Management Accounting: A Comprehensive Guide for Decision Making

Management Accounting
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Table of Contents
Introduction:.............................................................................................................................................................3
Task 1.......................................................................................................................................................................4
P1.........................................................................................................................................................................4
I: Definition of Management Accounting and to distinguish Management Accounting from Financial
Accounting..........................................................................................................................................................4
II: The importance of management accounting information as a decision making tool for department
managers..............................................................................................................................................................4
P2. Explain the different types of Management Accounting Systems................................................................6
M1. Evaluate the benefits of management accounting systems and their application within the context of
Imda Tech (UK) Limited.....................................................................................................................................7
D1. Critically evaluate how management accounting systems and management accounting reporting is
integrated within organisational processes..........................................................................................................8
Task 2.......................................................................................................................................................................9
P3. Income statements of September using; Absorption costing and Marginal costing.....................................9
M2. Calculate income Reconcile the profits.....................................................................................................11
D2. Accurate apply and interpret the data for the business activities...............................................................12
Task 3.....................................................................................................................................................................13
P4. Provide a written report on planning tools..................................................................................................13
M3 you will need to analyse the use of the different planning and their application for preparing and
forecasting budgets............................................................................................................................................15
Task 4:....................................................................................................................................................................16
Balance scorecard:.............................................................................................................................................16
M4 you will need to analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success..................................................................................................................19
D3: you will need to evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead to sustainable success.`..........................................................................................................20
Conclusion:............................................................................................................................................................21
References:.............................................................................................................................................................22
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Introduction:
Being the trainee management accountant of the Imda Tech Limited, which is the producer of
the mobile telephone charger and the other gadgets for the retail outlets in UK, needs to
improve their financial information for the better decision making. According to the director
of finance, Mr Imda wants a report which should include the meaning of management
accounting and their difference with the financial accounting. The report includes the
different types of management accounting tools such as cost accounting systems, inventory
management systems, job costing systems and price optimising system. The report should
also state the importance of the management accounting system and how it integrates with the
organisational process. In this report, the calculation of marginal and absorption costing is
explained. In this report, it will also explain that departments should take the responsibility to
make budgets. The process of budget and pricing strategies are explained in this report. The
report also explains about the Balance Score Card Approach and how it helps in identifying
the financial problem.
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Task 1
P1.
I: Definition of Management Accounting and to distinguish Management Accounting
from Financial Accounting
Management accounting gives the information, records accounting data and helps in taking
the decisions regarding the financial matters. Management accounting does the proper
planning of the management and helps in improving the performance of the company and
achieving the organization strategy (REZNIQI, et. Al., 2015). It helps in giving the
information of the statistical data and also maintains the internal and external factors.
Management accounting Financial accounting
It gives the information to the people within
an organisation.
It gives the information to people outside
the organisation.
It is concerned with the products and cost
centres of the particular factor.
It is concerned with the entire organisation.
The report emphasis on the problems which
are occurring in the organisation and how to
solve them.
The report's emphasis on the profitability
and increases the efficiency of the business.
It can be measured in both the terms
quantitative and qualitative.
It can be measured in only quantitative
terms.
It doesn’t follow any rule and there is no
statutory requirement for this accounting.
This accounting has been prepared as per
the rules of GAAP or IFRS and it is
mandatory to be prepared by all the
companies.
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II: The importance of management accounting information as a decision-making tool
for department managers.
According to a Peter Drucker, a business can be successful only if the management has taken
the courageous decision.
i. Management accounting helps in taking the internal and external; decisions of the
business. Internal changes such as hierarchical change, changes on a global value,
mergers and acquisition, etc. External changes such as election, new policy and law
are created, etc. management helps in guiding how to take decisions when such
situations are arising.
ii. Management accounting collects the data and compares it with the current
performance so that we can analyse the performance of the company and take
decisions accordingly (Malmi, 2016).
iii. Management accounting uses various tools and techniques which helps in taking the
decisions and reduces the problems such as KPI, MIS, Balanced Scorecard, etc.
iv. Management accounting helps in analysing the expenses and revenues of the
company and also created budgets which help in taking the decisions.

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P2. Explain the different types of Management Accounting Systems
Cost accounting systems: This system helps in determining the cost of the company. It
estimates the profit, inventory valuation and also controls the cost of the company. Actual
cost is based on the product cost of material, labour and overhead (acharya, 2018). Normal
costing is used to derive the cost of the manufactured product. Standard cost is compared
with the actual cost they are the predetermined cost of the goods and services.
Inventory management systems: This cost includes the holding, ordering and managing the
stock of the business. To manage the inventory is very essential for any organisation. This
system controls the overseeing of ordering inventory, manages the storage of inventory and
also controls the price of the product of inventory (Ngubane, et. Al., 2015).
Job costing systems: This system involves a process which determines the cost of the
specific job or production. It tracks the cost of the labour. It assigns the indirect cost such as
depreciation, rent, etc. to more cost pools (Ingram, 2018).
Price optimising systems: It is a process through which it is analysed how the customer's
will response on different prices of goods and services. This system helps in meeting the
objectives of the company of maximising the operating profit. It is used in the company to
analyse the big data.
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