Management Accounting: A Comprehensive Guide to Techniques and Applications

Management Accounting
1

Table of Contents
Introduction:....................................................................................................................................3
Task 1:.............................................................................................................................................4
P1: Explain management accounting and give the essential requirements for different types of
management accounting..............................................................................................................4
P2: Explain different methods used for management accounting reporting................................9
M2 &D1: apply management techniques and reporting documents. How management
accounting and reporting is integrated processes......................................................................10
Task 2.............................................................................................................................................11
P3: describe marginal and absorption costing:..........................................................................11
M2: apply techniques and produce financial reporting documents...........................................11
D2: interpretation of data:..........................................................................................................13
Task 3:...........................................................................................................................................14
P4: Explain the advantages and disadvantages of different types of planning tools used in the
budgetary control.......................................................................................................................14
M3: You should analyse the use of different planning tools and their application for preparing
and forecasting budgets.............................................................................................................16
Task4:............................................................................................................................................17
P5. Compare how organisations are adapting management accounting systems to respond to
financial problems.....................................................................................................................17
M4 & D3: how responding to financial problems, management accounting can lead
organisations to sustainable success..........................................................................................18
Conclusion:....................................................................................................................................19
References:....................................................................................................................................20
2

Introduction:
As a key to success, management accounting is playing a crucial role in modern businesses.
Currently, the discussion is based on the features of management accounting to discuss that, “is
management accounting is really beneficial for businesses and if yes how?” In context with the
business of Zylla Ltd, the report includes the explanation about different management
techniques, cost techniques and budgetary control techniques to give an understanding about
these techniques so that the senior management of Zylla Ltd. can adopt these systems to gain
sustainable success for the company. Additionally, some financial problems of Zylla Ltd which
are found during the analysis of company management system and way to remove them are also
going to be discussed in this report so that the financial director of Zylla can make suitable
changes.
3

Task 1:
P1: Explain management accounting and give the essential requirements for different types
of management accounting.
As a group of some analysis and reporting techniques, management accounting is a assistance for
the company managers in the decision-making process so that they can understand the internal
situation of company and external situation of the market and take gainful decisions during the
preparation of future strategy (Butterfield, 2016). It can be also defined as a set of rules which
reduces the risk of inappropriate decision-making and supports strategy making process from
start to end as an additional management specialist.
Management accounting is different from financial accounting and key differences are as
follows:
No. Management accounting financial accounting
1. Reports generated under management
accounting does not need to be
published
Financial statements made under financial
accounting are published for the use of
external parties.
2. It is used by only internal management
to understand and managethe business
situation (Wiedemann, 2014).
External and internal both parties use it to
understand the monetary situation of the
company.
4

Management accounting is a continuous process which is run by the management within an
organisationto ensure following activities:
(Figure 1: Targets of Management Accounting, 2018)
(By Author, 2018)
Management accounting plays a veryprecious role in business management and Zylla Ltd can
adopt practices this system to improve performance and quality of strategy and business process.
Various methods of management accounting are available and some of them are explained as
below:
Cost management system: Traditionally cost accounting system used by the manufacturing
companies to manage the costs related issues but In present businesses, cost accounting could be
portrayed as system approach that intends to get an affiliation's expenses of introduction by
means of assessing the facts fees of every motion of age and furthermore settled costs, as an
instance, disintegration of capital gadget (DONIZETTI, 2016). Cost accounting will initially
evaluate and document those prices simplest, by means of then balance enter occurs with yield or
actual outcomes to assist association corporation in assessing monetary execution.
Cost accounting measure the cost which are classified in flowing categories:
5
Strategy planning to make logic based strategy
Control on implementation of planed strategies
Continuous review of implementation for improvement

(Figure 2: Targets of Management Accounting, 2018)
(By Author, 2018)
Some requirements of this system:
 Recording of each cost occurs with appropriate classification because various cost
determination techniques are used in cost accounting (Savić, et. al., 2014).
 If a company is engaged in job or batch process, cost data according to each job.
Inventory management system:
A combination of some techniques which is put to use to manage and control the stock items is
known as inventory management system. In modern businesses, inventory management system
can be defined as a mixture of some software, hardware and financial management rules which
are applied within an organisation to maintain the stock items at an appropriate level because it is
necessery to run a business without any interruption (Shen, et. al., 2014). To value the stock
following methods are used under Inventory system:
6
Types of
Costs
Fixed costs
Operating cost
Direct Costs
Variable costs