Management Accounting and Reporting Methods

Management Accounting

Table of Contents
INTRODUCTION
TASK 1
P1 Management accounting and essential requirements of its systems.......................... 1
P2 Different methods used for management accounting reporting................................ 4
M1 Importance of MAS ..................................................................................................4
D1 Integration between MAS and MA reports...............................................................4
TASK 2
P3 Calculation of cost using different costing techniques............................................. 5
M2 Techniques to prepare income statements................................................................6
D2 Interpretation of produced income statement..........................................................7
TASK 3
P4 Advantages and disadvantages of different planning tool used for budgetary control.. 10
TASK 4........................................................................................................................ 13
P5 Comparison of the way in which organisations are adapting management accounting
Systems........................................................................................................................ 15
M4 MA to respond financial problems.........................................................................16
D3 Role of planning tools to solve financial issues......................................................17
CONCLUSION
REFERENCES

INTRODUCTION
Management Accounting is the practice where different activities are perform like identifying,
observing, analysing, measuring, Communicating as well as interpreting. In this all the important
internal information related to finance are tends to be recorded so that suitable and effective
decision making can be done for the purpose to betterment of organisation. Different
management accounting tool give support to outside people such as Banks, , shareholders,
Underwriters, brokers, financial institutions, merchant bankers, debenture trustee, Qualified
institution buyers to analyse actual status of firm in terms to money. It tends to reflect financial
position of business entity. All the decisions regarding investment are taken by stakeholders on
the basis of market position of firm which leads to be evaluate on the basis financial
performance. Shareholders deploy their funds only if the company is financially sound. And
underwriters take underwriting only if they ensure that investment in specific firm is definitely
profitable. Management Accounting plays crucial role in every size of business. Organisation
which was chosen under this project is Marks and Spencer. It tends to deals in retailing industry.
The CEO of the company is Steve Rove. In the year 1884 it was founded in UK. The brand has
its headquarters in London. In the project various topics are discuss such as management
accounting meaning along with essential requirement of various different types of MA system,
methods used for management accounting reporting, through adopting suitable technique cost
analysis are tends to be done for the purpose to prepare income statement with support of
marginal costing as well as absorption costing. Discuss merits 7 demerits of planning tools
implemented for budgetary control. In last how company follow M A system in context to
respond existing financial issues are also discuss under the assignment (Tekathen, 2019)
PART 1
TASK 1
P.1 Explain the concept of management accounting and provide essential
requirement of various types of management accounting system?
Management Accounting: It is presentation of analysis of business activities to the internal
management to facilitate decision making. In this financial data are tends to be prepare as well as

provide important financial information to company’s managers. On the basis of these data
decisions are taken by them on time. Another name to M.A. is cost accounting because in this
different cost analysis are perform. As well as by taking important decision unnecessary
expenses or cost are tends to be eliminated. As equilibrium Assets management help Mark &
Spencer to conduct it all on continuous basis so employees of finance department do cost
calculation and measure business performance easily.
Management Accounting is the wider concept in which all the executives put their efforts
to improve performance of organization. It is a strategy where shareholders analyse the
actual status of the company and on the basis of that important decision making regarding
investment is taken. It is necessary for all business entities to concentrate on their
performance so that they can easily identify that they meet all defined objectives and
targets on time (Burritt, 2017)
Management Accounting system: To track all operational as well as financial records it is
commonly used. It is beneficial for outside people/ firms like Shareholders, QIB’s, merchant
banker, underwriters. M&S following this system in their supermarkets for the purpose to
analyse actuall status of company in terms to finance. Availability of funds can be check easily
with the help of it and helps to satisfy working capital needs. (Guffey, 2017)
Types of M.A.system
To run the business smoothly, various task are perform in systematic manner. For this effective
tool of management accounting system are followed. Some of their examples are explain in
below mentioned paragraphs:

Cost accounting system: this is very common to manufacturing industry because apportionment
of cost can be done easily and it helps to determine costing of each item. M& S use this system
to ascertain the product cost and bifurcate direct as well as indirect cost separately. Marks and
spencer separate the fixed, variable. Semi variable cost by using it and take initiative steps to
eliminate or reduce unnecessary expenses so that cost of items tends to become decrease. So
anyone can afford to purchase the product (Qian, 2018)
Essential Requirement: Every industry or manufacturing concern use this system in the
organisation because it helps to provide reliable information on the basis of which important
decision making step is tends to be taken. The cost information which is generated with the help
of this system helps the firm to set their product prices so that they can earn maximise profit.
Inventory management system: Marks & Spencer use following system to make control over
the stock that are available for their super market. Generally manufacturing concerns adopt this
method to maintain sufficient stock of their product so product are easily available to their
customers whenever they demanded. All the detailed information regarding inflow & outflow of
stock are easily get by implementing respective system in the organisation. For stock tracking
purpose it is followed by M & S. With the help of this appropriate number of orders are given
sob that stock available easily in their stores. It tends to maintain carrying and ordering cost
Essential Requirement: in every organisation it is important to maintain stock so that demands
of customer can be meet easily through offering the product on time and it become possible only
when inventory management system implemented in the organisation. Because it helps to get
updated the stock in the organisation.
Job order costing system: this process is commonly adopted in manufacturing concern as in this
system all the products are differ from each other because all the produced item has unique
features because it tends to be prepare as per customers specification. As the Job order may be
relates contract or t o single order. Although, engineering workshops, advertising firm, furniture
company, printing, foundries etc. this system is followed. Marks and Spencer use system for
price fixation purpose (Rickards, 2018)

Essential Requirement: As in this as per the demand of customer product/ goods are
manufacture so it is important to follow the respected system because details of specification can
be easily observe and according that manufacturing is done.
Prise optimisation system: this tends to be implemented by M&S, with the objective to set
prices of product in such manner so that to gain satisfaction at optimum level also it leads to add
value to the company. It tends to support to analyse such prices that fixed for their which offers
surety that whether clients expectations are satisfied or not (Hoang, 2019)
Essential Requirement: it is necessary to follow in the company because it helps to determine
the price which provide maximum revenue.
Various methods to management accounting reporting are explain in brief in below paras :
Performance report: It is prepare to maintain track record of organisation performance with
regards to overall operations activity. By analysing these reports decisions regarding bonus are
taken in the company M&S. Also proposed dividend are tends to be declared after analysis such
performance report and if reflects that company has sufficient amount to pay. With the help of
these reports only employees incentives are tends to be fixed or set. On the basis of their efforts
to achieve tasks which are allotted to them remuneration of workers are decided. It plays very
important role to develop effective strategies with the objective to raise the level of performance
and to gain competitive advantage (Osim, 2020)
Budget report: It is called as internal report that used by company to assign budget to different
Functional areas and to various units of operational department of business organisation. budget
report are used by Marks and spencers managers for the purpose to compare actual as well as
standard sending’s so they can easily measure their performance. It is most significant to the
business as it leads to support to execute all the business activities in allotted budget. With the
help of it, organisation can tends to be determine that, is they are capable to satisfy the
projections that set previously in advance (Dahal, 2018)