Types of Management Accounting and Reports

This document provides an overview of different types of management accounting systems (MAS) and their essential requirements. It discusses cost accounting system, price optimization system, job order system, and inventory management system. It also explains various management accounting reports such as accounts receivable report, cost accounting report, inventory report, and budget report. Additionally, it includes a cash budget for the coming six months and an explanation of budgetary control and different planning tools.

Management Accounting

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types of MAS along with their essential requirements......................................3
P2.Different types of management accounting reports..........................................................5
TASK 2............................................................................................................................................6
P3. Cash budget for the coming six months ending in August 2020.....................................6
TASK 3............................................................................................................................................7
P4 Explanation of budgetary control and description of different planning tools...........................7
TASK 4............................................................................................................................................9
P5 Compare organisations on basis of usage of management accounting.............................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is described as a reporting system which helps businesses function
more efficiently. It facilitates the implementation of accounting methods and knowledge for
the requirements that assist all staff members within management and also the positive
management of business operations (Căpu bis neanu et al., 2020). In addition, the knowledge that
is collected can be used by administrators to routinely recognise important facets. As well as this,
the financial records will introduce completely separate to make executive decisions more
valuable. The business Lets Grow Ltd a manufacturing firm is chosen in this study to help grasp
the value Management accounting.
MA system is covered in this paper, with its basic necessity, MA documents and their
significance. Furthermore, costing methods used to compile declaration of revenue and to
calculate net benefit. Document also covers; numerous MA planning tools are developed to use
the value of budgetary control and MAS in order to overcome the financial problems.
TASK 1
P1 Different types of MAS along with their essential requirements.
MA is also known as managerial accounting that assists corporate administrators in the
decision-making process and provides financial information. The accounting branch of the
organization usually uses them, although they vary from revenue recognition aspects.
Cost accounting system: Cost accounting structure used primarily by organizations to
do structure cost evaluation to assure profits by projecting expenditures connected to various
operations. Method costing is often used for production units; marginal and regular costing may
be followed for any type of organizational study methodology that helps to assess income and
business risk factor. This kinds of accounting system can be used as an important aspect within
Lets grow to keep the result cost far below estimated cost (Cokins and Căpuneanu, 2020). The
key aim of this kind of accounting is really to maximize customer base by keeping the expense
of various activities as small as possible.
Essential requirement: Analysis of unusual rates of modifications associated with
monitoring total spending for different operations. In this regard, Lets grow ltd makes use of

accounting system for managing actual production costs and also handling all their over-
estimated activities.
Price optimisation system: This is effective system which control prices of products based
on customer responses with aim to maximise profits. This system requires advanced skills of
analysis for evaluation of effects of prices, demand and customer’s responses. The accounting
techniques allow Lets grow to provide evidence and business trends at their customers' demand.
Using this accounting process, respective company typically decide their pricing prices for
commodities and also products. In fact, department sales may change their pricing strategy with
regard to customer specifications.
Essential requirement: It helps companies in determining the price of products in line that
are available in market recent times according to prevailing trends. Production teams all over
Creams Ltd are responsible for setting product rates according to customer needs. In addition to
this; their rivals' actions may also be evaluated (Knudsen, 2020).
Job order system: Also, it provides quick analysis of job processes to determine which
process is cost effective or not. Moreover, the costing system for job orders is a beneficial tool,
because it requires all consumer demands to be met properly. Additionally, it is also
advantageous to accomplish business milestones including better profits and more happy
consumers. The accountability for this system is to raise and calculate expenses for individual
staff, positions or orders (El Deeb, 2020). This will make for accurate estimation and separate
analysis of the costs involved with each operation of Lets grow.
Essential requirement: It will allow Lets grow ltd to measure costs associated with the
generation of output figures. The accounting method is used to do cost-related analysis within
each object generated by recognition and cost-to-work calculation. It will help them produce
reliable and precise outcomes.
Inventory management system: It helps managers to make sure that they have enough
products or supplies that they need to produce the finished product. There are multiple forms of
methods to inventory assessment to handle stocks within businesses. By using techniques of
inventory control, Lets grow a manufacturing companies can properly manage its warehouses by
establishing accurate stock buying decisions. The entire program requires a considerable number
of methods such as Average expense, LIFO and FIFO. It is important that manager of

