Management Accounting

Management
Accounting
1

INTRODUCTION
Management accounting is also known as managerial accounting and could be described as
a procedure of providing the managers with financial information and resources when making
decisions (Akbar, 2010). Management accounting is used primarily by the organisation's
2

management department, and that is the only thing that makes it distinct from financial
accounting. This assignment based on UCK Furniture which is UK based company.
This report includes the various topics such as demonstration of management accounting
system and it include the range of techniques to produce income statement by using appropriate
methods. In addition, it also covers the use of planning tools in management accounting and the
way organizations used to respond their financial problems.
MAIN BODY
PART 1
Section 1
1.1 Explain management accounting and present the essential requirements of different types of
management accounting systems
According to the Institute of Cost and Management Accounting, application of
professional skills in order to manage accounting information in that way which provide useful
information (Callahan, Stetz and Brooks, 2011). By using management accounting, managers
able to formulate policies and build plan to control entire operational activity of organization.
UCK Furniture follow the range of management accounting systems that is essentially required
to maximise their overall productivity and profitability are as follow:
Inventory management system: It is a primarily a discipline which specifies the structure
and positioning of stocked products. It is important to immediately follow the standard and
scheduled course of production and stock of materials at various locations within a facility or
within several locations of a supply network. It is a computer-based system used to monitor
inventory rates, purchases, deliveries, and orders (Hopper and Bui, 2016). This system is used in
the manufacturing sector in some situations to produce a work order, bill of materials, and other
supplies relevant to the product. It is essentially required by UCK Furniture to reduce inventory
over-storage and under-stocking problems.
Job costing system: It is a method of determining the costs they spend to a particular job
that is associated with company. This term is commonly used in the construction industry, which
refers to the distribution of costs at a corporation for specific building projects. Most of the
organizations used this accounting system to set separate cost for each job that is essentially
3

required to minimise the production cost which further helps in maximising productivity as well
as profitability of UCK Furniture company.
Price optimisation: This system used to seeking the perfect spot pricing or price
maximization against consumer willingness to pay. Business up and down the supply chain, both
in B2B and B2C environments, rightly devote a considerable amount of time to market
management and ensure that their goods are delivered efficiently at the right price while still
making decent profits. It is essential for UCK Furniture to meet their consumer expectation
through fulfilling business objectives.
Above mention management accounting systems helps UCK Furniture to manage their
financial information which required by top management to take further decisions or build
strategies for the development of the business (Lavia López and Hiebl, 2014). It is used to
maximise productivity or profitability through improving overall performance of business
operations.
1.2 Explain different methods used for management accounting reporting
Performance report: This report is produced to assess a company's performance as a
whole and at the end of a year, for each employee. In large organizations even various
departments’ performance reports are produced. These success analyses are used by managers to
make important business decisions about the organisation's future. People are often rewarded for
their contribution to the company, and are laid off or treated as needed under performers.
Managers of UCK Furniture use this report to evaluate their overall organizational or employees
performance and further build strategies accordingly to improve the outcomes.
Cost managerial accounting report: Managerial accounting measures the prices of the
manufactured products. All the prices of raw materials, overheads, wages and any other prices
are taken into account. The sums are divided by the quantities generated. Managers of UCK
Furniture get the opportunity to understand products ' purchase prices against their value for sale.
Through these reports, profit margins are calculated and tracked, due to have a good picture of
all the costs involved in the development or procurement of the posts. Production loss, daily
labour costs and operating expenses are all part of cost accounting reports for managers. They
have a clear view of all costs, which is important for better source of information optimisation in
all departments.
4