Management Accounting Systems and Techniques: A Study on Creams Ltd

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Management Accounting systems and its benefits......................................................................1
Management accounting reporting methods................................................................................4
PART 2............................................................................................................................................5
Cost accounting techniques used by the organization.................................................................5
PART 3............................................................................................................................................7
Different types of budgetary planning tools used by organisation..............................................7
Management accounting helps the business in resolving financial issues................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting refers to analysing cost & operations of the business firms for
preparation of the internal financial reports and accounts. They help the business in effective
decision making process and to achieve the organisational goal and objectives with the available
resources in the most efficient manner. In simple words it refers to making using the financial
and costing information for taking the decisions of the business. management accounting is
mainly concerned with the internal affairs of the company for increasing the productivity and
profitability of the company. Present report is focused on the Creams Ltd that sells doughnuts,
ice cream, waffles etc. Study will provide the knowledge about management accounting system
and its application & the MA reporting methods. Study will also be providing about the costing
techniques used by company. Lastly, report will provide the planning tools of management and
its usage for resolving financial issues faced by the company.
PART 1
Management Accounting system & its benefits.
Management Accounting
It is the method of presentation of accounting information for formulating policies
adopted by management for carrying out daily operation of the business. it helps the
management to undertake all its activities such planning, staffing, organising, directing &
controlling. In the words of (Bromwich and Scapens, 2016)
“Management accounting is term used for describing accounting methods as well as
techniques with the special ability and knowledge, assisting the management to maximise the
profits and minimise the losses.”
As per the Institute of Cost & Management Accountants, London
“It is the application of professional knowledge & skills in preparation of various
accounting information in the way for assisting the management in formulation of the policies
and planning & controlling the operations of undertakings”
Management accounting Systems
MA systems are described as the methods used for managing the different operation of
organisation. There are various types of management accounting systems used by the Cream ltd.
Inventory Management System
1

Inventory or stock management is described as the method that is used by company for
managing the inventories. Companies are using manual inventory management methods by
combining the technology for the effective management of stocks of the company. Stock
management is used by the organisation for keeping the record of all the inventories that are
coming within the organisations such as raw materials and other input products to the finished
stocks that are sold by the organisation (Otley, 2016). Stock management is required by the
company for keeping the record of raw materials purchased for preparing the ice creams, number
of outputs produced and the amount of output sold and remaining in the company. It uses
different methods of inventory management such as LIFO – This is the method where the goods purchased last are sold for the first by the
entity. Good are sold at the prices by adding profit margin and that is seen generally in
perishable goods. FIFO – It refers to method where the inventory that is purchased first is also sold first.
The method is mostly used by the organisations WAC – This includes the method of using inventory by combining all the inventories
purchased and using the prices of inventory on average basis.
Benefits
 Inventory management helps in tracking record of all the inventory movements within
organisation.
 This helps in keeping required stock of inventories for the production process. This helps the management in effective decision making by assessing the frequency of
movements.
Application
Stock management is applied by the company for keeping track record of all the
inventories that are produced by the organisation and materials purchased for production.
Cost Accounting Systems
Cost accounting system is of great use to companies for identifying costs involved in
items for the profitability analysis, valuation of inventories and for cost control. This system is
used by company for keeping the complete record of all the activities and operations that are
consuming costs. It accounts for all the variable and fixed costs. Cost accounting systems also
helps organisation in keeping its cost and expenses of the company under control. This is
2