Management Accounting on TPG Assignment

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Role and essential requirements of different kinds of management accounting........................3
Different methods for management accounting reporting..........................................................5
TEST...........................................................................................................................................6
a) Advantages and disadvantages of different types of planning tools.....................................16
b)Explaining and analysing the uses and the application of the different planning tools.......17
c) Comparison of how organizations are adapting management accounting systems in
responding its financial problems.............................................................................................18
d) Evaluating how management accounting, in responding to financial problems, can drive
organizations to sustainable success.........................................................................................19
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21

INTRODUCTION
Management accounting is concerned with the preparation of managerial accounting report
by considering all the statistical as well as financial information of the business operations. With
the help of management accounting, proper planning, organising, managing, controlling function is
performed which assist in the decision making process. The present report is based on TPG
Processing, an organization in the manufacturing sector. Report will discuss about different
management accounting techniques and budgetary planning tools which assist in making business
operations more cost effective and profitable. Also, it will describe methods of management
accounting system which can help the company in overcoming its financial problems.
MAIN BODY
Role and essential requirements of different kinds of maangement accounting
Management accounting refers to the systematic process of analysing the costs of
business and activities for the purpose of preparing internal financial reports and records.
(Joshi and Li, 2016). It assists the management of the company in exercising their basic funtions
such planning, organsiaing, monitroing and controlling.
By the way of forecasting of the future revenues and expenses, capital budgeting techniuyes
for appraisaing teh investments, it aids in planning function. Likewise, it facilitates with different
tools such as variance analysis, benchamrking etc., which helps the managrs in monitoring and
assessing the peorfromance of the company. Furthermore, with the help of budgetory tools, it
allows the busines managers in exrecising the controlling by the way of asessing the loopgholes in
the performance by aocmpring it with the standards, and taking corrective actions.
It plays crucial role in TPG company.
 It aids in strategic decision -making.
 It performs the function of margin analysis that helps in ascertaining the profitability of each
product or service.
 It helps managers in optimally allocating the costs to each responsibility centre.
 Inventory valuation is its another function. Valuation of inventory is significant because it
affects the income and balance sheet statements of the company. For example, inventory
management system helps in reducing the costs of handling inventory by maintaining the
appropriate level of inventory at all the time.
 For example Capital budgeting which is one of the technique of management accounting

helps the mangers to examine a proposed investment or project before acquisition of the
same (The funtions of managerial accounting, 2018).
Different kinds of management accounting systems & their requirements
Cost accounting system:
It is a process applied for the managers of company for estimating the costs of its products
and services for the purpose of analysis of profitability, inventor valuation and cost control.
Requirements
 System software and its integration with other management accounting systems.
 It must meet the requirements and needs of the organisation in terms of its size and
information requirements.
 System must be easy to be used and the information derived from cost accounting must be
accurate.
 Cost Accounting System should be tailor-made, practical, simple and capable of meeting the
requirements of a business concern.
 The data to be used by the Cost Accounting System should be accurate; otherwise it may
distort the output of the system.
 It is needed in the firm for fixing the prices of the products. It is also required in the
business for ascertaining the profitable and non profitable activities of the business which in
turn facilitates the management to make more effective strategies for making the non
profitable activities profitable.
Benefits
It assists in controlling the activities of production process. It facilitates in decision making
regarding the production of goods and services along with labour related decisions regarding
machine and hours.
Inventory management system:
It is a framework which tracks the whole supply chain of the organisation. It is concerned
with the management of stock of material required by the company at any point of time.
Requirements:
 Barcoding
 Integration with accounting systems

 Forecasting of inventory
 system software
 Transfer Management :Enterprise businesses that manage multiple sites have the advantage
of moving their product to where it’s most valuable. Bundling or kitting your products can
be attractive to customers.
 Inventory management system is required in the organisation because it aids in improving
the accuracy in the inventory orders. Proper system of inventory management aids in
figuring out exactly how much inventory does the business requires to have on-hand. This
in turn assist in preventing shortages of products and allows the managers in keeping just
the appropriate level of inventory without having excess stocks in the warehouse.
Benefits
It helps in attaining efficiency in production process, saves time and costs of operation. It
facilitates the integration of entire business organization (Hald and Thrane, 2016).
Job costing system:
It is a procedure of information accumulation regarding the costs related to a particular job
order or service. In here, the process of production completely relies on the number of orders
received from the customers. Thus, the cost is determined separately for each job.
Requirements
Information regarding direct labour, material, overheads and production control system
Benefits
It assists in differentiating between the profitable and non- profitable jobs. It enhances the
forecasting of production. Cost control is it's another benefit.
Price-optimising system:
These are the mathematical programs that are concerned with the calculation of how
demand fluctuates when the price changes to different levels. It then brings together the data related
to inventory and costs for the purpose of recommending the equilibrium prices for improving the
profitability of company.
Requirements
 Demand of company's products and services.
 Cost accountant who can rationally determine the prices and can integrate the data related to

cost and inventory.
Benefits
It assists managers of TPG in formulating effective pricing strategy which complements the
market forces. It focuses on improving the profits of organization by ascertaining the price at which
company can earn the highest profits with the give level of demand.
Integration of management accounting systems:
It is necessary because for facilitating smooth flow of required information between the
different accounting systems. It leads to effectiveness in the entire accounts and finance department
of TPG processing. Proper integrating between the accounting systems helps the management in
identifying the profitability centres and it facilitates optimum allocation costs to each responsibility
centre which then leads to estimation of correct prices for the products and services. It also helps
the management in controlling the cost of operations which in turn assist in increasing the
profitability of the business entity(Schaltegger, Etxeberria and Ortas, 2017).
Further, integration of management accounting system such as inventory management
system with the production process aids the company in maintaining the most appropriate level of
stocks & inventory within the organization. The ultimate impact of this integration is reflected in
the seamless production without any delay. Such integration assists in delivering the products to the
customers on time which in a way helps in satisfying the customers. Moreover, appropriate link of
inventory system with production process helps in reducing the material handling and carrying cost
of excessive inventory and stocks. Working capital requirements are reduced because of such
interrelatedness of management accounting systems with the business processes.
Different methods for management accounting reporting
There are various methods of management accounting reporting through which TPG
presents and communicates its managerial information such as :
Cost reports :
It is the techniques of informing the internal stakeholders of company about the costs'
determination process of the products and services manufacturing by the organization. This report
facilitates the overview of the total costs accrued to a product or service against the income that is
expected by the unit of manufactured goods or services (Ismail, Isa and Mia, 2018). This report
assists the mangers of company in evaluating the profitability of specific responsibility centre of the
organization and optimising the operations by emphasizing on the most profitable cost centre.

Budget reports :
It is one of the most commonly used report in the management accounting. Budgets are the
spending plan of firm which lays the expected expenses that will be incurred by the company for
producing a pre-determined number of units of products. These reports are prepared with an aim of
achieving organizational goals within budgeted figures (Suomala and et.al., 2017). These reports
also facilitates the managers in analysing the actual performance by comparing with the standard
amounts to find the variations. Planning the expenses for the future events aids managers in finding
out the places for cutting the costs.
Budget Monitoring Report

Performance Report:
These are the report which are created for the purpose of monitoring and reviewing the
performances of an organisation as whole along with the performance of each employee in specific.
Even departmental reports are created in large companies for assessing the effectiveness with which
the business activities have been performed. Business managers use these reports for a motive of
making more effective decisions for making the performance of company highly impressive.