Management Accounting INTRODUCTION

Management Accounting INTRODUCTION 1 TASK 11 1.Explaining management accounting and the essential requirementand different types of management accounting system 1 2. 11 CONCLUSION 11 REFERENCES 13 INTRODUCTION Management accounting is a significant process which will help the organisation in analysing, gathering and presenting the information of the business operations to the management. TASK 1 1 1.Explaining management accounting and the essential requirement and different types of management accounting system The management of the company needs to know about the business operation in order

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.Explaining management accounting and the essential requirement and different types of
management accounting system..................................................................................................1
2. Explaining different methods of the management accounting reporting................................2
3. Evaluating the benefits of management accounting system with their application in Jupiter
plc................................................................................................................................................3
4. Critically evaluating the integration of management accounting system and management
reports in Jupiter plc. ..................................................................................................................4
TASK 2............................................................................................................................................5
a) Absorption and Marginal costing techniques..........................................................................5
1.Income statement as per absorption costing.............................................................................6
2.Income statement on basis of marginal costing.......................................................................7
Computation of manufacturing cost per unit :............................................................................8
TASK 3............................................................................................................................................8
1. Explaining the advantage and disadvantage of different type of planning tool used in
budgetary control........................................................................................................................8
2. Analyzing the use of different planning tool and their application in preparing and
forecasting budget.....................................................................................................................10
TASK 4..........................................................................................................................................10
1.Comparing the ways in which organisations are adapting the management accounting
techniques..................................................................................................................................10
2. Analysing the management accounting system in responding to the financial problems and
leading to the organisational success........................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is a significant process which will help the organisation in
analysing, gathering and presenting the information of the business operations to the
management. It helps the management in taking various decisions and making policies with the
help of the management accounting system. The report will help the Jupiter Plc in understanding
need of management accounting in their organisational system. The present report will include
the essential requirement of management accounting system for the better operation of the firm.
Further, report will help in understanding the need of management accounting report for top
executives of Jupiter plc. Moreover, report will explain the benefits of applying the system in
organisation. The report will also include the calculation of income statement with different
costing method. Furthermore, different planning tools for budgetary control is also discussed in
report. Report will also help in understanding the importance of management accounting system
in responding to the financial problem and leading the Jupiter plc to sustainable success.
TASK 1
1.Explaining management accounting and the essential requirement and different types of
management accounting system
The management of the company needs to know about the business operation in order to
take appropriate steps to make decisions and strategies for the further growth and development of
the company. The process of making analysing, gathering and presenting the business operations
to the management is termed as management accounting (Nahar and Yaacob, 2011). It is an
important process which helps in formulating different policies which will help the management
of the company in day to day operations.
Management accounting system is very essential in an organisation which will help the
Jupiter plc in measuring and evaluating the internal system of the organisation in order to
properly manage the business operations ( What is Management Accounting? , 2018). There are
different type of managerial accounting system which is essential for the management of the
Jupiter plc, they are:
 Cost accounting system: It is an essential system for Jupiter plc in order to analyse the
cost of the manufacturing of the product. Cost accounting is useful to find the
profitability of the product, internal control on the cost of production and inventory
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valuation of the company. It is very important to know the expenses incurred in order to
manufactured the cost of production which will help in estimating the profitable product
for the company.
 Job order costing: It is an important process for the organisation as it helps in assigning
the manufacturing cost to each product or the batch of the products (Renz, 2016). Job
order costing is a system which helps in tracking and monitoring by assigning
manufacturing cost to each product. It helps the management of the Jupiter plc to know to
keep tracking the expenses of manufacturing.
 Inventory management system: The system helps the management of the Jupiter plc to
track the flow of products through its entire supply chain and through different operations
of manufacturing. This system helps the manager to monitor different operations of its
product manufacturing which will helps the management of the Jupiter plc to make
different decisions and investment decisions.
 Price optimization system: This system helps the management of the Jupiter plc to
know the changes in the preference of the consumers for the products with the changes in
the price of product. Price optimization system helps in determining the cost of the
company which helps the operations to meet the maximising the operating profits.
2. Explaining different methods of the management accounting reporting
In order to make accurate and timely decisions and strategies for the operations of the
business which will help in attaining the goals and objectives of the Jupiter plc. Managerial
accounting report plays an important role in transforming the financial and statistical data in a
way that can be presented to the management of the Jupiter plc (Honggowati and et.al., 2017).
