Management Accounting Systems and Techniques

The provided report discusses the significance of management accounting systems in organizations. It covers topics such as zero-based budgeting, absorption and marginal costing, and different planning tools like budgetary control processes. The report also touches upon the application of management accounting techniques in various organizations and its importance in responding to financial problems. This document aims to provide a comprehensive understanding of management accounting systems and their relevance in modern business practices.

Management Accounting

INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1. Explaining the management accounting and the essential requirement of the different
accounting system in Jupiter plc..................................................................................................3
2. Explaining different methods for management accounting system. .......................................4
3.Evaluating the benefit of management accounting system and its application........................5
4. Integration of management accounting system and management accounting reports in
Jupiter PLC..................................................................................................................................6
TASK 2............................................................................................................................................6
1. What is Absorption Costing.....................................................................................................6
Income statement as per absorption costing:...............................................................................7
Income statement on basis of marginal costing...........................................................................8
TASK 3..........................................................................................................................................10
1. Explaining the advantage and disadvantage of planning tool used in budgetary control......10
2. Analyzing the use of different planning tool and their application in preparing and
forecasting budget......................................................................................................................12
TASK 4..........................................................................................................................................12
1.Comparing the organization and adopting management accounting techniques in responding
to financial problem...................................................................................................................12
2.Analysing how management accounting in organization leads to suitable success by
responding to financial problems...............................................................................................13
3. Evaluating the planning tool for organizational sustainable success by responding to its
financial problems:.....................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is an important process which helps in the presentation of the
information to the top executives of the organization. It is essential system for the proper
functioning of the management. The report will help in understanding the management
accounting and its system to the Jupiter plc. Further, the report will explain the different
management system of the Jupiter plc. The study will also help in understanding various type of
management accounting report. present report has mentioned the application of management
accounting and report in Jupiter plc. report will discuss the absorption costing and will include
different income statement with absorption and marginal costing. The report will discuss
different planning tool for budgetary controlling process. The report will also helped in
understanding the application of the management accounting system in different organization.
report will discuss the importance of management accounting and budgetary tool in responding
to the financial problems and leading the organization to the sustainable success.
TASK 1
1. Explaining the management accounting and the essential requirement of the different
accounting system in Jupiter plc.
It is the process which helps in gathering, analyzing and interpretation and presenting the
accounting information to the management is termed as the management accounting. Business
operations on day to day basis to compete in order to make better strategies are accomplished
trough management accounting, so that they can achieve higher goals and strive to make place in
today’s competitive world
The system of management accounting helps all stratus to collect proper and accurate
information so that it can be showcased in a manner which will help Jupiter PLC. to make more
strategic and firm decisions which will be helpful to them in long term (Ward, 2012). There are
various types of management accounting systems to help out companies with their business
operation and to make it run more smoothly:
1. Job costing system: the system wherein the manufacturing cost is issued or assigned to
individual product or to same collective batches of the same product this system assists in

keeping proper records and data and the cost of each product. it also helps in maintain records of
materials used and labor involved. This system also provides the management team of Jupiter
PLC to track expenditures allocated to the particular product, therein finalizing the selling price
of each product (Renz, 2016). It also helps the management team set a proper selling price of
their commodity wherein the production cost is covered and profit is attained.
2. Inventory Management: Tracking the flow of goods from manufacturers to retailers is a
system known as Inventory Management. Till the time the final product reaches the customer
trough retailers where they get it through warehouses from the manufacturers of the Jupiter plc.
It is an extremely efficient manner to manage inventory and keep track of all available stocks
whenever it is needed.
3.Cost Accounting System: Jupiter plc use this system to set the exact or estimated price of
their product with the value of the raw material used and the cost control involved in order to
make it profitable (Otley and Emmanuel, 2013). This system known as the Cost Accounting
system that helps in deciding the accurate price set up of the selling price for profitable gains.
4.Price optimizing system: Prices of available resources are controlled using the price
optimizing system which helps companies decides prices of multiple products at one time .It
helps the Jupiter plc in knowing the fluctuation in the demand of the product with the changes in
the price of the product. It is essential and an important factor in deciding the pricing structure
for setting up the promotional price of any commodity.
2. Explaining different methods for management accounting system.
Process which helps providing exact and efficient timely information about the financial
and statistical information of the company is known as Managerial accounting reporting. It will
prove to be of great help to Jupiter PLC and its management team in taking the right decisions
and planning strategies that will help them for a future growth and for the welfare and
development of their company. For smooth business operations different kinds of reports are
being prepared in order to evaluate the business performance of the company. The different types
of management accounting reports are as followed:
Budget Reports: The rudimentary element which is very crucial and plays an important part in
every organization is the Budget Report. The overall performance of a company in a specific