company make appropriate disciplinary measures to handle retained inventory levels to
maximise the production.
Essential requirement: This accounting system guarantees that stock prices that are
allocated are calculated efficiently. This system is built for machine reducing cost and will result
in a reduction in production-related costs within Lets Grow Ltd.
P2.Different types of management accounting reports.
All Essential reports of management accounting offers effective ways to deliver information
to top executives and assist them in crucial administrative works such as decision taking,
planning etc. Many of these reporting processes address different facets of MA program and
organisation.
Account receivable report: In accordance with such a report, financial managers are
making further plans about the requirements for funding to support activities and functions.
One main advantage of this is that under it, data is recorded regularly so that managers can
effectively review debt level. Thus, Lets grow finance team will create use of vital information
by helping with this study they would be able to recover their debt holders' current debt
obligations. This will contribute to satisfactory outcomes when they are able to obtain debts that
are being issued on time (Kalifa and et. al, 2020) Finally, corporate financial teams typically use
the entire report as it can provide valuable information of how many borrowers do not repay debt
far beyond the time period for means of this study. In Lets grow Ltd, the managers use this report
to preserve detailed details on the sum which contributes to a date of delivery for the customer.
This enables individuals to assess the exact success to be attained in the future.
Cost accounting report: This is classified as a form of report containing details of activities
and business expense. Report: Furthermore, the tasks are categorized according to the levels of
expenditure. The purpose of this report is really to demonstrate numerous more costly aspects
and components (Ertl and et al, 2020). Let’s Grow Ltd accounting department uses this study to
monitor gross costs below the normal level.
Inventory report: Documenting of information relevant to the inventory level stored in the
warehouse is signifies with this report. The report’s main purpose is to provide additional help to
the division of production in which sufficient steps apply to the amount of units needed and
several other factors (Hanley, 2020). In Lest grow Ltd stock data is mentioned in this report

which defines the total goods ready for sales, total raw material in warehouses and quantity that
is being utilised in processing unit.
Budget report: It is a vital study for assessing market performance and producing sales for
small, large, and medium-sized businesses. Thus, each organization carries out a master budget
plan that is properly considered and allows the business to monitor operation in a manner that
produces in improved income. Lets grow ltd is designing budget forecasts that allow staff to
support staff and reliably forecast revenue and expenditures. That is in turn linked to the fact
which businesses assign workers in compliance with their requirements to all sectors and that
activities are performed. If Lets grow Ltd wants to expand, this arrangement therefore needs to
ensure that all planned activities are handled within the already approved budget. It is beneficial
to the company as the departments will provide enough resources to conduct all their duties. This
analysis is also useful for businesses to assess the discrepancy between actual and planned costs
and even revenue. Although of this administrators take sufficient action for next year's financial
report.
TASK 2
P3. Cash budget for the coming six months ending in August 2020.
It is really important to have a cash budget particularly for smaller businesses. This helps a
business to calculate the volume of credit it may lend to clients without liquidity issues. A
financial allocation tends to prevent a lack of funds at occasions when a business faces a large
amount of expenditures. The financial allocation also allows Lets grow Ltd to meet spending
targets and offers insight about how thy handles financial on a daily basis. To comprehend cash
flow is essential to understand that from where and how the cash moves in or goes out. This plan
could avoid severe liquidity crisis in future situations.
Estimated Cash budget.
Particular March April May June July August
Balance at bank 20000 20000 49000 47000 13000 -9000
(A) Receipts
Collection from
credit sales 30000 156000 168000 124000 144000 162000
Amount received
from customers 96000
Total (A) 146000 176000 217000 171000 157000 153000