The managerial reports helps in providing the internal information that will be used in planning,
regulating and measuring the performance of the organisation. Following are the types of
management accounting reports for the Jupiter plc:
 Budget reports: it the most essential report for any type of organisation. It helps the
manager to measure the actual performance of the business operations with the budgeted
performance. It helps in controlling the cost of business operations. It considered the
expenses of the prior year expenses for the preparation of the current year budgeted
expenses.
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 Accounts Receivable Ageing reports: this report helps the company in managing the
cash flow in the company. This report is widely issues in the organisation which provides
the facility of the credit to its clients and the distributors. By preparing the account
receivable reports, the manager can find the defaulter and the issues in the company's
collection processes. This report is significant for the Jupiter plc, as the proper flow of
cash flow is essential in the organisation to meet the urgent contingencies.
 Cost Accounting reports: This reports help the manager in estimating the cost of
product manufactured. The raw material, overhead, labour and other cost are being
considered and than will be divided by total amount produced. The cost managerial report
will help in informing all this information (Crowther, 2018). This report help the manager
of Jupiter plc in determining the selling price of the product by estimating the cost of
production.
 Job reports: This reports helps in analysing the total cost that is incurred in the
manufacturing of the production. This report helps manager in comparing the actual
expenses with the expected revenue earned by that product. This report is essential for
manager of Jupiter plc to evaluate the profitability of the product and the specific job.
3. Evaluating the benefits of management accounting system with their application in Jupiter plc.
The management accounting system is essential for the Jupiter plc, as it would help the
top management of the company in getting timely and accurate information. The management of
the Jupiter plc can make effective decision, policies and strategies for the business operations in
order to achieve the organisation goals. The benefit of applying the management accounting
system in Jupiter plc are as follows: Inventory management system: This system helps the Jupiter plc in tracking managing
the flow in their inventory (Epstein, Verbeeten and Widener, 2018). Monitoring the flow
of the inventory is essential to know the need of the inventory and producing the
inventory when and where required.
Advantage of Inventory management system:
 The system helps in controlling the over production of the inventory.
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 It assist the controlling of the unnecessary investment on the production of the inventory
that are not required. This system helps in tracking the inventory through its supply chain.
Disadvantage of Inventory management system:
 The inventory management system required high manual power to closely check the
inventory flow. It required cost in order to tracking and managing the inventory value.
Cost accounting system: this system helps the manager of Jupiter plc in controlling the
expenditure of the production (Ward and Calabrese, 2018). The manager have to take various
decisions regarding the use of materials, processes, product design and have to plan costs or
expenses.
Advantage of cost accounting system:
 This system helps in eliminating the waste and inefficiency in the manufacturing process.
 The new methods of production helps in controlling the cost. With the timely available of the cost accounting report, the manager can easily determine
the selling price of product.
Disadvantage of Cost accounting system:
 The cost calculation are not always correct, the financial expenses are not included in the
calculation.
 Delay in receiving costing information will not give timely information to the
management of the Jupiter plc.
4. Critically evaluating the integration of management accounting system and management
reports in Jupiter plc.
Management accounting system has become an integral part of any organisation. It helps
in guiding the business operations and function of the management of Jupiter plc. Management
accounting helps in increases the efficiency of the employees in organisation. On the basis of
available information, accounting system helps the management of Jupiter plc in determining the
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goals to be achieved. The techniques of the budgetary system help in measuring the performance
of the business operations in order to find the difference between the actual and the estimated
one it helps the management in measuring the efficiency of the employees. With the help of
management accounting tool and techniques, the management of the Jupiter plc will be able to
better understanding the planning controlling and coordinating the different activities of the
business.
Management accounting reports helps the management of the Jupiter plc in getting the
different business operations report timely and accurately. It facilitates them to make the
different policies and strategies. Management accounting reports helps the management of the
Jupiter plc the policies which are responsible for the success of the organisation in taking
effective decisions for the future growth of the company.
TASK 2
a) Absorption and Marginal costing techniques.