year is measured by this report and is prepared on the basis of the companies past years
performance. It helps the management in making reports analyzing the performance of the
company on past and present basis (Wickramasinghe and Alawattage, 2012). It helps in cost
controlling process and in controlling the management to understand the way the company
operates .Jupiter PLC can gain in finding the difference in their actual performance and their
budgeted performance trough Budget Reports
Accounts Receivable Aging Reports: These reports play a vital part for any business firm that
provides credit facilities to it customers, clients and distributors. The management is able to gain
information about the defaulters of the company trough this report. The companies credit policies
are also showcased trough this and it also helps in the need for improvement in the collection
process of the company. The need to tighten the credit policy of the company can be analyzed by
this report.
Cost managerial reports: This report covers the cost of products manufactured. It gives proper
knowledge of the exact amount of material cost, overhead, labor and other miscellaneous cost
involved in production and the selling process. the report will help the manager of the Jupiter plc
in determining the selling price of the product by evaluating the cost of production.
Job cost reports: The expense of a specific job or project is shown in this report which helps the
revenue or monetary earned by the product and the estimated price of the product. It can be
fruitful in assessment of the profit to be gained (Banerjee, 2012).
3.Evaluating the benefit of management accounting system and its application.
To obtain information of financial and non financial information of business operations
which play a key role in decision making and for creating strategies for a better growth and
development to help attain the desired goals management accounting system role plays a key
role and are as follows:
Job Costing System: the system keeps records of individual products manufactured and can be
used to keep track of the expenses involved in manufacturing goods and to set the selling price

Price Optimizing System: The pricing structure is defined in this system, to manage the starting
price and discounting price. This system decides customer preference according to price change
and vice versa
Cost Accounting System: This system helps in production cost control and estimating the
expense which will provide profit to the company.
4. Integration of management accounting system and management accounting reports in Jupiter
PLC
The integration of management accounting system balances and controls the method in
recording transactions and financial data..It interconnects and combines the activates of all the
areas of work such as point of sales, back office and front office. The input and output is
managed trough the management accounting and financial accounting functions. the integrated
management accounting system serves its purpose in increasing the speed efficiency of the exact
and right processing in financial data
The management gets the timely information and accurate data about the proper and original
operation and workings of each and every function in the company trough the management
accounting report (Dillard and Roslender, 2011). The strategies which are responsible for the
success of the organization and the decision making process for this purpose is made trough this
system. The Budgeting reports help companies achieve real performance with approximate
performance that takes the company on a path to achieve their set goals with the desired
performance.
TASK 2
1. What is Absorption Costing
The value of the inventory is calculated trough the cost accounting method. Absorption costing is
about the finance that goes into manufacturing a product, all the fixed cost and the variable cost
are brought into consideration while calculating the final cost of the manufactured product. it is
needful as it ensures proper valuation of the cost including the direct cost i.e. the material cost
and indirect cost such as the overhead cost (Crowther, 2018). This costing system is helpful in
providing a exact and accurately comprehensive cost of the manufactured product. The person in

charge is ensured that the entire cost will be recovered from the selling price that has been used
in the production or manufacturing. It also helps in the decision making process in utilizing the
cost management.
Income statement as per absorption costing:
Particulars
F
igures
(in £)
F
igures
(in £)
Sales revenue (16000 * 50) 8
00000
Production cost (19000 * 37.6) 7
14400
Less: inventory at the end of period
(3000*37.6)
1
12800
6
01600
Gross profit (Sales – COGS) 1
98400
Less: Under absorption
Net gross margin

Computation of manufacturing cost per unit :
Particulars Figures (in £)
Direct labour 20
Direct material 10
Variable production overhead 2
Fixed production overhead 5.6
Total manufacturing cost per unit 37.6
Income statement on basis of marginal costing
Marginal costing
Particulars
F
igures
(in £)
F
igures
(in £)
Sales revenue (16000*50) 8
00000
Less: Variable expenses
Direct labour (19000 * 20) 3

