Management Accounting: Techniques and Systems

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Management accounting and essential requirements of systems.................................................1
Methods in management accounting reporting............................................................................3
Benefits and application of accounting systems..........................................................................4
The aspects in which accounting systems with reports are integrated with processes................5
LO 2.................................................................................................................................................5
Costing techniques for preparing income statements..................................................................5
Accurate application of accounting techniques...........................................................................8
Interpretation of data....................................................................................................................9
LO 3.................................................................................................................................................9
Planning tools...............................................................................................................................9
Analysis and application of tools to prepare and predict budgets.............................................10
LO 4...............................................................................................................................................11
Comparison showing the ways organisations adapts accounting systems for responding
financial problems. ....................................................................................................................11
Analysis of the aspects in which management accounting lead firms to sustain success. ........14
Evaluation of planning tools responding financial issues. ........................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
APPENDICES...............................................................................................................................17

INTRODUCTION
Management accounting is applied technique, concept addition to knowledge in
preparing accounting information that assist managers to formulate policies, controlling
operations, optimising resource usage, safeguarding assets and making critical decisions
(Arunruangsirilert and Chonglerttham, 2017). The motive of management accounting is to
present relevant accounting as well as economic data that further aids in performance evaluation,
making comparisons, forecasting, setting budgets and analysing business position in competitive
market. To realise deep grasp about management accounting, Jacksons Fencing is chosen. It is
leading fencing manufacturing entity having headquarters at Kent, United Kingdom since 1947
(Jacksons Fencing. 2019). The company manufactures diverse range of metal and deluxe timber
fencing products. The reports demonstrates information about management accounting together
with its associated systems and accounting reports, application of techniques to prepare income
statements and usage of distinct planning tools. It also includes comparison among two firms in
context to the ways they uses accounting methods for responding financial problems.
LO 1
Management accounting and essential requirements of systems.
Management accounting: It is described to technique which presents accounting
information for devising managerial policies together with assisting daily activities (Management
accounting. 2019). It describes accounting methods and techniques with special ability to advise
managers in various tasks so that they can maximise profits and reduce losses. Management
accounting's essential role at Jacksons Fencing are to handling taxes, assisting towards strategic
planning, budgeting, managing organisational assets and collecting, recording as well as
reporting necessary data from other units.
Management accounting systems: It is characterised to frameworks followed by
business concerns for providing information as required by managers to make decisions. These
systems involves elements that creates standards for collecting required data. Some of the
accounting systems followed at Jacksons Fencing are as elaborated:
Cost accounting system: One of the system that is applied for accumulation of costs for
organisational products in order to examine profitability, inventory estimation and controlling
costs. It aims to capture overall cost of production through weighing input costs plus fixed costs
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that are involved in production steps. Estimation of exact product costs is important for
profitable operations (Bandy, 2014). Cost accounting system is opted by production managers of
Jacksons Fencing for estimating perfect costs that had occurred while manufacturing deluxe
timber as well as metal fencing products such that profitable operations can be properly
ascertained. The system is essentially required at chosen business entity so that managers can
identify distinct unit costs, reduce additional costs that are involved with per unit output and
forecast future functions for building effective strategies.
Inventory management system: The system which performs functions of making
purchase orders, receiving, checking, relocating, aligning as well as disposing inventory is
named as inventory management system (Seow and Wong, 2016). It helps in understand
existing level of inventory available so that situations in concerned with overstock and
understock can be eliminated. The system combines utilization of barcode scanners along with
printers, mobile devices and software so to streamline management of various inventories.
Inventory management system is essentially required at concerned organisation for tracking
inventory level, preparing documents such as material bills as well as work order bills that
further helps in making inventory decisions for upcoming time scale.
