Management Accounting and Systems: Basics, Types, Reporting, and Budgetary Control

Management
Accounting System

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1: Management accounting and types of management accounting systems along with their
requirements...........................................................................................................................3
P2: Management accounting reporting and its methods.........................................................4
TASK 2............................................................................................................................................5
P3: Calculation of costs using marginal and absorption costs...............................................5
TASK 3............................................................................................................................................6
P4: The advantages and disadvantages of different types of planning tools used for budgetary
control.....................................................................................................................................6
TASK 4............................................................................................................................................8
P5: Adaptation of management accounting systems by the organisations to face and solve
financial problems..................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
This report will put light on the basics of management accounting. Management
accounting helps the business or any organisation to analyse data from financial information
provided by financial accounting (Abdusalomova, 2019). Management accounting is the
procedure of identifying analysing, interpreting and communicating the financial information
which helps the business to achieve its goals. Management accounting with the help of financial
information helps in planning decisions, and also keeps a check and control on the finance within
the organisation. In this report management accounting is further explained with practicals and a
case study of Marshals Ltd.
Marshals Ltd is the UK's leading supplier of superior natural stone and concrete
landscaping products. It was founded in the late 1880s. Marshals was the first company to label
its entire range and was the first in the landscaping industry to work with the Carbon Trust’s
labelling scheme.
TASK 1
P1: Management accounting and types of management accounting systems along with their
requirements
Management accounting provides information to the management to assist them in the
process of decision making, planning and controlling and performance measurement.
Management accounting will enable Marshall Ltd. to get organisational reports and these reports
will help it to make necessary changes and take required decisions in the organisation itself and
the management. Management accounting provides the management with the information that
they need to plan and control the operations of the business or organisation.
Management accounting helps the management to form reports and analyse the financial
information which further helps the organisation to carry out its operations effectively and
efficiently and make better decisions by considering all the alternatives.
There are various Management Accounting Systems, some of them are:
 Cost Accounting System: It is one of the major management accounting system
which consists of various accounting techniques which helps the business to
assess cost of specific tasks and projects. With the help of this assessment the
management will be able to compare the profits with costs and take necessary

decisions and plan to cover the shortfall. In context to Marshal Ltd., the company
uses Cost Accounting System with which they are able to manage all their
relevant cost like that of raw material, processes and of distribution of products.
 Inventory Management System: This system has techniques that help the
management to maintain the level of stock. This system involves the process of
stocking and restocking the organisation's inventory so as to increase overall sales
as stock will be available when the customers, retailers and who. Basically, it
combines the characteristics of technologies and processes (hardware and
software) and processes which track and maintain stock goods, whether they are
business properties, commodities and supplies or finished goods ready to be
shipped to salesmen or customers. Marshal Ltd. uses this system with its various
techniques to manage inventory. Techniques may include LIFO, FIFO, JIT and
ABC analysis (Pedroso and Gomes, 2020).
 Price optimization system- This helps companies to determine the selling price
in line with recent trends in the market. In the above company and even their
competitor’s actions, their sales team sets the cost of furniture as per clients'
wishes. Price optimization systems are statistical systems that measure the
variations in competition at various levels of price and then integrate the data with
actual inventory knowledge to suggest values that increase income.
P2: Management accounting reporting and its methods
Management accounting reporting will aid the accountant to represent management
accounting information in a clear form which helps in taking important strategic decisions for the
smooth working of the organisation. This helps in highlighting the profitable operations of the
business so that they are easily visible to the stakeholders. This segment has various techniques
like inventory report, budgetary report, job costs report, account receivable ageing report.
 Budgetary Reports: Budget reports are important in measuring the performance
of a company. Budget reports are made for small companies but they are also
used in large-scale organisations as per the department. They are made on the
basis of past experiences and have power to give insight of future unfavourable
situations. Budgets are prepared on the basis of current expenditure and costs as
compared to expected costs and expenditure. Accounting reports that are related