Management Accounting and Reporting Methods

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
P1 Definition of Management accounting and essential requirement of different types of
management accounting system for organisation........................................................................1
P2 Different methods used for the management accounting reporting.......................................4
P 3 Calculation.............................................................................................................................5
P4 Different types of planning tools and their advantages and disadvantages............................9
P 5 Organization responding to financial problems with help of management accounting
systems.......................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The MA could be described as the process of analysing the business cost and operations
for preparing the internal financial reports, accounts and records to enable the managers in
decision making to achieve the business goals. In simple words it involves utilising the costing
and financial data for making essential decisions for improving the efficiency and productivity of
the enterprise. MA is also used by the management for formulating financial strategies by using
the budgets, forecasts, costing techniques and other accounting tools. Present report is based over
Innocent drinks providing fruit juices and other energy drinks. Study will demonstrate the
concept of MA and the different systems of MA used by the organisations to manage the
operations along with their requirements and benefits. It will be providing about the different
MA reporting methods used by the firm. Further the report will also provide about the different
costing techniques used for preparing profit or loss statement in MA to identify profits or losses
occurred. Further the study will cover the different planning tools under budgetary control with
their advantages and disadvantages. At last it will provide about the MA tools used by the entity
in resolving financial issues.
MAIN BODY
P1 Definition of Management accounting and essential requirement of different
types of management accounting system for organisation
Management accounts includes various accounts of firm that need to be managed so that
company can easily operate its business and achieve its objectives.
Thus, it is process that helps in preparing reports about the way business operates at the same
time assist manager in taking appropriate decision for growth and sustainability of enterprise in
highly competitive market. Management accounting helps in identifying, analysing and
measuring various statistical information so that correct decision can be made by manager for
benefit of organisations. There is difference between two terms that is management accounting
and finance accounting. Such that finance accounts are mostly useful for external parties such as
investors, shareholders, suppliers and customers to know credibility of firm so that they can
invest or lend money or supply raw material at credit for smooth operation of business
(Căpușneanu and et.al., 2020). Manager of innocent drink in order to take decision related to day
to day operation make use of reports or accounts so that firm can cope up with external changes
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and achieve its objectives. It can be stated that management accounting system vary as per their
application or uses in the organisation thus it provide information as per requirement of manager.
Job costing, price optimisation, inventory management and cost accounting system are different
kinds of accounting system that are used by manager of innocent drink with different objectives,
function to take best decision. Therefore, essential requirements of different types of
management accounting systems for innocent drink can be illustrated as follows:
Price optimising system: It assist manager of innocent drink to understand the way customers
will react on particular price or communication channel that is set or used by organisation. Price
optimising system helps manager in determining best prices at which various products or
services needs to be delivered to customers. So that they can be influence to be part of
organisations for satisfaction of their needs. Most of the customers while taking decision to make
purchase compare actual price with value delivered by company in order to get maximum value
(Taschner and Charifzadeh, 2016). Therefore, innocent superior manager by use of price
optimising software can easily set best possible price that attract more and more customers to
prefer products and services of specific company rather than other competitors in industry.
Cost accounting system: It is frameworks that is used by manager of innocent drink to estimate
actual cost that company have to bear to manufacture specific products and services within
organisation. Cost accounting system enable manager to identified products that are more
profitability for organisation. Manager find actual cost incurred by company to produce final
goods by weighting actual expense that it have incurred to purchase raw material( variable cost)
plus fixed cost (machinery and land and building). Manager of innocent drink by comparing
actual cost incurred with selling prices is able to identified total profit earned by enterprise from
specific products and services (Gatti, 2018). Therefore, it can be stated that it is key concept as it
helps in controlling budget, setting appropriate prices at which products or services need to be
offered to customers so that company can earn maximum profit margin.
Job costing report: It is another management accounting system that is essential for organisation
as it helps in identifying or tracking actual cost that will incurred to complete on going project. In
another words, it helps innocent drink manager to evaluates or compare production performance
with estimated standard set by firm. These job cost are further classified or divided into three
common cost such as labour, variable cost and material cost, overhead (Fleischman Johnson and
Walker, 2017). It helps manager to track actual revenue and cost that company have incurred to
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