Significance and Essentials of Management Accounting Systems

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1. ................................................................................................................................................3
Explaining the significance of MA and essentials of different MA systems...............................3
Describing different methods that are been used for reporting....................................................4
Evaluating benefits and the application of the various MA systems ..........................................6
LO2..................................................................................................................................................7
LO3..................................................................................................................................................9
Evaluating different planning tools that are been used under budgetary control........................9
Analysing uses of different budgetary tools .............................................................................12
LO4................................................................................................................................................13
Comparing the use of different MA systems by the firm in order to respond the financial
problems ....................................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting refers to the process of facilitating financial information and the
resources to managers in respect of making suitable decisions. It is been used by the internal
team of an enterprise which reflects the information regarding the performance, budget,
receivable, cost etc. that helps in smooth running of the business operations in an overall market.
MA is the practice that assesses the cost of business in preparing of its internal financial reports
and helps the managers in setting financial and the costing data, thereafter converting such data
into the useful information for the manager in an enterprise. The present report is based on
Agmet Ltd which is a medium sized manufacturer of UK that deals in chemical products.
Furthermore the study involves role of management accounting and highlights relating to the
different MA systems and various reports that are been prepared for the purpose of reporting.
Moreover, the study also includes the evaluation of the different planning tools under the
budgetary control with the systems that are used by the firm in order to respond with the
financial problems.
LO1.
Explaining the significance of MA and essentials of different MA systems
Management accounting is considered as the most valuable tool because it helps in
analysing the real and the value cost that incurred within the operations of a manufacturing firm.
This type of information is been used internally by the managers in order run the company in a
better way. Management accounting to a large extent differs from the financial accounting as
under MA an Agment Ltd need not have to follow the accounting standards and the principles
while under financial accounting, at the time of preparing the financial statements all the
accounting standards need to be follow (Rasyid, Sugiarto and Kosasih, 2017). MA includes the
decision making regarding monetary as well as non-monetary aspects of the business. MA helps
the Agment Ltd in making for an effective plan and ensuring adequate controlling over the
activities so that if there any deviation, corrective measures could be adopted. However,
Financial accounting enables the company in recording financial performance for a particular
accounting period and presenting the financial information to the users. There are various MA
systems that plays a crucial role in the smooth functioning of an Agment Ltd are as follows-
Cost accounting system- It is the system that includes recording of the production
activities of an Agment Ltd by using a perpetual system of an inventory. In other words, this

system is been designed for tracking the cost incurred at different level of the production stages.
It acts as the most important system for an entity in estimating their product cost which in turn
helps in making the profitability analysis, cost control and an inventory valuation. It helps in
evaluating the accurate cost of the product in order to achieve profitable operations as through
this system a firm can find out the products that are not profitable.
Price optimization system- It reflects utilization of the mathematical procedure by an
enterprise for the purpose of finding out the reaction of the buyers towards different prices set for
the product or the services through the use of diverse channels (Kurniawan and Azmi, 2019).
This system of MA is the model that helps an Agment Ltd in calculating varying demand of the
customer at different level of price and thereafter combining data with the information regarding
the cost and the inventory levels fro recommending best prices that leads to improvement in the
profits. This allows the company in using the pricing as the powerful tool of profit lever that
often is been underdeveloped. This system could be used by an Agment Ltd for tailoring the
pricing in respect of the customer segments through stimulating the way in which the targeted
customer will be responding to the changes in prices with the data driven areas.
Job costing system- It includes practice of accumulating the information regarding the
costs attached with the particular service or the production job. This information is required for
submitting cost information to the customer under the contract where the costs are been
reimbursed (Bempah, 2015). This system plays a vital role within an Agment Ltd that provides
for the products or the services in varying cost that depends upon the customer specifications.
Inventory management system- This system reflects a combination of the technology
and the procedures that oversees maintenance and monitoring of the stocked products in order to
assess that whether those goods are the assets, supplies, raw material or finished product of an
organization (Lawrence, Karlsson and Thollander, 2018). This system helps an enterprise in
managing their inventory, keeping track over the items so that inventory needs could be analysed
and in turn automate the ordering process of the firm which results in quick delivery of the
product.
Describing different methods that are been used for reporting
Under MA, an Agment Ltd prepares for different reports that is been used for planning,
decision making, measuring and regulating the performance of the firm. Such reports are
continuously been generated for an entire period as per the requirements. Most of the critical