Management Accounting: A Comprehensive Guide to Cost Analysis, Budgeting, and Sustainable Success

Management Accounting
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Contents
Introduction.................................................................................................................................................3
LO 1............................................................................................................................................................4
P1) Explain management accounting and give the essential requirements of different types of
management accounting..........................................................................................................................4
P2) Explain different methods used for management accounting reporting.............................................6
M1) Evaluate benefits of management accounting systems and their application within organizational
context.....................................................................................................................................................8
D1) Critical evaluation of how management accounting systems and management accounting reporting
are integrated within organizational context............................................................................................9
LO 2..........................................................................................................................................................10
P3) Calculate cost using appropriate techniques of cost analysis to prepare income statement using
marginal and absorption costing. (M2, D2)...........................................................................................10
LO 3..........................................................................................................................................................13
P4) Explain advantages and disadvantages of different types of planning tools used in budgetary
control...................................................................................................................................................13
M3) Analyze the use of different planning tools and their application for preparing and forecasting
budget....................................................................................................................................................15
LO 4..........................................................................................................................................................17
P5) Compare how organizations are adapting management accounting systems to respond to financial
problems................................................................................................................................................17
M4) Analyze how in responding to financial problems, management accounting can lead organization
to sustainable success............................................................................................................................19
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D3) Critically evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organization to sustainable success.............................................................................20
Conclusion.................................................................................................................................................21
References.................................................................................................................................................22
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Introduction
This report discusses the management accounting and its various methods which are used by the
managers of the organizations so as to evaluate the performance. It also includes the explanation
of the management accounting systems and how they are integrated with management
accounting reporting. Through this, the understanding of the management accounting systems
will be developed. Zylla company is the multinational organization which has expanded its
business in different locations so that the new market share can be captured with the use of the
management accounting systems. Further, the income statements are also prepared using
marginal and absorption costing. The report also explains the advantages as well as the
disadvantages of the budgetary control so that the performance can be appraised. An analysis has
also been done which shows that how management accounting systems and reporting help in
solving the financial problems so that the sustainability can be achieved.
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LO 1
P1) Explain management accounting and give the essential requirements for different types
of management accounting.
Management accounting is the provision of financial data which help the organization in making
the development of the business (Financial Accounting.org, 2015). Through management
accounting, the managers of the Zylla Company will be able to analyze and interpret the
accounting information which in turn will help in evaluating the performance of the organization
as well as employees (Hamlett, 2018). The management accounting will help the managers of the
Zylla Company for taking the strategic decisions about future. It will also help in formulating the
policies so that day to day operations of the company can easily be done.
There are various types of management accounting systems and each of them carries the distinct
essentials in the Zylla Company, they are explained below:
Image: Management Accounting Systems
Source: By Author, 2018
Inventory management Systems: This method is used for overseeing the inventory so that the
ordering cost can be determined (Hamlett, 2018). The inventory management systems combine
various applications such as desktop software, mobile devices, and barcode scanners so that the
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Inventory
Management
Systems
Cost
Accounting
Systems
Job Costing
systems
Price
Optimizing
Systems

inventory can be managed as suppliers, stock as well as the goods. The tracking of quantities will
enable the managers of the Zylla Company to take inventory related decisions effectively
(Hamlett, 2018).
Cost accounting Systems: These systems will determine the cost of Zylla Company’s product
so that the inventory can be evaluated, the cost can be controlled and the profitability can be
attained. This system will also help in measuring the financial performance by evaluating the
costs of input outcomes to that of the actual output (Hamlett, 2018). It is the main concept as it
offers the analytical tools such as marginal costing and absorption costing so that the
productivity can be effectively utilized.
Job Costing Systems: It is the system which allocates the cost to the individual item or the batch
of the products (Hamlett, 2018). This job costing is mainly used in the manufacturing firms
(Lister, 2018). This information is necessary as it helps in determining the accuracy of the
systems of Zylla Company which is capable of quoting prices for the reasonable income
(Hamlett, 2018).
Price Optimizing Systems: It will help Zylla Company in determining that how consumers will
react to the various prices offered for the goods as well as the services (Hamlett, 2018). It also
helps the company in determining that which price is best suited for the goods and the services
so that the gross profit can be maximized. With this, the undesired price can be minimized.
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