Management Accounting: Principles, Systems, and Techniques

Management Accounting
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain the concept of management accounting and provide essential requirements of
various types of accounting management system. .....................................................................3
P2 Elaborate the various methods used for management accounting reporting.........................5
TASK 2............................................................................................................................................6
P3 Calculate the costs with the help of various techniques of cost analysis. Also prepare an
income statement with the help of marginal and absorption costs. ............................................6
TASK 3..........................................................................................................................................10
P4 Elaborate the various merits and demerits of different types of planning tools that are used
for budgetary control.................................................................................................................10
TASK 4..........................................................................................................................................12
P5 Provide a comparison between two organizations on the basis of the management
accounting systems adapted by the organization in order to deal with the financial problems.
...................................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Management accounting is referred to the practice which involves identification,
measurement, analysis, interpretation and communication of the information in context of
finances to the managers. The aim of communicating the information is to accomplish the
organizational goals. The concept of management accounting varies from financial accounting as
the motive of management accounting is to facilitate the internal users of the organization to
formulate better and well informed decisions in context of business. Management accounting
focuses on improving the quality of the information that is passed to the management in terms of
operational metrics of business in terms of productivity which means that the information which
is material for the organization must only be passed on (Abdusalomova, 2020).
Rowlinson Knitwear is a United Kingdom based medium-scale manufacturing
organization. The organization was established in the year 1935. The organization became
employee owned in the year 2015 and is presently an accredited Living Wage Employer
(Honggowati and et.al., 2017). Rowlinson Knitwear aims to produce and supply garments of
high quality to the independent retailers of school and corporate wear. The study revolves around
the management accounting concepts of Rowlinson Knitwear. The report is divided into two
parts namely, part 1 and part 2. The study focuses upon principles of management accounting
along with the role of management accounting and management accounting systems.
TASK 1
P1 Explain the concept of management accounting and provide essential requirements of various
types of accounting management system.
Management accounting is referred to the practice which involves identification,
measurement, analysis, interpretation and communication of the information in context of
finances to the managers. Management accounting will facilitate effective and efficient decision
making at Rowlinson Knitwear (Azudin and Mansor, 2018).
There are various types of accounting management systems that can be used by an
organization. The management accounting systems that can be used by Rowlinson Knitwear are
explained below-
Cost accounting system
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Cost accounting system is referred to a system which provides an in depth assessment of
the various costs. The various costs that are calculated and assessed in a business are fixed costs,
variable costs, etc. The cost accounting system will facilitate Rowlinson Knitwear to make
estimations for the costs of their products. It will also help the organization to make a
profitability analysis along with inventor valuation and cost control. The cost management
accounting system will help Rowlinson Knitwear to take effective decisions in aspect of the
growth of the organization.
Essential requirements for Cost accounting system
 Costing accounting system requires the organisation to identify various methods and
techniques in order to determine the cost level in an effective and efficient way.
 The cost accounting system requires the organization to identify a set of procedure with
specific steps in order to fulfil the goals and objectives of the organisation (Burritt, and
et.al., 2019).
Job costing system
Job costing system is basically an assessment various types of job costs in an
organization. In case of Rowlinson Knitwear, it is very important for the organisation to apply
the management accounting system that will help in identification and control of the job costs.
Essential requirements for job costing system
 It requires identification of job costs that will help the organization to take suitable
actions in aspect of the organisation.
 Appropriate steps need to be followed in order to enhance the profitability of the
organization.
Inventory management system
Inventory management system is referred to an accounting system which introduces
various methods and techniques in order to assess the level of inventory available at the
organization. This method will allow Rowlinson Knitwear to maintain an appropriate stock of
inventory at the organization.
Essential requirements for inventory management system
 Inventory management system requires an organization to keep a track of stocks that is
stocked in the organisation (Hariyati, Tjahjadi and Soewarno, 2019).
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