Price optimisation system: Understanding customer perceptions and reactions for
changes in prices of commodities is done with price optimising system. Jacksons Fencing applies
mathematical analysis to ascertain reaction of customers for variations in prices of commodities
like timber fencing products through distinct channels so that they can optimise accurate price
that can grab attention of distant customers (Rudman and Kruger, 2014). It guides managers to
set most suitable rates for products that are manufactured by them. Essential requirement of price
optimisation system is to determine best prices that fulfils objectives of maximising operational
profit. It also helps in optimising pricing structure for promotional pricing as well as mark down
pricing.
Job costing system: Allocation of manufacturing values to individual commodities along
with product batches is done through job costing system (Cooper, 2017). Entities manufacturing
distinct product ranges as per special orders only apply the system. Management administrations
of Jacksons Fencing uses it so that they can accumulate and allocate costs to distinct product
units that they manufactures. Essential requirement of the system at respective institution are to
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reduce risks, improving methods of controlling and segregating expenses according to distinct
jobs performed under certain situations.
Methods in management accounting reporting
Management accounting reporting: Tools or framework that helps in understanding
facts pertaining with business are management accounting reporting. With accounting reporting
mechanisms,exact data or information related to operational activities are gathered and analysed
for understanding ongoing situations within enterprise. Jacksons Fencing uses accounting reports
for ascertaining areas that needs more improvements for acquiring huge output levels. Certain
methods for accounting reports are as follows:
Budget reports: Information about future expenses and gains are presented through
budget reports. It represent variances among standard budgets with that of actual outcomes. At
Jacksons Fencing, the reporting method assist in planning future, evaluation of activities
performed, reviewing profits addition to assumptions in errorless ways. Budget report also helps
in looking various means so that sales can be increased while limiting expenses. It is also used
for maintaining financial spendings as per the manufacturing activities requirements.
Performance report: All entities despite of their sizes formulates reports for recording
information about functional addition to personnels performances (Eckardt, Selen and Wynder,
2015). Business performance reports are used to understand together with discover growth
potentials pertaining with entity. It strengthens managers knowledge for assumed level of
performances in context to sale and income. Jacksons Fencing administrators uses the reporting
method for devising strategic decisions for describing future sustainability.
Account receivable report: The reporting mechanisms that list out customer account
balance considering time outstanding length (Ismail, Isa and Mia, 2018). During audits of the
company, the report plays main role for determining whether account receivable balance are
valued properly or not. In addition, the report is used by finance directors of the chosen
institution so that they can evaluate existing credit policies, estimate bad debts, determining
credit limits for customers and initiate collection procedures in context to overdue accounts.
Inventory management report: It is essential for all business concerns to keep
information about inventory used to execute and carry forward operations. For this, inventory
management report plays significant role as it records information about raw material stock,
work in progress and stock of finished goods available at warehouses. With proper analysis of
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inventory management report, production department of Jacksons Fencing takes inventory
decision for coming duration.
Benefits and application of accounting systems.
Management accounting
system
Application and benefits
Inventory management
system
Jacksons Fencing applies the system for tracking together with
maintaining desired product stock (Gibassier and Schaltegger,
2015). In addition, the system benefits the company in
enhancing inventory accuracy, organisational bottom line and
improving workflow by reducing circumstances of understock
or overstock of goods. It also benefits managers in streamline
procedures through reducing associate stock costs along with
improves capabilities to frame profitable decisions.
Price optimisation system The system is applied for ascertaining accurate prices of
various products such as timber fencing and metal gardening
fencing products that helps in meeting customer expectations
and business objectives. Benefits that price optimisation system
provides to Jacksons Fencing are eliminating error possibilities,
setting prices that customers along with business can afford and
helps in maintaining revenue margins with quickly observing
behaviour and altering prices.
Cost accounting system Jacksons Fencing management authorities applied the system
for acquiring elaborated views about costs that are incurred in
manufacturing final fencing product. In addition, the system
provides benefits of proper cost planning, controlling materials,
framing policies together with measuring efficiency in
standardised manner (Harrison and Lock, 2017).
Job costing system Application of such system is to track and allocate overhead
costs to jobs that are performed within business. It benefits the
selected firm by monitoring manufacturing processes,
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