80000
Material cost (19000 * 10) 1
90000
Variable production overhead (19000 *
5)
9
5000
Less: closing inventory (3000 * 35) 1
05000
5
60000
Contribution (sales – variable cost) 2
40000
Less fixed production overhead cost 1
00000
Net profit 1
40000
Computation of manufacturing cost per unit :
Particulars Figures (in £)
Direct labour 10

Direct material 20
Variable production overhead 5
Fixed production overhead 5.6
Total manufacturing cost per unit 35
TASK 3
1. Explaining the advantage and disadvantage of planning tool used in budgetary control.
A budget is the calculation of the monetary and the expenses used in manufacturing a
product over specific future plan and objective of Jupiter PLC. Budgeting helps in making
monetary distribution for a specific year. Performance of business activity or
activities .Companies can establish and make new and different monetary budgets for different
activates in their organization. Budgetary control is the process which helps the company
differentiate and evaluate between the budget figures and the actual result or benefit for Jupiter
PLC. This tool also plays a vital role in controlling and the performance of the company set by
the budgeted performance in the specific year. There are advantages and disadvantages in this
planning tool for budgetary control, which are as follows:
Activity based budgeting: All activities go through proper scrutunity in order to get prepared
for the current year budget. in this tool the performance of the past year are not considered but
the last years activities are definitely evaluated in order to prepare a new budget for the future
(Giordano-Spring, Maurice and Cho, 2018). All activities are closely scrutinized, that have
incurred the cost are deeply evaluated and even those that were waste activities are brought into
consideration so that they can be avoided in future and those that wew profitable activities are
considered so that they can be included in future projects in the coming year.

Advantage of Activity based budgeting:
 ABB helps in evaluating each and every cost driver, it also plays a key role in analyzing
all activity.
 Helps assist the management at Jupiter Plc to calculate all waste and exempted activity
and eliminate it and save cost control for the company.
 ABB helps the management to control all business activities together and consider them
on one platform and not in particular for any one department in the organization
Disadvantage of Activity based costing:
 . Activity based budgeting is difficult and complex and is also a time consuming process
as each and every activity in the organization needs to be scrutinized
 . Deep knowledge of each and every function and activities in the organization is needed
so that is can ascertain and promise a successful performance of each activity
 . Highly trained and qualified in the certain required field employees are required in order
to recruit the right kind of skilled and able employees which can create more cost burden
in form of high wages for the company
Zero Based Budgeting: In this budgeting each and every aspect, every expense is evaluated of
the current year is taken into accounts as this budget tool does not consider the past and previous
year and thus helps in cutting the cost of waste expenses in the new budget for the current year
(Epstein, Verbeeten and Widener, 2018). it also keeps account and justifies all expenses incurred
in the organization thus help preparing a better and more efficient budget in the current year .
Advantages of zero based budgeting:
 .ZBB improves activities trough cost effective ways
 .Involves staff in decision making process thus increasing the staff motivation as it gives
them responsibility and initiative.

 .Helps the staff in increasing coordination and communication skills among each another
thus bringing out the best in all
 .Waste activities are eliminated from the business activities
Disadvantages of Zero based budgeting:
 .Its a very time consuming process
 ZBB analyses all the activities which requires involvement of all the employees thus
requiring high efforts from all employees
 Proper training has to be imparted to be implement the ZBB in organization therefore
effective employees need to be deployed causing cost damage’
2. Analyzing the use of different planning tool and their application in preparing and forecasting
budget
Performance of the business can be controlled in an effective way with proper allocations of
cost .budgeting planning and forecasting trough planning tool helps determining and detailing
the goals and the objectives for a long term and short financial goal which can take the company
a long way.
TASK 4
1.Comparing the organization and adopting management accounting techniques in responding to
financial problem
Jupiter PLC uses different management accounting techniques in order to answer the
financial problems they face in the organization and they have adopted the following
management accounting techniques.
Balanced scorecard: The performance of an organization in a time bound period is the key of
this technique which helps in converting the business objective that can be measured by
performance within a time span. This technique brings out external results by improving internal
functions of the organization. It also provides feedbacks and gives necessary improvements in

