Management Accounting: Benefits, Methods, Techniques and Tools

Management
Accounting

Table of Contents
Management Accounting.................................................................................................................1
Introduction......................................................................................................................................3
P1.....................................................................................................................................................3
Management Accounting.................................................................................................................3
It has many benefits such as :.....................................................................................................3
P2.....................................................................................................................................................5
Different methods used to prepare management accounting reports are as follows :.................5
M1....................................................................................................................................................6
Benefits of management accounting system in context to organisation :...................................6
P3.....................................................................................................................................................6
Cost Cards of November and December month.........................................................................6
Absorption costing .....................................................................................................................7
Marginal costing .........................................................................................................................7
Flexible budget of November and December.............................................................................8
M2....................................................................................................................................................8
Management accounting techniques used to do analysis of financial information:....................8
P4.....................................................................................................................................................9
Advantages and disadvantages of planning tools used for budgetary control purposes :..........9
M3..................................................................................................................................................12
Application of planning tools in preparing and forecasting budgets:.......................................12
P5...................................................................................................................................................12
Businesses are using management accounting for solving financial issues of the organisation :
...................................................................................................................................................12
M4..................................................................................................................................................14
How management accounting leads to the sustainable success of the organisation.................14
Conclusion :...................................................................................................................................15
References :....................................................................................................................................16

Introduction
This report focuses on the management accounting and how it helps the management
to make long term and short term decisions. It is the systematic process of collecting,
identifying, summarizing, analysing and communicating the information with the users. The
main objective behind preparing these financial reports is to help the top level management in
planning future corporate strategies. Moreover, it helps to prepare the plan and control the
operations of the concern. By using the management accounting techniques actual
performance is compared with the standard one to figure out the variations and provide the
best services to the customers.
P1
Management Accounting
It is the process of preparing financial reports that would help the management to make
decisions for long term purposes. In this businesses financial transactions are recorded,
classified, summarised, analysed and communicated to help the managers in proper utilization
of resources and plan future corporate strategies. It has various benefits right from taking
important decisions to asset management.(Aslanertik and Yardımcı, 2019 ) Moreover, this
assists in revenue management, cash management, turnover management and so on. This
helps the management in planning the activities of the operations in order to make profits.
It has many benefits such as :
• Planning the operational activities – In management accounting all the monetary and
non monetary information is presented in front of top level management which helps
them to forecast future conditions of the business and do the in depth analysis of the
financial position of the organisation performance. Therefore, it assists managers to
make decisions as per the reports provided by them.
• Taking important decisions – Since, management accounting tools are used to figure
out the actual position of the business concern as well as it provides financial data in the

form of charts, graphs, tables and others which helps the management to get actual
view of the concern and take decisions accordingly. For instance, if the product is not
doing good in the market place managers will take decisions to overcome all the
constraints and frame strategies to avoid any kind of future losses.(Paul, 2020)
• It helps to monitor the performance on regular basis : As these financial reports helps
the organisation to measure the performance on regular basis. In this they uses various
tools of costing like standard costing which helps to find out the deviations. As per this,
management will find out the variations and will take accordingly.
• It helps to increase the productivity of the concern : In management accounting, top
level management set the standards for all the departments and later find out the
deviations or all the weak areas in order to improve the efficiency of the business
concern.
• Better services to customers : After doing the in depth analysis of costs and revenues
management take decisions regarding the cost reduction, quality of products and
others. In this they focuses on providing the best services to the customers by increasing
the quality of goods and reducing their cost. It helps to control the prices of the
products because in this management uses cost control devices to put control on all
kind of extra costs which ultimately is beneficial to customers and raises the profitability
of the organisation.(Batkovskiy and et. al., 2017)
P2
Different methods used to prepare management accounting reports are as follows :
Managerial accountants has to translate all the financial data into useful information
that can help top level management to take all the decisions carefully. The goal is to provide
detailed information with regard to company' s operating activities such as how many line of
products they are offering , how much costs businesses incur and others.
• Marginal costing method : It focuses on calculating the changes in total cost when the
quantity produced is increased by one. In this fixed cost is same, while variable cost