Absorption Costing:
It is an very important method for the inventory valuation. This method used to absorb all
the manufacturing expenses that are incurred in the production of a unit. The cost of the
production will include all direct material, direct labour, both the variable as well as fixed cost
(Goldraich and et.al., 2018). Absorption costing is also known as full costing method, as it
consider both variable and fixed cost at a time pod ascertaining the cost.
Marginal Costing:
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In this techniques, only variable cost are considered while evaluating the cost of
production. In this method, the fixed cost considered to be fixed over a constant time. Marginal
cost of the production are variable cost that are consisting of the labour and material costs. The
difference between marginal cost and absorption cost is that, in absorption costing fixed cost are
also accumulated. Whereas, in variable costing fixed cost are completely written off for that
period.
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1.Income statement as per absorption costing
Computation of manufacturing cost per unit :
2.Income statement on basis of marginal costing
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Computation of manufacturing cost per unit :
TASK 3
1. Explaining the advantage and disadvantage of different type of planning tool used in
budgetary control.
Budgetary control is the process through which a manager can evaluate the actual
performance of the company with the budgeted performance. It helps in controlling the cost of
the organisation which includes the preparation of budgets, comparing the actual performance
with the estimated performance in order to achieve the maximum profitability.
Budgetary control is the process that helps in evaluating variances between the actual
performance and the budgeted one of Jupiter plc. Planning tool for the budgetary will help in
controlling and estimating the performance of the company as per the estimated performance
prepared by the management of the company(What Does Budgetary Control Mean? , 2018).
Below are some of the planning tool that are used by the organisation in order to control the
budgets, they are:
Cash budgets: It helps in providing the estimated receipts and payment in the budgeted
period. Cash budgets help in estimating the company's cash position with in a specific time
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period. The cash budgets helps the manager of Jupiter plc in estimating the cash requirement to
meet the daily operations.
Advantage of cash budgets:
 It will help in saving the cost of the company, by eliminating all the waste from the
budgets. It helps in minimizing the cost and maximization of profit.
Disadvantage of cash budgets:
 The success of the cash budgets mostly depends on the co-operation of the employees. The cash budgets provides a less flexibility, once prepared the manager can not ,make
any changes in the budget.
Master Budgets: This budgets involved the summary of all the smaller budgets of the
company. It includes all the functional budgets and will help in indicating their affects on the
business as a whole (He, 2018). The master budgets includes the customer services, marketing,
sales and all other departmental budgets in order to create a single overall budget.
Advantage of Master Budgets:
 It helps in giving the management of the company an overview of the company's budgets.
It helps in estimating the total expenses and total revenue of the business. It helps in representing all the functional budget in one report, hence it helps in saving the
time of the top executives.
Disadvantage of master budgets:
 The main disadvantage of the master budget is that it is very difficult to update the budget
report as there are many categories and numbers in the report.
2. Analyzing the use of different planning tool and their application in preparing and forecasting
budget
Performance of the business can be controlled in an effective way with proper allocations of
cost. budgeting planning and forecasting trough planning tool helps determining and detailing
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the goals and the objectives for a long term and short financial goal which can take the company
a long way.
TASK 4
1.Comparing the ways in which organisations are adapting the management accounting
techniques
Organisation can successfully implement different management accounting techniques
which will help them to respond the financial crisis. Jupiter plc in order to respond its current
financial problems has adopted the following management accounting techniques:
 Financial governance: it is an important techniques for Jupiter plc which will help the
organisation in collecting, managing and controlling all the financial information of the
organisation. Financial governance helps the company in tracking all the financial
transaction and information and helps in providing the financial information to the top
level, management of Jupiter plc (Grabel, 2018). Financial governance helps the
management in getting the timely and accurate information, which is essential in making
the policies strategies for strengthening the financial position of the company. It is very
essential for the company for internal control of performance and financial transaction.
Financial governance will help Jupiter plc to respond to its financial problem by ensuring
the financial stability in the organisation.
 Key Performance indicator: It is a measurable value that helped company in evaluating
the efficiency of company in achieving the business objectives (Challis and Clarkson,
2017). Jupiter plc are utilizing the KPI in order to evaluate their success in reaching the
organisational goals and targets. KPI are the business metric that are helpful for the
executives and the managers in order to track and analyse the factors that are essential for
the success of Jupiter plc. With the help of KPI, the managers can evaluate the future
outcomes, can know the possible business problems and advance guidance in maximizing
the profit of the company. Jupiter plc can evaluate the profit and revenue growth with the
help of KPI, it helps the manager in smooth operations of the business (Albats,
Fiegenbaum and Cunningham, 2018). it will help the business in achieving the business
target and helps the company to become financially stable.
