Management Accounting and Operations

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1. Management Accounting System
P2. Discuss Different Methods of Management Accounting Operations
LO2..................................................................................................................................................3
P3. Calculation of Costs Using Best Method of Cost Analysis to Make an Income Statement
LO3..................................................................................................................................................6
P4: Explanation about benefits and liability of different tools for budgetary control................6
P5 Comparing as to how corporations are effectively adapting MA systems for responding to
multiple financial problems........................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting explain and refer to the process of analysing, interpreting,
evaluating and expressing all information about the organisation to the upper manager. The main
aim of management accounting is to accomplish organisational goal and objectives within
decided budget. Financial and management accounting refers to managing business information
which helps in making better decisions (Yalcin, 2012). This assignment is written from
perspective of Innocent Furnitures which is a medium sized enterprise engaged in manufacturing
of desks, chairs and other furnitures.
The report discusses the management accounting and reporting system along with its
importance in the context of chosen organisation. The report also describes cost accounting
methods and its different methods, various planning tool to control budget along with their
merits and demerits, comparison of usage of management accounting system between two
organisations so that proper actions can be taken for further improvement of an organisation.
LO1
P1. Management Accounting System and MAS
The management accounting activities can be defined as all those activities related to the
business which will include the goals of the company, monitoring and controlling the investment
and optimisation of revenue and profit. In Innocent Furnitures, Management Accounting is
majorly related with financial data processing, records and expectations, inadequacy of
management and various methodology of accounting. The MA method which is used by
Innocent Furniture to ensure that their decisions are correct in nature has been mentioned as
following:
Inventory Management System: The most important role in monitoring the expenses
and sales of the Innocent Furnitures is played by the inventory management system. Stockpiles
as well as good’s inventory by using a uniform chain management system will be created by the
manager of the Innocent Furnitures. Then also these corporate goods are being distributed to the
shopkeepers by delivering them through the manufacturer(Hiebl and Richter, 2018). The process
of inventory management system is very helpful in efficient and quick promotion of the products
and also it leads to decreasing the cost of maintaining.
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Job Costing System: The Management Accounting can be regarded as such an efficient
way through which each organisation can assess the cost of each operation undertaken by them.
To track and evaluate the expenses of the organisation, every expense will be analysed to
identify the volume of expenses generated within it. Essential requirement of the system within
Innocent Furnitures is identifying the spending of the organisation, generally this method is
being used(Jermias, Gani and Juliana, 2018).
Cost Accounting System: It is very useful in evaluating the costs of manufacturing and
selling of the products by an organisation. This management accounting will be very useful for
Innocent Furnitures as by this they can come to know that which products are more price-
involved and on the basis of it they could be able to decide whether it is worth or not to spend
such big amount of money on that particular product. Key requirement of the system in Innocent
Furnitures is about determining the value of the products and from all the products choosing the
most cost efficient product so that the company can get an edge over its competitors in the
market.
Inventory management system- It is a form of accounting system that is mainly related
with managing of all kind of stock of the company (Hutaibat and Alhatabat, 2020). It is
determine that it can properly done by the assistance of recoding of each stock on basis that
involve semi-finished stock, consumption of raw material, prepared stock and many more.
Furthermore, inventory management system are being used by higher authorities considering
FIFO, LIFO method. In relation to the respective organization, it is stated that top level
authorities adopt inventory management system in order to consume the available raw material
in an effective and better way. Essential requirement of the system in Innocent Furniture is to
manage available stock in a proper and effective manner.
P2. Discuss Different Methods of Management Accounting Operations
Management accounting is basically the process of developing as well as preparing various
sorts of formal documents that involve information associated to different segments of an
organization. It is analyzed that there are various reports used by administration of a company
which can effectively help in making better decisions. The reports which are devised by Innocent
Drink managers are mentioned below:
Cost Accounting Report: This analysis which helps an organisation in doing its audit
mission in a smooth manner as in this research the major focus would be upon listing all the
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