like full flagged package of all the vital tasks
primarily concerned with both management and accounting aspects.
This study-report emphasises on fundamental and critical aspects of managerial
accounting in context of ABC Limited which is a mid-size entity operating in manufacturing
sector. It also covers necessary requisites of its systems and comprehensive discussion on
different reports used in managerial accounting reporting as well as use of planning-tools in
responding to numerous kind of financial problems. Moreover it consists of comparison of
enterprises in terms of manner of adaption of MA systems and different planning-tools.
TASK 1
P1. Management accounting systems and its essential requirements
Management Accounting: Management or managerial accounting referred as set of
systematic functions which effectively contributes towards detailed tracking and analysis of
internal costs related to multiple business processes which assist a corporation and enterprise in
making of determinations and decisions concerned with productions, core-business operations
and investment & funding in market-place (Azudin and Mansor, 2018)). Enterprises need
managerial accounting and its different aspects to assess efficiency predetermined budgets, costs
of key operations and thereafter efficacious allocation of funds and resources accordingly in
respective departments. Therefore, herein role and function of managerial personnel and
accounting officials is quite significant for business' success.
As per Anglo-American Council of Productivity management accounting is defined as
“Structured presentation of crucial accounting facts and information in structured means with
object to aid in formation of managerial policies and routine operations of business entity.”
Management accounting system: A management-accounting system described as operating
framework which aid in generating crucial information that is ultimately assist in formulation of

strategies and decisions. MA involves multiple systems which are employed by managing staff
as per business requirements and organisational structure.
Integration of MA-systems within organisation: Core function of managerial
accounting is to provide critical and meaningful information for management's decision making
tasks, which make it necessary to integrate MA systems within enterprise. Since lack of
integration lead to barrier in generation of such information and eventually affects decision
making. In a organisation like ABC limited, accounting processes and division provides useful
information which is used in one or more MA-systems, thus structured integration here is
needed for quick generation of information/data.
Inventory management system
Inventory management system is a system where the accounts for all inventories and
stock are maintain. It is a combination of both hardware and software. The software helps in
keeping the database- entering, storing and editing the data regarding inventories. Where as
hardware are the tools which reads the barcode labels. This system helps ABC limited in
overseeing its inventories, generates report about stocks, do forecast regarding stock ordering,
and the like. Inventory management system essentially required to maintain records regarding
the flow of its inventories for example amount of stocks are in process, amount of finished and
semi finished products, number of stocks kept in warehouse and so forth.
Cost accounting system
Cost accounting system is a framework adopted by the firm for estimating the cost of
their products. Estimating the true and fare value of cost for products is every essential for
profitability analysis, inventory valuation and cost control. Further, this system helps in
estimating the closing value of finished and work-in progress goods for financial statement
preparation (Chenhall and Moers, 2015). The objective of cost accounting system is to ascertain
the cost, true estimation of selling price, cost reduction & control, ascertaining of profit margin,
making cost decision accordingly.
Price optimization system
Price optimisation is the tool / method used to identify the fluctuation in demand of
every increase or decrease in the price of a product. It also control price that company
determines, which will help to achieve the objectives through maximisation of profits. This
system is used for dynamic pricing strategies for hospitality, e-commerce, etc. It provides