Management Accounting: Principles, Systems, and Planning Tools

UNIT: 5 – Management Accounting
1

Introduction
The report prepared in the concerned assignment of management accounting is related to the
basic concepts and principles of management accounting which are mostly applied in the current
business scenario. The first part of the report includes the preparation of a report in which the
various types of management accounting systems and their requirements will be explained in
context of the organization that has been chosen among ten manufacturing and medium sized
enterprise of UK. The reporting methods used in management accounting reporting will be
correctly described in this report along with the calculations to be presented for the income
statement of the company by applying absorption and marginal costing methods. The second part
of the report will be written report which is associated with description of various items of
planning tools which can assist in planning and budgeting function of the organization. The use
of planning tools will be described in the context of solving financial problems and ensuring
sustainability in the market.
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Contents
Introduction......................................................................................................................................2
Task 1&2.........................................................................................................................................5
Introduction..................................................................................................................................5
P1. Explain management accounting and give the essential requirement of different types of
management accounting systems to the chosen scenario giving examples.................................5
M1 Evaluate the benefits of management accounting systems and their application within an
organizational context for the chosen scenario............................................................................6
P2. Explain different methods used for management accounting reporting that can also be used
for the chosen scenario.................................................................................................................8
D1 Critically evaluate how management accounting systems and management accounting
reporting is integrated within organisational processes for the chosen scenario.........................8
P3 Calculate cost using appropriate techniques of cost analysis to prepare an income statement
of marginal and absorption costing............................................................................................10
M2: Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents....................................................................................................11
D2 Produce financial reports that accurately apply and interpret data for a range of business
activities.....................................................................................................................................13
Conclusion.....................................................................................................................................13
Task 3.............................................................................................................................................14
Report.........................................................................................................................................14
Introduction................................................................................................................................14
P4. Explain the advantages and disadvantages of different types of planning tool that can be
used for budgetary control for the chosen scenario...................................................................14
M3: Analyse the use of different planning tools and their application for preparing and
forecasting budgets with special reference to the chosen scenario............................................16
P5: Compare how organisations are adapting management accounting systems to respond to
financial problems......................................................................................................................18
M4: Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success with special reference to your chosen scenario (D3).......19
Conclusion.................................................................................................................................20
Conclusion.....................................................................................................................................21
References......................................................................................................................................22
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Task 1&2
Introduction
The report is prepared in order to give users an understanding of the basic principles and role of
management accounting and its systems in the organization IMDA Ltd. which is medium sized
manufacturing company engaged in manufacturing antique items. The reporting method applied
in the management accounting system along with various cost reports will be presented in this
report.
P1. Explain management accounting and give the essential requirement of different types
of management accounting systems to the chosen scenario giving examples.
Management accounting is the function of management which is concerned with sound decision
making related to the future and long term strategic decision making often company. The
management accounting function involves identification of various types of information
including qualitative as well as quantitative information and the information to be presented in
the data format in the management accounting reports (Morris, 2017). The various types of
management accounting systems are:
Cost accounting system – The cost accounting system is the system which involves recording
and classifying the various types of cost information related to a product in the manufacturing
company. The essential requirements include:
 The cost items must be classified adequately and correctly in order to arrive at the
accurate results.
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Management
accounting
systems
Cost
accountin
g system
Job
costing
system
Inventory
manage
ment
system
Price
optimisa
tion
system