TASK 13 Management accounting system and its requirements

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION..................................................................................................... 3
MAIN BODY............................................................................................................ 3
TASK 1................................................................................................................... 3
Management accounting and essential requirement of its types.......................3
Different method of management accounting reporting....................................4
Benefits.............................................................................................................. 5
Integration of management accounting system and reporting .........................5
TASK 2................................................................................................................... 6
Income statement as per marginal and absorption costing ..............................6
TASK 3................................................................................................................... 8
Defining benefits and limitations of different planning tools..............................8
Analyzing application of different planning tools.............................................10
TASK 4................................................................................................................. 11
Types of management accounting systems for resolving financial problems.. 11
CONCLUSION....................................................................................................... 13
REFERENCES....................................................................................................... 14

INTROUCTION
Management accounting is defined as a process of analyzing expenses of cost of
business thereby assisting in preparation of the internal managerial report. The report is
related to KEF Ltd. Which is a medium size manufacturing firm. This assignment will
provide understanding about the different management accounting systems. Moreover, it
consists of methods related to management accounting reporting which can be used for
preparation of report. It also evaluates the benefits of management accounting systems. It
will define planning tools which can be used for formulation of budget and to control it.
Also, it will assist in providing information regarding the management accounting systems
which helps in responding to the financial problems.
MAIN BODY
TASK 1
Management accounting and essential requirement of its types
Management accounting assists in preparing the internal report on the basis of which
the organization is able to make the decision for improving the future performance and
profitability. It assists in allocating the cost and identifying the ways in order to reduce the
cost for increasing the profitability of organization (Kaplan and Atkinson, 2015). The
management accounting is the way the organizations able to manage the internal accounting
of the firm and helps in reducing the cost in order to achieve the goals and objectives of
organization. With the help of identifying the cost of the process the management accountant
is able to provide the organization the reports on the basis of which the firm can take
decision which will be profitable for the business in the future. There are different types
which are as follows:
 Inventory management system: It is a practice through which organization
manage its inventory level which will helps in reducing the wastage and also
the cost of the organization will be reduced. It helps in identifying the level of
inventory which is required in the organization and can assist in providing the
firm with the benefits and cost of maintenance of the inventory is also
minimized.

 Cost accounting system: Helps in making estimate the cost of their product
in order to determine the level of profitability a control the cost for the future
which will help in increasing the profit margin (Quattrone, 2016). It helps in
controlling expense related to cost by allocating the cost in most effective and
efficient manner.
 Job costing system: It is the process of allocating the cost to the specific job
in order to identify the profit associated with that job. It helps in identifying
the cost of every job and the information regarding them.
Different method of management accounting reporting.
Assist in identifying performance and profitability of the firm on the basis of which
the organization is able to make decision for the future. This report helps firm in make
forecast for the future and can determine the strategies which are required to be formulated in
the organization for improving the profitability and performance in the future. The following
are the different reports which are being prepared by the management accountant:
 Budget reports: Are being prepared by the management accountants for predicting
future on the basis of which they are able to determine the future performance and
profitability of the firm and can also take the decision for improving the performance
and profitability. It consists of case budget report, operating budget report, sales
budget reports etc.
 Account receivable aging report: It is the reports which is prepared by management
accountant in order to know the customers that have taken credit for the amount
payable. It also assists company in taking the decision regarding limiting the credit
limit in order to reduce the bad debts which affect the credibility of the firm and also
the firm profitability is affected to a great extent (Otley, 2016). It helps in tracking the
customers and the balance which not payable by them. This report assists the firm in
making the effective decision for improving the credibility of the firm and receiving
the payment by customers on time in order to reduce the bad debts.
 Cost report: The cost report assist in allocation of the cost to the different product
produced. With the help of cost report KEF Ltd. able to identify the cost of different
product on basis of which they are able to minimize the expenses and identifying the