Management Accounting: A Comprehensive Guide to Financial Success

Unit – 5
Management Accounting
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Contents
Introduction:...............................................................................................................................4
LO1............................................................................................................................................5
P1. Explain and give its essential requirements.....................................................................5
P2. Different methods used in management accounting reporting........................................6
M1. Benefits and their application within an organizational context....................................7
D1. Integration of management accounting systems and management accounting...............8
LO2............................................................................................................................................9
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costing..................................................................9
M2. Apply a range of management accounting techniques and produce appropriate
financial reporting documents..............................................................................................11
D2. Produce financial reports that accurately apply and interpret data for a range of
business activities.................................................................................................................12
LO3..........................................................................................................................................13
P4. Advantages and disadvantages of planning tools used in the budgetary control. [M3].13
LO4:.........................................................................................................................................16
P5. Compare how organisations are adapting management accounting systems to respond
to financial problems............................................................................................................16
M4. Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success.....................................................................................17
D3. Critically evaluate how planning tools for accounting respond appropriately to solving
financial problems to lead organisations to sustainable success..........................................18
Conclusion:..............................................................................................................................19
References:...............................................................................................................................20
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Introduction:
Being the management accountant of the Zylla company, which is the large multinational
organisation undergone with a number of changes over some time. The major change which
has occurred is in the acquisition, locations, and restructuring so the company wants to
manage the accounting. In this report, the manager has explained about the management
accounting systems and the management accounting techniques which help in ascertaining
the cost of the company. The report also includes the different management accounting tool,
budgetary control system and forecasting budgets. The report also gives the brief description
about the marginal and absorption costing which is the important technique to analyse the
cost. The report also states how the management accounting helps in solving the financial
problems. Planning tools and management accounting techniques maintains the proper
accounting of the company and helps in increasing the growth of the company. The report
also explains the benefits of the management accounting and budgetary control system.
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LO1.
P1. Explain and give its essential requirements.
Management accounting
The procedure of preparing management accounts and reports which are used by the
managers of the firm to make the decisions. These systems guide the managers of Zylla
company in the process of decision-making and improve the effectiveness of the decision-
making process. These systems can be used by the managers at the top and also the managers
at the ground level who takes the day to day decisions in the firm (Hilton and Platt, 2013).
Essential requirements of management accounting systems
The style of management
It means the autonomy allowed in the Zylla company. As for different organizations,
different powers are delegated, this changes the use of management systems. In an
organization where autocratic style is followed the company’s top management requires more
information and in the company following democratic system that s from bottom to top the
lower level managers require more information. This changes the requirement of
management accounting systems (Ward, 2012).
The organizational structure of Zylla Company
The organizational structure affects the system, if the company has a vertical system then
managers will require narrow information but in much depth, whereas in horizontal
organizations a lot of information will be required but in simple terms.
Information quality
The information collection process in the organization can be different and also the quality of
the information collected. If the information s collected randomly and is less reliable it will
be used accordingly and on the other hand, if a deeper analysis has been made then the
information will be analyzed in a more sophisticated manner (Dale, 2015).
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P2. Different methods used in management accounting reporting.
Cash flow analysis
Cash flow statements are used for analyzing the inflow and outflow of cash and cash
equivalents in an organization (Reid and Myddelton, 2017). This system is used for the
purpose of knowing the situation of cash in the organization. It offers valuable insights into
cash position and how they were earned. It also helps the managers in their decision-making
process. These statements ensure the proper cash flow for the firm and prevent ant future
financial crises. It further ensures that the liquidity of the firm is maintained so that
unforeseen expenses can be met (Drury, 2013).
Management Information System (MIS)
MIS is a computer-based system where all the financial information of the company is stored
in digital format. This enables the managers of the company to access the information in an
organized manner. This system enables the managers to have complete access to the
information and make the decision in an effective manner. This increases the overall
productivity of the firm and enables the firm to increase its profitability. It also eases the
work of managers as they can find all the important information in one single place. This
system further helps the top management to monitor the performance of the firm.
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