Management Accounting: A Comprehensive Guide to Systems, Reporting, and Financial Problem Solving

Management Accounting
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Table of Contents
Introduction..................................................................................................................................4
Task 1.............................................................................................................................................5
Management accounting:..........................................................................................................5
Various management accounting systems and their requirements:.....................................5
Benefits of management accounting systems..........................................................................7
Different methods used for management accounting reporting............................................8
Integration of management accounting systems and management accounting reporting..9
Task 2...........................................................................................................................................10
Calculation of cost and preparation of income statement using marginal and absorption
costing.......................................................................................................................................10
Report showing profit when sale of 5000 units is made by absorption and marginal
costing.......................................................................................................................................12
Interpretation of business activities.......................................................................................14
Advantages and disadvantages of tools used in budgetary control.....................................15
Planning tools used and applied in forecasting budgets.......................................................16
Adapting management accounting systems to respond to financial problems..................17
Responding to financial problems by management accounting..........................................18
Planning tools for responding to solving financial problems...............................................19
Conclusion..................................................................................................................................20
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References..................................................................................................................................21
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Introduction
In the business, there are various essential requirements which are required to be
completed in relation to management accounting. For that, the report is presented in
which all of the aspects which are related to the same will be covered. There will be an
explanation which will be provided for the reports and the systems which are to be
undertaken. The manner in which cost is calculated will be understood with the
calculation for the variances also. There will be proper planning tools which will be used
by which company will be able to have the appropriate level of control. The techniques
which are required to be undertaken so that all the issues are dealt with appropriately
and also their occurrence in future can be avoided.
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Task 1
Management accounting:
In the entity, it is required that all of the practices shall be applied in a proper way so
that the managers are able to have the required knowledge which can be used by them
in the making of the decisions. For this, the management accounting is taken into
consideration in which there are various processes such as collection, identification, and
analyzation which will be performed and the results will be used in the company
(Butterfield, 2016). By the help of this, it will be possible to attain the required outcomes
by which objectives and gals will be met.
By the help of management accounting, it will be possible for the managers to make the
decisions by the use of which it will be possible to attain the required outcomes and this
will be enhancing the sustainability of the business. There is the use of financial
accounting also which will be different in certain terms form this and they are provided
below:
In the process of management accounting, there are various activities which are
performed such as planning, controlling and directing. For the carrying out of them in
the proper manner it will be required that all the requirements shall be fulfilled and in
that information will be needed which can be attained by the help of systems which are
as follows:
Various management accounting systems and their requirements:
Cost management system:
In the business, it is very much essential that proper control shall be established on the
costs which are incurred and for that this system will be taken into consideration. In this,
all of the components which are involved in the cash will be ascertained and then they
will be managed in the manner by which the reduction will be achieved in the total cost
of the company (DONIZETTI, 2016). The cost of the business will be classified as the
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direct cost and indirect cost and then in them, there will be fixed and variable elements
which will be involved and shall be determined. The cost related data will be attained
and by that all of the decisions will be made in a manner that profits are maximized.
Inventory management system:
In the processes which are performed in the business, there are various inventories
which are required and they include finished stock, inventory in the process and
different raw materials. It will be required that they all shall be managed in such manner
that all of the production is carried in a most effective manner (Viktorovna and
Ivanovich, 2016). There are several policies which are required to be followed in this
such as the just in time approach, ABC costing, EOQ, FIFO, and LIFO. By all of them,
the inventory will be properly measured and there will be proper records which can be
maintained in this regard.
Price optimization system:
In the company, the products are provided to the customers at different prices and it is
needed that the reaction of the consumers on the price change shall be analyzed. For
that, this system is used. In this, all the factors will be ascertained and then the price will
be set accordingly by the use of various strategies which are available in this respect
(Lopez-Valeiras, et. al., 2015). They include the price penetration and price skimming.
Also, the techniques in which cost is taken as the base are considered. This way the
overall development will be made possible and increase in the profitability will be
ensured.
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