Management Accounting: Methods, Budgetary Control, and Pricing Systems

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Management Accounting and their essential requirements...................................................3
P2 Different methods used for management accounting reporting.............................................4
TASK 2............................................................................................................................................5
P3 Calculation of cost by using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................5
TASK 3............................................................................................................................................9
P4 Budgetary control with their advantages and disadvantages.................................................9
TASK 4..........................................................................................................................................11
P5 Management accounting systems and their response towards financial problems..............11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The term accounting process relates with summarising, classifying and recording all
business transactions which are related with the financial accounts or monetary policy. Journal,
Ledger, trial balance, etc. are prepared which are easy to understand and this aids stakeholders to
compare them in order to monitor and check the account and profits of business. In simple terms,
management accounting is the process for summarising all details related with financial
statements of company. Rowlinson Knitwear is selected as an organisation for this report and
this is a well-known UK based cloth manufacturing business (Bleyen and et. al., 2017).
Moreover, this project will highlights on different types of management accounting systems with
their essential requirements and also different methods used for management accounting
reporting. In the present scenario, organisation is well-known for manufacture large corporate as
well as school wear so cost calculation method will also included in this report.
TASK 1
P1 Management Accounting and their essential requirements
The term management accounting is explained as the process of formulating management
accounts, reports and financial factors which provide accurate and reliable information related
with costing of data. Moreover, this is used by manager for control and manage constant
operations related with business. Management accounting also translate financial information
and data into useful information that are used for appropriate decision-making of business. In the
context of Rowlinson Knitwear, management is engaged in bulk production activities so it is
important for organisation to make accurate and effective decisions. Some types of management
accounting systems with their essential requirements are mention as follow:
 Product costing- The term product cost management accounting aids to identify all cost
which is related with formulation of products so this aids the manager for understand and
analyse all cost and expenditures related with production of products (Bruno and Lapsley,
2018). From the perspective of Rowlinson Knitwear, product costing is used to manage
overheads of business through monitoring and allocating the raw-material as well as
financial resources in an organised manner.
Essential Requirements

◦ To consider overall market- With include overall revenue management consider
that all cost factors related with market are included and this aids an organisation to
manage expenses in the decided budget. By engage of all valuable factor management
compute cost as per item requirement.
◦ To divide expenses- Management of Rowlinson Knitwear perform an important rile
to understand and identify the diversified expenses related with business. This refers
that product costing help to identify both fixed and variable cost related with
business.
 Cost accounting system- This is also explained as product costing system and it provide
the framework related with estimation of future cost (Grossi and et. al., 2019). From the
perspective of Rowlinson Knitwear this is understand that management accounting
analyse overall future cost and profitability of business. Within this cost accounting
accounting system provide appropriate costing and also budget cost that helps to allocate
various overheads of business.
Essential Requirements
◦ Forecasting- Future cost perform an important role for business because this aids an
organisation to formulate appropriate budget. From the perspective of Rowlinson
Knitwear cost accounting perform an important role to formulate budgets because this
helps by analyse cost of inventory, direct-material cost, fixed-cost, etc.
 Job-costing- The term job costing is explained as a method of determining cost related
with each manufacture units. In the present scenario, organisation that are engaged in the
manufacturing of single units easily estimate or calculate cost of business. One of the
most effective process of job-costing is to deliver all products as per their task
requirements and order request.
Essential Requirements- One of the major benefit related with job-costing system is to
manufacture and engage all those factors which are important to manufacture the task according
to the order request (Hadiyanto, Puspitasari and Ghani, 2018). This aids Rowlinson Knitwear for
utilise all resources in an optimise manner.
P2 Different methods used for management accounting reporting
Management accounting plays a crucial role for the internal management of the
respective organisation. This is because they are used for formulate policies and also define all