Management Accounting.

Management
Accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Management accounting and essential requirement of different types of management
accounting....................................................................................................................................1
P2 Different methods uses in management accounting...............................................................2
M1 Benefits of management accounting system and their application.......................................4
Task 2...............................................................................................................................................5
P3 Cost calculation using appropriate techniques of analyse to prepare income........................5
M2 Application of management accounting technique and financial reporting documents.......6
Task 3...............................................................................................................................................6
P4 Advantages and disadvantages of different planning tools....................................................6
M3 Uses of different planning tools and their application..........................................................7
Task 4...............................................................................................................................................8
P5 How organisations are using accounting system to respond financial problems...................8
M4 How management accounting can lead organisation to sustainable success......................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................13

INTRODUCTION
To run a business and making financial decisions management accounting is important that
is the study of accounts and financial statements helps to increase the organisational productivity.
It is uses by all business in order to know how they should be manage activities and financial
decision so competitive advantages can be get in competitive business environment (Chang and
et.al, 2014) (Gersonius and et.al, 2015). The managers are playing important role in organisation
who analysis the information and maintaining the activities in order to increase the business
performance. This report is based on Lets Grow Ltd. that is manufacturing company providing
products and services effectively. This report covers different topics such as management
accounting and its system, reports and planning tools that uses to control the budget, calculation
of cost and application of system that are uses to solve the financial problems.
Task 1
P1 Management accounting and essential requirement of different types of management
accounting
A process which is uses to identify, analyse and measure the information in relation to
accounting that should be managed properly is called management accounting. The managers of
organisation understand their roles and complete the task in order to run business effectively.
Management accounting is important for every business as it helps to prepare the financial
statement and uses systems to run the business and increase the profitability (Honggowati and
et.al., 2017) . In context to Lets Grow Ltd, different types of management accounting system that
are as defined:
Inventory management system – For every organisation in relation to manufacturing it
is important to prepare inventory management system that can helps to keep track record of their
organisation. Whenever organisation produce something in bulk then it is required to keep proper
records of inventory and manage the stock effectively. In context to Lets Grow Ltd, is
manufacturing company for tracking the inventory which are important to maintain to good
performance. Several of the approaches that can be used by the business are LIFO, FIFO and
AVCO. In the LIFO process, the product which is last bought by the client is first sold because
they assume that the last acquired inventory is higher valued than the prior one. In the FIFO
system, the product first purchased by the client will be sold first. Although the total cost of the
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goods is assumed in the AVCO setting, the calculation is assumed (Lindholm, Laine and
Suomala, 2017). Among the three, FIFO Structure is ideally suited because the drug marketed by
the organization belongs to the food sector in which it will first be distributed.
Cost accounting system – This refers as system which is related to cost and helps to
increase the business performance. Cost is important for every organisation as it manufacture
different types of products and services with the help of cost that maintain the high performance.
The managers of business organisation should be focuses on cost that can help to fill need and
wants by defining the cost. For Lets Grow Ltd., it is essential requirement to use the cost
accounting system for the purpose of determining the cost of raw material, labour, overheads etc.
that can help to increase the business activities (Otley, 2016).
Job costing system – This is one of the system of management accounting that uses to
allocate the cost in to different activities which are undertaken by the organisation. It is
required in Lets Grow Ltd. to determine the cost which are divided in to different production and
specification along with activities. This helps to maintain the high productivity and profitability
by determining the cost appropriately and managing the performance.
Price optimisation system – The aim of business organisation is to increase the profits
and attracts customers by providing products at reasonable cost. This system is uses to set the
prices of products and services which are producing by organisation and important to increase
the profitability. Lets Grow Ltd. has essential required of price optimisation system as it is
required to set the prices of their products and services that can help attracts the customers and
manage activities.
P2 Different methods uses in management accounting
Reports are important for organisation as it helps to keep records and information in order
to run business. Management accounting refers as study of financial information and statement to
know manage the activities. In context to Let’s Grow Ltd, different management accounting
reports are prepared by managers to know the financial position in competitive business
environment that helps to increase the business activities.
Different types of management accounting reports are prepared by management of Let’s Grow
Ltd, that are as defined:
Inventory management report – This is important for organisation to prepare the report
in relation to inventory management and tracking the stock for the purpose of running a business
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