(B) Payments
Credit purchase 50000 70000 80000 90000 100000
Loan 20000
Wages 30000 30000 30000 30000 30000 30000
Rent 4000 4000
Depreciation on
fixed assests 2000 2000 2000 2000 2000 2000
Variable overhead 10000 15000 18000 12000 14000 16000
Fixed overhead 30000 30000 30000 30000 30000 30000
Suppliers for
purchase 50000
Total (b) 126000 127000 170000 158000 166000 178000
Total (a) - (b) 20000 49000 47000 13000 -9000 -25000
TASK 3
P4 Explanation of budgetary control and description of different planning tools.
The method used by the company to plan the estimated budget including an evaluation of
actual budget results to determine variability is called budgetary management. By comparing the
numbers being measured, the company will recognise differences that prevail inside the
numbers, allowing them to take effective steps without uncertainty (Otley, 2016). This
monitoring is crucial because excess expenses have an adverse impact on corporate earnings.
The method is helped ensure by the mangers of Lets Grow Ltd. Money planning is used as an
internal tool to monitor spending, like departmental structure, budgeting, performance estimation
and budget appraisal as well as to identify the commitments along with budgetary objectives to
produce results that are productive or competitive. This functions as a corrective measure with
regard to financial factors and can be accurately measured on this framework fluctuation in profit
along with expense.
The main justification for using budgeting process by Lets Grow Ltd. is because it has a
method that has an important role to play in the company's growth. For most activities, the
effective financial management structure aims to organize and ensure that the company performs
efficiently (Cooper, Ezzamelm and Qu, 2017). This offers working resources and other services
available in an acceptable way by the company. These include top-level managerial support,
setting up an evaluation system, quantifying an organization's priorities, concrete objectives,

organizational plans, staff involvement, the complexity of all operating dimensions, a robust
accounting structure etc. Budgetary management is often used like a cost-reduction tool by
which the enterprise that includes fiscal expansion, coordination among various departments,
functions and operations, a positive analysis of spending and the results needed to achieve the
better savings or losses. This is beneficial for companies as variance in estimates and real costs is
taken into account. To this purpose, the planning resources are listed below:
Cost budget: This is defined as the financial schedule listed as consumer costs for the
previous year. This shall be responsible for listing the costs involved in the procedures and
activities undertaken. Manager of Lets Grow Ltd. use this budget, for making calculation of
actual costs used on different operating and noon operating operation. That further provides
assistance to determine the variance between the actual and budgeted cost.
Benefits: Cost budgeting is responsible for managing company's incoming spending through
with this; it promotes transfer across productive capital-related networks. This will help Lets
Grow Ltd manager to evaluate the real cost rates over a specific interval of time.
Drawbacks: It is the period that systems decide the calculation of costs because the system
takes ample time. Management frequently predicts a difference in the spending sense, but often
does not meet expectations.
Zero-based budgeting: This budgeting starts from base zero and analyses the new amount
or cost needed to perform particular task. The expenditure mentioned in the budgeting cycle
must be supported with proper justification. Lets Grow Ltd. managers ensure the increase in
spending must be clarified within the budgeting framework before the final budget is
implemented. This budget seeks to reduce extra spending (Nitzl, 2016).
Advantages: ZBB acts as an effective effort to stimulate businesses to deal effectively with
company funds, since it does not rely heavily on following financial figures. This will help to
ensure accountability and consistency of the annual reports of Lets grow Ltd.
Disadvantages: It needs time to shift towards sustainable budgeting policy consistently and
sometimes quickly. Through this way, Lets grow Ltd. should only prioritize costs instead of
other things, as it would take long. Each cost has to be clarified and handled such that small
businesses have trouble opting for the same.
Capital Budgeting: The company will use this framework to detect its expenditures as such
is to be authorized and the proposed reduction in working capital. This offers an appropriate

