Management Accounting: Principles, Systems, and Planning Tools

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
Explaining the principles of management accounting ................................................................3
Describing the role of management accounting and its systems .................................................4
Explaining the benefits of Management Accounting Systems.....................................................5
Explaining the different methods used in management Accounting Reports (MAR)................6
Evaluating MA integration within organization...........................................................................9
Explaining the benefits of function to organization.....................................................................9
PART 2..........................................................................................................................................10
Comparing and contrasting the planning tools used in management accounting along with
advantages and disadvantages ...................................................................................................10
Explaining the management accounting effectiveness for solving the financial problems ......12
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting is concerned with taking strategic decision by involving the
crucial financial information into the process. In the current era, Management Accounting
(MA)play important role in providing assistance to the organization for gaining competitive
advantages in effectual manner. The current report is based Associated British Foods which is
one of the manufacturing organization of UK. The present study will involve management
accounting principles and system for providing deeper knowledge. Current report will highly
give emphasis on different techniques and methods like variable & marginal costing with
practical example. Evaluation of management accounting integration with organizational
function & its benefits. Present report will highlight the different planning tools along with pros
& cons. It will comprise application of management accounting to overcome financial problems
and recommendations to achieve sustainable business growth.
PART 1
Explaining the principles of management accounting
MA (Management Accounting) play essential part in helping the organization to obtain
appropriate level of guidance in turn effectual business practices can be established. British
Associated Food can utilize this principles in respect to achieve ability to execute its operational
as well financial activities to accomplish objectives. It includes value, credibility, relevance
and influence to have designing, compiling, controlling resources.
 Creditability is one of the crucial principle of management accounting which is
concerned with making decision making process more purposeful . This is exerted by
ensuring that organization is having great credibility to create the trustworthiness and
reliability among shareholders. This particular principle helps in having ethical,
responsible & aware of company’s governance prerequisites & interpersonal
communications.
 Influence principle is concerned with reflecting the communicational insights that are
important which helps company to get relevant information for cutting silos and enable

integration process to have positive impact on organizational performance. It is mainly
give focus on getting essential information for making sound decision (Rikhardsson and
Yigitbasioglu, 2018).
 Value aid in assessing link between organizational processes and its core model &
intensive knowledge for gauging possible opportunities and risk. It provide assistance in
having significant value generation by concentrating on higher opportunities.
 Relevance principle of MA helps in getting g relevant source for getting data to
formulate significant decision for boosting organizational growth. It concentrates on
maintaining proper balance between past, present and future related internal & external
factors by presenting all financial and no monetary data to result in accurate decision
formulation.
Describing the role of management accounting and its systems
MA is one of the important part that play significant role in making business capable by
proving crucial information necessary for taking sound decision (What is management
accounting? 2021). It helps in measuring analyzing, interpreting, communication of information
in order to have ability to accomplish the organizational goals. Management accounting assist in
planning, organizing, decision making, coordinating and controlling which allows organization
to be prompt in having sufficient and reliable resources for formulation of policies (Ngo, 2021).
MA helps in analyzing the problems prevailing in organization so that irrelevant component
causing such practices can be removed for gaining smooth functioning. ABF can declining the
present manufacturing cost to get higher profitability with implementing proper allocation,
coordination and monitoring of resources.
Management accounting system helps in tracking the efficiency of internal operational task
to achieve competitiveness. BAF can collect, evaluate and analyze data regarding different
aspects for managing & controlling cost and operational practices.
 Cost Accounting System (CAS) is responsible for analyzing the expense associated
with operational practices so that profitability margin can ascertained. (Diegtiar and
et.al., 2021) ABF can conduct inventory valuation and cost control activities by