Management Accounting: Types, Techniques, and Planning Tools

Management Accounting Business
Faculty of Business and Management Studies
Management Accounting
Submitted by:
Session: February 2020
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Management Accounting Business
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Management Accounting Business
INTRODUCTION
MA is the provision of financial data and provides assistance to the management of the
organization. This is the procedure of financial report, records and account to assist the
management for making better decision process for achieving business goals. This creates more
effectiveness for business. The preset report is based on British Electrical and Manufacturing
Company which is manufacturing company. The report will explains about the concept of MA
along with various MA systems and its significance to the business organization. This will also
state about various methods of management accounting (MA) reports. It also includes
application of various management accounting techniques of cost analysis by preparing financial
statement by using marginal and absorption cost technique. Report will covers pros and cons of
planning tools. At the end of report will compare organization adapting MA system for meeting
the various financial problems.
LO 1
Different types of management accounting system
MA is consists with the managerial accounting and with the internal system of business
utilizes to measures and in evaluating the complete business process. Financial accounting
system works on with the provision information to the external users of the companies like the
stakeholders and creditors. Management accounting system is important because that is help to
improve productivity and production capacity of company in effective manner. This process is
higher profitable and beneficial for greater market share for their business growth as well as
development. This system is providing complete relevant data to businesses to be utilized in
business activities and decision making. There are different forms of management accounting
(MA) system which are help to company for managing their effectiveness and making proper
reports of working. Here, is measures management accountings systems are as follows:
Inventory management system (IMS):
The IMS is the combination of technology as well as the process and procedures which is
overseen monitoring or maintenances of stocked products. This is the process which is help to
track products and services throughout the entire supply chain management from purchasing to
production to sales (Otley, 2016). In the context of British Electrical and Manufacturing
Company can track their inventory properly within the business. This creates the more
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Management Accounting Business
advantages for company such as cost saving, saves time, increased efficiency. Through that
company gets updated knowledge and details about inventory available into company and its in
warehouse. On the other side, having some disadvantages limited elimination of business risk or
complexity in the absence of proper data.
Cost accounting system:
This MA system is generally useful for manufacturing concerns to keep the records of all
the manufacturing activities into the inventory management system. In simple words, it is an
accountings system which is mainly developed for manufacturing firms to easily track the flow
of stock on a continuous basis along the different stages of manufacturing (Cooper, Ezzamel and
Qu, 2017). Through this system, British Electrical and Manufacturing Company are able to track
all those expenses and findings out the profitable costs. Through that company have great
advantage which is help on cost control, build effective decision making power and the most
important thing is to find out the ideal capacity of business. However, having some disadvantage
such as system is more complex, not suitable for small scale companies and this is based on
estimation.
Job costing system:
Job costing system is the process which is used by the business organization for assigning
cost incur to a particular job and activity which is tangled with them into the business. Through
this technique of costing the work can be carried out in an effective manner. With the help of
this, British Electrical and Manufacturing Company will be able assign cost to its respective
account and also helps in representing the accurate results. That is includes direct cost, labor cost
and overhead charges. Through that company have great opportunity to find out the defective
work and products (Weetman, 2019). However, having disadvantage in fixed prices for the
complete process by recoding cost of products and services.
The above are the effective MA system which assists the company for find out the
problems as well as stock of inventory. Those are to create best records of inventory and work
process.
Different methods of management accounting reports
Management accounting report is generally build for making proper and effective
planning, regulating as well as formulating decision making within the company. this is provide
complete relevant information to the manager of company which is enables for preparing
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