context for assessing the practical interpretation of expected spending on fixed assets (Hall,
2016). This will help Lets Grow Ltd. evaluate investment in the marketplace and further support
to increase the overall profitability.
Advantages: This helps Lets Grow Ltd. predict high expected returns on investment
opportunities present in the market considering the risk factors. . It helps executives make sound
financial decisions which can help them to grow profit margin and recover the invested amount.
Disadvantages: Capital budgeting plans are typically long-term and potentially
unsustainable. This is Lets grow Ltd if capital investment decisions are incorrect, long-term
viability or survival within the company would be impacted.
TASK 4
P5 Compare organisations on basis of usage of management accounting
In present dynamic business environment organizations encounter unique financial
challenges, due to which operation and profitability gets impacted. Many of the challenges Lets
Grow Ltd faces are set out below:
 Stock mismanagement: As demands of customer are chaining very fast, the business has
numerous difficulties in handling these shifts. As demand increases, consumers are
attentive and expect changes in services. Due to this old stored stock level gets out-dated
and company have to order new one fulfil the market requirement. As a results huge
amount of lets Grow ltd gets wasted are there is mismanaging of stock level.
 Liquidity crisis: Unexpected defaults, excess debts, weak asset quality, low income,
decreases in revenues, savings and several other factors contribute to uncertainty in the
company's problems (Makrygiannakis and Jack, 2016). Due to lack of cash liquidity
many time situation arise that activities gets delay and there are chances of reducing
profitability.
MA methodologies for responding to financial difficulties are used by the manager of Lets
grow Ltd that are discussed underneath:
Key performance indicator: It is a form of method linked to the analysis of organization's
financial and non-financial perspectives. The productivity of sales, management of different cost
and stock etc. are taken into account inside this financial performance measures. This includes
partnerships with administrators and employees, conflict control and so on with non-financial

organizations. In order to detect the issue of stock mismanagement, Lets Grow Ltd uses this
method that enables them to determine the reason for wastage use of stock. Benchmarking: It is liable for comparing financial dimensions of firm with their
strategic businesses that aims at identification of unfavourable variations. It aids
businesses within figuring out which will lead to financial issues for organisation.
Furthermore, manager of Lets Grow Ltd make use of benchmarking for assessing real
monetary issues or define the reason of lack of liquidity. It further enables them to
associate these financial aspects with other organisations dealing within the same
industry. Financial governance: This is an essential tool of MA concerned with the creation of
structured corporate information reports that are responsible for the issuance of strategies
that enables to overcome kind of financial problems (Hiebl, 2018). This is used by Let
Grow Ltd manager in tracking the each and very financial happing related with cost and
inventories and make further enables them to regularly analyse these records to find the
ways to overcome different financial issues.
 Comparison of organisations depending on management accounting system:
Basis Lets Grow Ltd Harvey Water Softeners
Issue face by
company
The company faces issue with
improper management of
organisation's stock.
The issue face by company is
linked to a lack of liquidity. This
is due to lack of proper resources
for successful completion of the
research as well as secure
relating to its decisions and
processes.
Management
accounting System
The organization uses
inventory management method, as it
is sufficient to handle issues
associated with stock management.
This system contributes to
productivity achievement and also
activity and process performance.
Manager uses Cost accounting
system to resolve the problems
associated with liquidity
shortages. This allows firms to
monitor business free cash flow
and also encourage firms to
maintain relevant cash levels that

Along with such user demands can be
meet them in an acceptable way with
help of this system.
are responsible for maintaining
estimated cash levels that are
responsible for making sure
proper functioning.
Technique Implementation of KPI metrics is
important because it supports market
executives in tracking inventories as
well as enhancing productivity
(Rikhardsson and Yigitbasioglu,
2018).
Financial governance is among
the most powerful methods for
collecting, controlling,
monitoring and governing
corporate financial tracks from
which all of the company's
related functions and processes
can be properly managed. This
will allow them to ensure
sufficient liquidity is maintained
within the company.
CONCLUSION
In the end of report, it has been concluded that accounting for management is an
internal program process that provides the required information for the specific management
levels. It results in decreased production costs along with improved sales and profits that
automate organizational functions. This will help them maintain profit margin through profit
preservation, timing of sales, short-term acquirement and working capital. In addition, there are
other statistical approaches used for modelling as well as analysing organizational-related
expenditures under the term organizational control.

REFERENCES
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