Management Accounting and Cost Techniques

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Management accounting and essentials of different types of management accounting
system.....................................................................................................................................3
P2 Various methods of management accounting reporting....................................................5
M1 different types of system and benefits.............................................................................5
D1 Management Accounting system report within the organisational process.....................6
TASK 2............................................................................................................................................6
P3 Cost techniques and prepare income statement to calculate cost......................................6
M2 Different management accounting tools..........................................................................7
D2 Financial reports that apply and interpretation of data.....................................................7
TASK 3............................................................................................................................................8
P4 Merits and demerits of various types of planning tool......................................................8
TASK 4............................................................................................................................................9
P5 A critical analysis of how organisation have adapted different accounting approach in
resolving financial problem by management.........................................................................9
M4 Managing accounting system for achieving long term success of business..................11
D3 Planning tool for financial problem................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is a tool which is used to analysis organisational activity with
different tools and techniques with help in collecting relevant information. (Chiarini and
Vagnoni 2015). It is a systematic information which is used for collecting data and information
in an effective manner. Financial decisions-making which aid to planning, controlling
formulation of plans and policies in order to achieve organisational objective. Essentra
packaging which is a manufacturing firm deals in tear tapes and many more, is selected in this
project in which it is been discussed about the concept of management accounting, cost
techniques which is beneficial for company and advantages and disadvantages of planning tool.
TASK 1
P1 Management accounting and essentials of different types of management accounting system
This management accounting tool is a process which describe various activities which is
done to analyse and collect information in terms of monetary (Harrison and Lock 2017). There
are different advantages of accounting which aid in decisions making and also control over
business financial functions. With management accounting system, Essentra packaging can
effectively work in proper manner to achieve organisational goals. This is important for a
company to consider accounting management to their operation for effective planning and
achieve higher growth. It is important for Essentra packaging to use management accounting as a
tool to manage their operations and their related costs so that effective business decisions can be
taken by the manages of this company. Some of the characteristics of MA are been mentioned
below: Study on causes and effects relationships: Financial accounting system which is been
prepared to know profit and loss, so under management accounting system it causes
effects relationship between variables and profitability of business.
 Management accounting in organisation is important tool which is used to analyse
financial stability of organisation in an effective manner.
Management accounting systems are analysed below:
Inventory management system: In organisation there are two main important function
that is manufacturing and production which manages inventory and stock and keeps tract on
organisational structure (Armitage, Webb and Glynn 2016). With the use of this system

inventory wastage can be reduced resulting in higher profit. To increase overall productivity,
company can work on this strategy to avoid less wastage and use optimum resources in effective
and appropriate manner. Some of ratio of inventory which will be help organisation in
impressive way.
 FIFO- (First in first out)
 LIFO- (Last in first out)
There are two main tools which are used by the organisation in day to day operation.
FIFO denotes when product is manufactured and it should be sold out first as earlier as possible
and LIFO denotes or means that after production when stock come last and goes first. The
company uses FIFO method which help to aid profit in effective manner. Essentra Packaging
uses FIFO method and the essential requirement of tis inventory management system are the re
order level, re order quantity, lead time etc. which needs to be taken care of by the management
of the company while implementing this management accounting system.
Price optimisation system: This Model are mathematical programs that calculate demand
varies at different price levels. Price optimisation is use to determine how customer will respond
to different prices of its products and services through different channels. Essentra Packaging
which can increase their sales margin in effecting pricing strategy in different products. Through
this method which will aid to attain more profit company.
Job costing system: Job costing system is for assigning and accumulating manufacturing
costs of an individual unit of output. Company can perform operations by detailed information
which been carried out which aid to relate cost within an accounting period. More over with job
costing system, this company Essentra collects information which will assign job role according
to company roles and duties of employees. Through this system which will help to maintain cost
in effective way.
Difference between Financial Accounting and Management Accounting
Financial Accounting Management Accounting
 The main purpose of using this financial
accounting is in external company. The
accounting is used in internal company
to maintain rules and regulation
 Management accounting is different
from financial accounting. It includes
details of company's available cash, sales
revenue and current state of organisation