Management Accounting Concepts and Techniques for Decision Makers

MANAGEMENT ACCOUNTING
CONCEPTS AND TECHNIQUES
FOR DECISION MAKERS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
Understanding Management accounting system.........................................................................3
Advantage and disadvantage of planning tool used for budgetary control..................................6
Part 2................................................................................................................................................8
Comparing how organization are adapting management accounting system to respond to
financial problem.........................................................................................................................8
Producing financial report............................................................................................................9

INTRODUCTION
Management accounting is process of making report of the business activity operation
that help the mangers to make short term and long term decision by identifying, measuring, and
analysis the information by the mangers (Amara, Benelifa, 2017). This report highlight the
management accounting fundamentals that involve the business environment and their operation
in the environment. The report of how management accounting applies financial information and
data ton assist in planning decision, monitoring the finance of the company. By successful
completion, students shall ready to present the financial statement and help the senior manager
involve in financial planning. Whereas, they also learn the fundamental skills and knowledge in
the field. Management accounting assist the manager and owner to monitor the company's
performance and prepared throughout the year. Manager or owner can also request report for
weekly, monthly or quarterly depends on the nature of the company.
MAIN BODY
PART 1
Understanding Management accounting system.
It is also known as the managerial accounting system. Management accounting helps in
to provide the financial information and data to managers of the company for the decision-
making purpose. Its only involved the internal management team of the firm which make it
different from the financial accounting. Management accounting gives the financial data to
assist, monitors, planning and decision-making and manages the financial management of the
firm. Management accounting is a process where measures the data, identify, interpret and
anglicizing the financial information of the data to achieve the target goal of the company
(Hamamura, 2019). The process of preparing the management accounts are offer on time,
accurate statistical financial information needed by the management to complete day to day task
of the firms. They show the report which are prepared to fulfil the requirements of the
management. Accounting shows the data which are measures, identify and interpreted the
economical data for the decision. Management accounting system applications varies in the data.
Every management accounting system gives various information based on the requirements of
the firm's management. There are various kinds of management accounting system with their
various objectives and functions where all the elements creates the standardized context of the
data to analysis and communicate the data in accounting system.

 Cost Accounting System: It is the costing system is a framework used by the various
companies to calculate the cost of their products and analysis the inventory valuation,
profit analysis and to control the cost of the firm. In this cost system cost is performed on
the basis of activity based costing system or by traditional costing system. It shows the
approximate actual cost of the product for the effective functioning. Cost accounting
system is an accounting system which focuses on the cost of production considering the
inputs cost occurring on every production step plus fixed cost occurring in the production
like equipment depreciation. Cost accounting Measure cost individually and record and
then comparing the actual input of production and output from the production to compare
the financial performance of the firm. It is key concept in the management accounting as
they provide analytical tool like budgetary control, standard costing, marginal costing,
operational costing and inventory control of the firm to manage and work in the
efficiently. Cost-volume-profit : It helps the management to understand the relation between cost,
sales, volume and profits. It is an effect which are made by the cost on the profits and the
activity of financial report. They also known as Break even analysis which determine the
break even pointy for different level of sales volume and cost occurring which is useful to
manage the short term decision-making. It assumes the various factors like sales price,
fixed cost , and variable cost remains the same. Budgetary control: It is the process where budgets are prepared for the future period and
can be compared to the actual performance to know the variances of the company and
can be taken correct steps. This comparison brings out the discrepancies and correct steps
can be taken to avoid the losses. Budgetary control is the continuous process for the
organization which help in to stick with the plan and coordinating with management. Marginal costing: It is costing technique where marginal cost is a variable cost and are
charged from the cost of unit and fixed cost is written off completely against the
contribution. It can be calculated by dividing the change into cost of production by
change in quantity of the product. (Nan, 2019). Absorption cost: Is the marginal accounting method for calculating all the cost related to
the manufacturing product either direct or indirect cost such as direct material, direct