(PDF) Management Accounting

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and essential requirements of management accounting systems...1
M1 Benefits of management Accounting systems......................................................................3
D1 Integration of management accounting system and report within organisational process....4
P2 Different methods of management accounting reports .........................................................4
TASK 2............................................................................................................................................6
P3 Usage of the techniques of cost analysis to prepare income statement by using marginal
and absorption costing.................................................................................................................6
M2 Applying range of management accounting techniques.......................................................8
D2 Interpretation of above data...................................................................................................8
TASK 3............................................................................................................................................9
P4 Advantages of different planning tools used for budgetary control......................................9
M3 Analyse the use of different planning tools and their application for preparing and
forecasting budgets ..................................................................................................................10
TASK 4..........................................................................................................................................11
P5 Adoption of management accounting systems to respond financial problems ...................11
Contribution of management accounting in sustainable success of the organisation while
responding financial problems..................................................................................................12
D3 Application of planning tools to respond financial issue along with attainment of
sustainable success ...................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES.............................................................................................................................14
INTRODUCTION
Management accounting introduces as an useful process of preparing management
reports as well as accounts also. As it give timely and accurate statistical and financial

information which is required by business managers to make short-term or day-to-day decisions.
This type of accounting only followed by the internal team within an enterprise, and this is only
thing which creates it dissimilar from financial accounting. There are different benefits of
management accounting for an organisation such as decision making, planning, controlling
business operations, organising, understanding financial data, identifying business problem
areas, strategic management and so on. All these are main advantages of management accounting
which will help an organisation in its success and growth at marketplace. For this project Oshodi
Plc is chosen manufacturing organisation which mainly specialise in manufacturing of JOJO fruit
juice in all age bracket. The main purpose about conducting this this project is to give accurate
data to the internal stakeholders within an organisation. This information mainly related with the
functioning of the internal departments for effective decision making.
This report divided into different parts which covers understanding of management
accounting systems and different techniques of management accounting. This report will also
include effective techniques of cost analysis which will help an organisation in preparation of its
income statement with the use of marginal and absorption costing. Along with this, advantages
and disadvantages of different types of planning tools for budgetary control will be cover in this
report. At last, importance of management accounting in solving of financial problems will be
include in this assignment.
TASK 1
P1 Management accounting and essential requirements of management accounting systems
Management Accounting: It is the concept which includes usage of different accounting
systems behind the preparation of various accounts which depicts information related to different
departments of the organisation. All such information is further used by the manager of the
organisation to build decision making for effective operation of day to day functions(Zoni, Dossi
and Morelli, 2012). These systems further used in the process of making reports which aid to
gain the information to analyse the results. Afterwards, organisation is able to made changes in
their strategies in accordance to the deviations noticed after comparison of actual result with
standard. This will further aid in attainment of results in accordance to standard set by the
management.

Management Accounting system: These systems are different type of accounts prepared
by the accountant to grab the information about the strength of internal departments working and
their contribution behind accomplishment of desired results. The different type of systems which
are prepared by Oshodi includes cost accounting, job costing. Inventory management and price
optimisation system. All these systems are different in nature and having their own contribution
within the organisation. Through proper study of all the information, manager able to get insight
into the departmental functioning(Bryer, 2013). The functioning of different accounting system
has their own contribution in the development of the organisation and accomplishment of the
objectives that can be ascertained from the description presented below:
Cost accounting system: This system is used for the purpose of analysing total cost of
the product. The same system is used by Oshodi to analyse the cost they incurred in the process
of preparing JOJO fruit juice. The main advantage that can gathered by the organisation with the
help of this method is about ascertainment of the financial performance by input results with the
actual. Also, this will help the management is ascertaining the contribution made by the JOJO
fruit juice in process of creating profit.
Inventory management system: The main function of this system is about effective
management of stock within the organisation by tracking the level of inventories they have at
warehouse. For the same purpose, Oshodi use this system and further use the results in creation
of work order, bill of materials in respect of the inventories which are used in preparation of
JOJO fruit juice. It improves the inventory management of the organisation and allows to track
the whole supply chain which is used to handle the whole process from production to retail.
Another benefit which is associated with this is about maintaining the inventory and focus on
continuous production of JOJO fruit juice without any disruption. The methods that can be used
very frequently in management of inventory are named as LIFO, FIFO and AVCO. To manage
the inventories in warehouse the method which is used is FIFO. For the purpose of ascertaining
the time period for re order of the raw material EOQ method is used(Grabner and Moers, 2013).
This will help to grab the information about the time period under which organisation has re
order their inventories.
Price optimisation system: The main function of this system is about ascertain the
behaviour of consumers on the different price of the fruit juice. The main advantage is that it