Report on Management Accounting in an Organization

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Different systems of management accounting which are necessary to implement..........1
P2 Different kind of reports used by management accountant...............................................4
TASK 2............................................................................................................................................6
P3 Calculation of costs through appropriate techniques and differences between them.......6
TASK 3..........................................................................................................................................10
P4 Merits and demerits of various budgetary plan techniques.............................................10
P5 Management accounting system used by business to deal with financial problems.......11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a process that is adopted in each small and big firms to make
a report on various activities of business. The report made under management accounting is
formed after making an analysis and detailed interpretation because of which the top level
management cam take decisions after having an overview from the management accounting
reports. The report is usually prepared on monthly basis for all departments and sections of
company so as to take decision on overall basis for entire organisation. The present report is
made on the management accounting in which the chosen company is Oakwood guest house in
which there are maximum 50 members in its workforce where annual turnover is below
£500,000. The report will have a discussion over management accounting and various essential
requirement to make it (Baldvinsdottir, Mitchell and Nørreklit, 2010). Further, the report is going
to make a discussion over the range of methods that are used for management accounting reports.
Besides this, the calculation of costs will be done with the help of different techniques of
absorption and marginal costing ways. Apart from this, the report has the description of merits
and demerits of planning tools have been done which will help in knowing different tools and
methods of planning process.
TASK 1
1.1 Different systems of management accounting which are necessary to implement
To: General Manager, Aron Smith, Oakwood
From: Management Accounting Officer, Marius Marin Iosif
Date: 6th October 2017
Subject: Different types of management accounting systems
The management accounting is a report that is used extensively by the managers and
owners of the business so as to have the information about position of business. These reports
are made on the basis of monthly to weekly basis on which a number of information regarding
cash flows, revenue earnings through sales and outputs, purchase and sell of materials, stocks
etc. Thus, the management accounting is helpful in providing a lot of information to the internal
parties and managers so as to take right decision over various matters (Lukka and Modell,
2010). Here, it is vital to mention that it is opposite to the financial accounting in which the
reports are made to be analysed by the manager in which most of the information is based on
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historical data. While on other hand, the management accounting report contains the most
recent data because of which it is more relevant in taking decisions for future time period.
Further, it helps the firm in getting the information regarding operating expenses as well
because of which, if the expenses are more, the management will take decision regarding
reduction in the expenditure. The Oakwood guest house employ this method of accounting
extensively so as to make use of available information in preparing budgets and taking other
significant decisions. In addition to this, it acts as a foundation for making different
anticipations related to cost and minimise different types of risk (Garrison and et.al., 2010).
Management accounting: It is the process used by enterprise because it helps the
management in decision making, planning and organising organisational functions in order to
increase effectiveness and efficiency in business operations. The management of Oakwood can
implementing the management accounting as it is beneficial in various processing of business
such as,
 Determining the goals and objectives
 Increasing cost effectiveness
 It helps the organisation in increasing financial returns
 It will also help the Oakwood in making changes and maximizing return and
profitability.
The ultimate objectives behind implementing this system in Oakwood in establish the
coordination and cooperation between business operations. Further, it helps the manager in
planning and communication with all the departments of the firm. Thus, the system assist in
making appropriate decision and strategies regarding fluctuations in policies and procedures.
Management accounting system: The system can be useful for the guest house because it
assist in converting the financial data of raw materials, sales, and inventory into an analysis
which helps in determining the accurate information about the company’s position. There are
various types of accounting system which can be implemented by the Oakwood to make its data
reliable and accurate. Some of the system are as follows:
Cost Accounting system: This system is used by management to evaluate the cost of
products and services in order to forecast company’s profitability. This is done to set prices in
order to control the cost functions and to value the inventory appropriately.
Inventory Management system: It helps the company in keeping record of inventory
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