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On the other hand, Unicorn plc has adopted different management accounting techniques to
respond to its financial problem in organisation:
 Balance scorecard: it is the techniques which are useful in evaluating the performance
of the organisation within a specific time period. Balance scorecard helps in converting
the business targets in the set of performances which can be measured. This techniques is
useful in improving the internal functions of the business and the possible outcomes.
Balance scorecard helps in providing the management of unicorn plc the proper
feedbacks of their performances (Bergeron, 2017). It will in determining the area where
the improvement in needed. It helps the effective working of business operations in
achieving the organisational target. Balance scorecard stabilises the financial resources of
the company so as to work according to the determined set of goals and objectives.
2. Analysing the management accounting system in responding to the financial problems and
leading to the organisational success.
The role of the management accounting techniques in responding to the financial
problems is:
Financial governance: Ensuring proper management and tracking the financial
information of the organization thus help strengthen the financial performance of the
company .With the help of proper governance the company can make plans and strategies which
can help the company achieve their predetermined and set goals as finance is the backbone of
any organization which when well maintained can make the company rise to great heights.
CONCLUSION
By summing up the above report, it can be concluded that, Management accounting is an
significant process which will help the organisation in analysing, gathering and presenting the
information of the business operations to the management. The present report has concluded
different management accounting report and its important in Jupiter plc. The report has
concluded the importance of management accounting reports. Present report has included the
preparation of income statement by applying absorption and marginal costing method. Further,
the report has discussed about various planning tools for the budgetary control process. Present
report has concluded the comparison of the organisation in adapting the management accounting
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techniques in responding to their financial problems. At last, the report has concluded the use of
planning tool that has helped the company in leading the organisation to sustainable success.
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REFERENCES
Books and Journals
Albats, E., Fiegenbaum, I. and Cunningham, J. A., 2018. A micro level study of university
industry collaborative lifecycle key performance indicators. The Journal of Technology
Transfer.43(2). pp.389-431.
Bergeron, B. P., 2017. Performance management in healthcare: from key performance
indicators to balanced scorecard. Productivity Press.
Challis, D. and Clarkson, P., 2017. Performance indicators in social care for older people.
Routledge.
Crowther, D., 2018. A Social Critique of Corporate Reporting: A Semiotic Analysis of Corporate
Financial and Environmental Reporting: A Semiotic Analysis of Corporate Financial and
Environmental Reporting. Routledge.
Epstein, M. J., Verbeeten, F. H. and Widener, S. K. eds., 2018. Performance Measurement and
Management Control: The Relevance of Performance Measurement and Management
Control Research. Emerald Publishing Limited.
Goldraich, L. and et.al., 2018. Discrepancies Between Costs and Reimbursement Values May Be
Associated with Low Heart Transplants Numbers in Brazil. The Journal of Heart and
Lung Transplantation. 37(4). pp.S236-S237.
Grabel, I., 2018. When Things Don't Fall Apart: Global Financial Governance and
Developmental Finance in an Age of Productive Incoherence. MIT Press.
He, H., 2018. Control-Oriented Inventory Production and Sales Activities in Chinese
Manufacturing Firms. Accounting and Finance Research. 7(2). p.134.
Honggowati, S. and et.al., 2017. Corporate governance and strategic management accounting
disclosure. Indonesian Journal of Sustainability Accounting and Management. 1(1). pp.23-
30.
Nahar, H. S. and Yaacob, H., 2011. Accountability in the sacred context: The case of
management, accounting and reporting of a Malaysian cash awqaf institution. Journal of
Islamic accounting and business research. 2(2). pp.87-113.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Ward, D. M. and Calabrese, T., 2018. Accounting fundamentals for health care management.
Jones & Bartlett Learning.
ONLINE
What is Management Accounting? . 2018 [Online] Available
through:<https://www.myaccountingcourse.com/accounting-dictionary/management-
accounting>
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What Does Budgetary Control Mean? . 2018 [Online] Available
through:<https://www.myaccountingcourse.com/accounting-dictionary/budgetary-control>
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