Management Accounting

Management Accounting

Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1 Explanation of management accounting along with essential requirements of its systems.................3
P2 Description of different methods which are used to report information of management accounting. .4
M1 Evaluation of benefits of all the systems which are used for in organizations...................................5
TASK 2..........................................................................................................................................................6
P3 Calculation of costs with the help of different costing techniques such as absorption and marginal
costing.....................................................................................................................................................6
M2 Application of range of management accounting techniques to generate financial reporting
documents................................................................................................................................................8
TASK 3..........................................................................................................................................................8
P4 Explanation of budgetary control along with advantages and disadvantages of different planning
tools which are used in it.........................................................................................................................8
M3 Analysis of various planning tool’s use in preparing and forecasting budgets................................10
TASK 4........................................................................................................................................................11
P5 Comparison of different organizations on the basis of use of management accounting systems to
respond financial problems....................................................................................................................11
M4 Assessment of the way in which companies are using management accounting to respond financial
problems and the way in which it can lead entities o sustainable success..............................................12
CONCLUSION.............................................................................................................................................13
REFERENCES..............................................................................................................................................14

INTRODUCTION
Management accounting is one of the main aspects that all companies rely on to ensure that
produces accurate reports are drawn up that can better assess the businesses' market presence.
Unless the companies are unable to produce it, then insider entities such as staff, managers and
investors will put effect on political mindset as they analyze and evaluate confidential documents
to determine the company's current role. It demonstrates that it is really necessary for all
researchers to implement it each year so shareholders' interests can be improved (Bulgakova and
et.al, 2018). This report based on the AJ & Sons, A consulting firm provides consumers with
knowledge and consulting services and improves corporate profit margins. One of client
Innocent drink face the problem of COVID 19 so consulting firm provide the advise to apply the
management accounting. Management accounting analyses, their systems, their basic criteria,
documents with details, costing strategies including such marginal and absorption costing etc. are
numerous topics covered in this project. Furthermore, this research also discusses the preparation
methods alongside their benefits and challenges, the analysis of organizations based about the
use of management accounting systems to react to economic challenges etc.
TASK 1
P1 Explanation of management accounting along with essential requirements of its systems
Management accounting is the method of monitoring, assessing and reviewing all the
measures the management takes to develop the business in order to evaluate the organizational
value. In Innocent drinks supervisors use it to assess real business performance. Multiple types of
systems that are listed following have been used during performing it:
Price optimization system: All companies use this management accounting system to set
suitable prices for all goods and encourage greater number of customers. It can be used in
Innocent drinks to measure consumer reactions to the price levels of juices and smoothies. It is
important for the company as it lets management establish the most appropriate price for the
product offered either by company, which is helpful in achieving business objectives such as
rising wages and income (Chibili, 2019).
Cost accounting system: Within this accounting system administrators hold accurate records on
all the expenses that happened when the company runs. Company utilizes it in Innocent Drinks

to obtain reliable information about the performance that lead to higher expenses. It is crucial for
the organization to devise cost containment plans, as it will direct the calculation of the all the
costs that may arise in the future when going to carry out another operational activities.
Job order costing system: The businesses engaged in various operations use this method to
meet all customers’ needs in compliance with their preferences. Innocent drinks use work order
costing so administrators can take care of all the work that they do and conduct services. One of
the main aspects of this framework is for the organisation to direct all various aspects of business
and ensure that they execute well all tasks as per client expectations in order to achieve lengthy-
term goals.
Inventory management system: It is often used by organizations to routinely evaluate the
inventory used only to conduct the all activities. Innocent Drinks executives use it to determine
when they have enough products to satisfy consumer specifications (Goddard and Simm, 2017).
There are three distinct forms of it, the following:
• First in First out (FIFO): This inventory management system is being used by organizations for
the production of products using actually bought items.
• Average cost (AVCO): only those products have been used in this technique of inventory
management on an estimate based for the manufacturing processes.
• Last in First out (LIFO): This technique of inventory management is put into account so if
companies use the inventory actually owned to carry out activities.
From all of the other management accounting systems mentioned above, Innocent Drinks
uses FIFO as it allows allowing good use of all resources. Its basic business necessity is that it
advises managers are responsible for ensuring that the correctly are using all the stored products
to conduct all the activities.
P2 Description of different methods which are used to report information of management
accounting
For the purposes of developing documentation of entire years, unique procedures are
performed in all organizations so that internal users can evaluate existing organizational
performance. This method is called Accounting Management Reporting. Executives use this in