Management Accounting Systems and Techniques for Innocent Drinks

Management
Accounting

INTRODUCTION
Management Accounting refers to the use of various types of accounting provisions, tools
as well as techniques in order to ensure that the right decision is taken by the managers for the
purpose of increasing the overall level of efficiency and effectiveness in the organization without
problems and issues (Alawattage, Wickramasinghe and Uddin, 2017). Overall it helps for them
in ensuring that they take right decisions in the context of the company. In this way the firms can
ensure that they are able to take the strategic advantage over their rivals by maximizing their
profits and ensuring sustainable growth. In this report, Innocent Drinks has been chosen. It is a
company which provides various drinks to its customers in the market. In this assignment, a
detailed analysis will be made on demonstration of understanding of management accounting
systems, application of a range of its techniques. Additionally, the use of planning tools in
companies and comparison of ways in which they use the management accounting systems to
solve their financial problems will also be discussed as a part of this project.
TASK 1
P1: Management Accounting Systems
It uses different types of tools and techniques of accounting so that the organization can
achieve its aims and objectives without issues and problems and the right decisions can be taken
by the management.
There are different systems which are used in management accounting. An explanation of
these systems is as follows-
Cost Accounting System- In it, the managers make sure that they are able to use the
right techniques in order to control the overall costs and overheads in the organization (Azudin
and Mansor, 2018). The managers of Innocent Drinks can use this system effectively and
efficiently in the right manner so that they can achieve their goals and objectives.
Essential requirements-
 Cost Accounting System helps in the reduction of the overall costs in the company. In
this way it can help the managers of Innocent Drinks to maximize the level of profits.
 Cost Accounting System should ensure that the overheads in the company are absorbed
properly. By doing so it will help the managers of Innocent Drinks to optimize the costs.
Inventory Management System- In it, the managers make sure that they are able to
manage the level of stocks in the company. In the context of Innocent Drinks, it is required to be
ensured that the inventory in the company is properly managed.

Essential requirements-
 It should ensure that the inventory of the organization is managed properly so that orders
are tracked in the right manner. The managers of Innocent Drinks are required to ensure
this.
 It must be able to ensure that the level of inventory in the companies is maintained so that
there are no problems and issues in supply of goods. Thus the managers of Innocent
Drinks must ensure this.
Job Costing System- It is primarily used in those companies in which manufacturing of
goods are done (Bui and De Villiers, 2017). Thus the managers of Innocent Drinks can
make use of this system so that they are able to manage their job orders and ensure their
timely completion.
Essential requirements-
 Job Costing System must ensure that the job orders in company are managed effectively
and efficiently. In this way the managers of Innocent Drinks can properly manage their
job orders.
 Job Costing System is required to make sure that the job orders in the company are
completed on time. In this way the managers of Innocent Drinks can ensure the
satisfaction of their customers and clients.
Price Optimization System- It has to be used by the organizations so that they are able
to set a price for their goods and services which helps them in achieving strategic
advantage (Christ, Burritt and Varsei, 2016). In this way the management of Innocent
Drinks can make sure that they are able to earn higher level of profits.
Essential requirements-
 It is required in the organizations so that they can ensure that they are able to set a right
price for their products and services. The managers of Innocent Drinks are required to
ensure this.
 It is required in the companies so that they can ensure higher level of profits. The
management of Innocent Drinks has to ensure this.
P2: Management Accounting Reports
These Reports are used by the companies so that they are able to analyze and interpret the
relevant information effectively and efficiently (Cooper, Ezzame and Qu, 2017). In this way the
management of Innocent Drinks can ensure that it is able to analyze and interpret the information
to increase the overall efficiency and effectiveness without issues and problems.
The various types of Management Accounting Reports are as follows-