Management Accounting: A Comprehensive Guide for Zylla Limited

Management Accounting

Table of Contents
Introduction:....................................................................................................................................2
Task 1...............................................................................................................................................3
P1: Explain management accounting and give the essential requirements of different types of
management accounting..............................................................................................................3
P2: Types of management reporting:...........................................................................................8
M1: Benefits of management accounting and application for organisational............................9
Task 2:...........................................................................................................................................10
P3: marginal costing and absorption costing.............................................................................10
M2: income calculation under marginal and absorption method:.............................................11
D2: interpretation of data:..........................................................................................................12
Task 3:...........................................................................................................................................13
P4: advantages and disadvantages of planning tools used in the budgetary control.................13
M3: planning tool and applications for forecasting budgets:....................................................16
Task 4.............................................................................................................................................17
P5: How planning tools are adopted in management accounting for financial issues...............17
M4: in respond to financial problems management accounting can lead organisation to
sustainable success.....................................................................................................................18
D3: Critically evaluate the use of planning tool for sustainable success:..................................19
Conclusion:....................................................................................................................................20
References;....................................................................................................................................21

Introduction:
As business conditions are changing rapidly and uncertainty of macro environment factors
increased due to heavy competition and globalisation, management system and techniques work
like a safeguard for the business in order to face financial and managerial problems. Presently
made a report is going to explain, management accounting system and cost measurement
techniques for the understanding of financial director of Zylla Limited so that he can take action
to remove the problems of management system applied within the company. Techniques of
budgetary control and how they are beneficial for business is also going to be described in below
report. Zylla Limited is facing some financial problems and the main reason for these problems
is the improper implementation of management practice. In the current report, these financial
problems and solution for the same are also going to be explained.

Task 1
P1: Explain management accounting and give the essential requirements for different types
of management accounting.
The management system can be described as a group of some methods, techniques, special
information and tasks prescribed for the support of management in actions which are going to be
taken to minimise the losses and maximise the gains (Borker, 2016). It works like a medium
between different finance, cost and other components of financial management.
Following are some objectives of management accounting system:
 It gives assistance in the formulation of strategic planning of future.
 It gives facility of interpretation of business performance and financial information.
 Helpful in the generation of two-way communication and in this way enhance
coordination.
It is the usage of fitting frameworks and thoughts in looking after recorded and foreseen
budgetary records of a substance to help the corporation in setting up plans for practical
economic targets and extraordinarily coming to fruition of sound choices with a view towards
these desires (Richardson, 2017). Management accounting is enough different from financial
accounting and some differences are explained below:
Financial accounting Management accounting
Only monetary information is involved by
the system of financial accounting.
Monetary and Non-financial both type of
information is covered by management
accounting.
Statements under the financial system are
made as per financial year. Like 1 year.
No timeframe fixed for these reports made as
per needs.
It is compulsory to made and used by
external users also (Dražić-Lutilsky, et. al.,
2016).
No statuary obligation and used only by
internal managers.
Specified format is issued for the preparation No specified format issued under

of financial statements. management system.
Scope of management accounting:
(Figure1: Management accounting scope)
(Source: By author, 2018)
Management accounting system is group of several techniques and some of them are as follows:
Cost Accounting System: A system which is considered to measure the costs occurred by an
entity is knows as cost accounting system. It is set of some frameworks, controls, reports and
activities which are utilised to determinate and control the cost of product and services (Alahdal,
et. al., 2016). There are two types of cost accounting system;
Job Costing:
Job costing system is applied to find the cost of unit through compiling the cost of material,
labour and overhead. It is a process which is utilised by the production companies to find the cost

of particular batch (DONIZETT, 2016). When an entity is engaged in the fabrication of unique
products or order based production process.
Process costing: Materials, work and overhead expenses are collected altogether for an entire age
system and are then allocated to solitary advent units. This method capacity outstandingly for
huge introduction continues jogging of doubtful matters, as an instance, an age continues going
for walks of 200000 cars. The value collection process is considered successful and components
of it are able to be electronic.
Some needs of this system for effective implementation:
 A complete record of expenses with proper classification like variable, fixed etc.
 Recording of each expense separately to find the cost of the batch.
 Proper recording of abnormal losses.
Inventory management system:
A management system which is applied to manage the inventory items is known as IMS.
Inventory management system is associated with various processes and not limited to stock
keeping only. It works to control the ordering, purchasing and storing cost of raw and finished
stook (Sindhu, et. al., 2014). In modern businesses, it is applied to a set of software and hardware
which makes it uniform with supply system. In order to maintain the right level of inventory
following method are used:
Economic order quantity:
EOQ may be described as the variety of gadgets that an affiliation should upload to inventory
with each demand to confine the whole charges of stock. Distinctive types of cost which are
connected with stock are holding costs, shortage costs and order costs (Hart, et. al., 2014).
Just-in-time: just in time method is applied only in the case of repetitive production systems. In
this system, good is purchased just before one day of requirement. When items are high valued
just in time is preferable to approach.