areas requires. The organization also stabilizes itself through its financial resources and helps it
attain the goals set by themselves.
Financial Governance: This is the most important techniques which helps strengthen the
financial position thus helping the company in managing collecting and controlling financial
governance. The management is able to trace all data and information regarding financial
transactions in the company. It also scrutinizes and stops disclosures regarding monetary
transaction. It also helps them prepare strategies and plans to control the use of finance .Thi
technique are also important as it assists the decision for internal control regarding financial
policies. This technique ensures financial stability in the organization.
On the other hand Unicorn Plc a retail company in UK is using other techniques for
responding to its financial problem in its organization which is as follows:
Key Performance Indicator: it is the quantities value that helps in measuring the efficiency of
the teamwork of the organization in achieving its goals. Unicorn plc which uses KPI at multiple
levels to further their success in reaching their required goal. there are two levels of KPI, the
high level KPI which has its eye on the overall performance of the organization whereas the low
level KPI takes into consideration the performance of each department individually. thus
assisting and ensuring smooth functioning of the business of UNICON PLC and thus helps them
to answering to their financial problems by reaching their set goals
2.Analysing how management accounting in organization leads to suitable success by responding
to financial problems.
The role of the management accounting techniques in sustainable success for a business
organization can be obtained by:
Balance Scorecard: Evaluating the performance of the company as per the goals of the
company. Balance scorecard leads the company to attain sustainable goals by efficient functions
Financial governance: Ensuring proper management and tracking the financial information of
the organization thus help strengthen the financial performance of the company (Schaltegger,
Burritt and Petersen, 2017). With the help of proper governance the company can make plans
and strategies which can help the company achieve their predetermined and set goals as finance

is the backbone of any organization which when well maintained can make the company rise to
great heights
3. Evaluating the planning tool for organizational sustainable success by responding to its
financial problems:
There are many tolls that help a company in identifying the financial problems faced by any
company so that they can attend and respond to that financial problem. There are two types of
planning tools for the budgetary control..Activity based budgeting and Zero based budgeting
which help in responding to financial problems.
Activity based budgeting: Each activity of the organization is analyzed in order to prepare the
budget with the help of the management who evaluate the activities that can be profitable for
strengthening the business and eliminate the non profitable activity of the organization
Zero based budgeting: The budgeted expense is identified by the managers of the organization,
though no change is made in the previous year budget (Bennett and James, 2017). All expenses
of the organization is taken into consideration by the management in order to administer funds to
the different function of the organization thus saving the cost of the company as the allocation of
funds will be done on basis of information according to the performance of the different
functioned in the present year and not the previous year. The amount saved by the company can
be put to use for another profitable activity by saving financial resources.
CONCLUSION
By summing up the above report, it can be summed up that the management accounting
system is an essential process which helps in proper functioning of the management. The present
report has explained the importance of management accounting report and different system of
management accounting in Jupiter plc. The report has concluded the income statement with the
help of absorption and marginal costing. The report has concluded different planning tool that
helped in budgetary control process. Report has discussed the application of management
accounting techniques in different organization. The importance of management accounting
system in responding to the financial problem of Jupiter plc has also discussed in the file.

REFERENCES
Books and Journals
Ward, K., 2012. Strategic management accounting. Routledge.
Otley, D. and Emmanuel, K. M. C., 2013. Readings in accounting for management control.
Springer.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches and
perspectives. Routledge.
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt. Ltd..
Dillard, J. and Roslender, R., 2011. Taking pluralism seriously: embedded moralities in
management accounting and control systems. Critical Perspectives on Accounting. 22(2).
pp.135-147.
Crowther, D., 2018. A Social Critique of Corporate Reporting: A Semiotic Analysis of Corporate
Financial and Environmental Reporting: A Semiotic Analysis of Corporate Financial and
Environmental Reporting. Routledge.
Giordano-Spring, S., Maurice, J. and Cho, C. H., 2018. Sustainability Accounting: Education,
Regulation, Reporting and Stakeholders. Emerald Group Publishing.
Epstein, M. J., Verbeeten, F. H. and Widener, S. K. eds., 2018. Performance Measurement and
Management Control: The Relevance of Performance Measurement and Management
Control Research. Emerald Publishing Limited.
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental
management: Striving for sustainability. Routledge.

Bennett, M. and James, P., 2017. The Green bottom line: environmental accounting for
management: current practice and future trends. Routledge