Essential Requirements of Management Accounting Systems

Management
Accounting

Table of Contents
INTRODUCTION..................................................................................................................3
TASK 1............................................................................................................................................3
Essential requirements of different types of management accounting system.......................3
TASK 2............................................................................................................................................5
Different methods of management accounting reporting.......................................................5
TASK 3............................................................................................................................................6
Calculation of costs................................................................................................................6
TASK 4...........................................................................................................................................8
Advantages and disadvantages of various types of planning tools used for budgetary control..8
TASK 5..........................................................................................................................................10
Comparison of organizations................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting act as decision making tool for the managers of an organisation.
It help them to plan for their business, monitor performance and provide path so that they can
control their organisation (Abbasi, Vakilifard and Marouf, 2018). This accounting includes tools
such as budgeting, BEP, cost- volume-profit and variance analysis. In this report we are going to
mention about Marwa Limited which produces scooters for children. They started their
functioning from 1 January 2019. Marwa Limited uses management accounting in order get
information of their financial and other data to make internal decisions.
This report covers essential requirements of various types management accounting
systems, different methods used in management accounting reporting, merits and demerits of
different planning tools. Further this reports covers calculation of cost with the use of proper
techniques of cost analysis to prepare income statement using absorption and marginal cost.
Budgetary control tools, their advantages and disadvantage are also discussed.
TASK 1
Essential requirements of different types of management accounting system
Management Accounting helps to identify, analyse, interpret and convey informations to
managers to achieve their goals. Management accounting systems belong to internal
management systems that provides informations that are useful for managers to take decision in
relation to their operations (Brink, Hobson and Stevens, 2017).
Management Accounting refers to the presentation of the accounting information in such
a manner so that the assistance can be provided to the management for the purpose of creation of
policy and in the day to day operations of an undertaking. This will be quite helpful in ensuring
that the wide range of goals and objectives in the short-term, medium-term and long-term can be
attained in the right manner.
Marwa Limited with these systems do its operations in systematic manner and avoid
wastage of time. They follow following systems in this regard-
Inventory management system- Inventory management system provides information
regarding the stock level of organisations (Dijkman, 2019). This system help the business to
keep an eye on situation like under and over stocking. Marwa limited will get correct estimation
of their stock with this system.

Essential Requirements:
 Marwa Limited will be profitable with this system as it will provide proper estimation of
correct stock, at right place, at correct level, at right time and at right cost.
 Software's of this systems will build transparency in the working of Marwa Limited.
Cost Accounting System- Cost accounting system helps organisations to get generate
actual cost that they have incurred in manufacturing a product or services
(Rahmani and Ghashghaei, 2018). Marwa Limited with this system can know what is the
production cost of their scooters. There are a wide range of principles as well as features which
are associated with this particular accounting system and therefore this can be quite useful in
ensuring that the different types of costs of the organization can be managed properly. This will
be quite helpful in leading towards a higher-level of efficiency and effectiveness.
Essential Requirements:
 This system leads to accuracy which will help company to make less error and complete
its work on time.
 Marwa Limited can easily find out its profit margin as cost of production is easily
determine by them with this system.
Price Optimisation System- This system provides optimal cost of every transaction of
every sale (Remenarić, Kenfelja and Mijoč, 2018) (Schmidt and Günther, 2016). With help of
price optimisation system organisation gets full knowledge about their customers as they may
know how customers will react to different prices of goods and services. Marwa Limited can
generate actual cost of their scooters with this system.
Essential Requirements:
 Marwa Limited can easily analyse situations in which they are going increase price of
their product to earn profit. Situations such as price reduction modify volume of their
sales and revenues, can be easily settle out with this system. Thus, In this way it can be
said that the company has to assess the different types of prices and ensure that they are
able to ensure that the right price is set for ensuring the attainment of the overall goals
and objectives in the future.
 Company can determine amount of potential customers in order to get correct demand
level of its scooters. The managers can make sure that they are able to assess the demand
level in a proper manner and therefore this will be quite helpful in ensuring that the