Management Accounting: Principles, Techniques, and Applications

Unit 5 - Management accounting
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Contents
Introduction:....................................................................................................................................3
P1.Explain management accounting and give the essential requirements for different types of
management accounting...............................................................................................................4
P2: Explain different methods used for management accounting reporting................................7
M1: You should evaluate the benefits of management accounting systems and their
application within an organisational context............................................................................8
D1: You should provide a critical evaluation of how management accounting systems and
management accounting reporting are integrated within organisational processes.................9
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costing......................................................................10
M2: You should apply a range of management accounting techniques and produce
appropriate financial reporting documents.............................................................................11
D2: You should produce financial reports that accurately apply and interpret data for a range
of business activities...............................................................................................................14
P4: Explain the advantages and disadvantages of different types of planning tools used in
budgetary control.......................................................................................................................15
M3 you should analyse the use of different planning tools and their application for preparing
and forecasting budgets..........................................................................................................16
P5: Compare how organisations are adapting management accounting systems to respond to
financial problems......................................................................................................................17
M4: You should analyse how, in responding to financial problems, management accounting
can lead organisations to sustainable success (D3)................................................................17
Conclusion.....................................................................................................................................18
References:....................................................................................................................................19
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Introduction:
The management accounting report has been prepared in context of an organisation Zylla which
is a medium scale company operating and manufacturing the goods in the wider business
environment. The report will be prepared to compare and define the roles and benefits that
management accounting functions and systems will play in improving the performance of
company and assisting in providing the adequate information to the management for decision
making purposes. The various methods of costing will be used in this report for producing the
financial reports that will be used by management for preparing the income statement and talking
critical decision about the company. The report will also include the definition and roles that the
planning tools of management accounting will play in forecasting and making budgets of the
company. This will help the company in recognizing the importance of management accounting
tool in solving financial problems and resulting in sustainable success.
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P1.Explain management accounting and give the essential requirements for different types
of management accounting.
In the modern business environment the term management accounting can be defined as the
system of accounting which assist the management in identifying and obtaining the required and
necessary information which are critical for decision making and planning the future course of
actions in this regard. The process will include developing the system which will enhance the
productivity of extracting the information and analyzing and interpreting the same for improving
the organisational performance as a whole (Johnston, 2018).
Evolution of management accounting:
The evolution of management can be related with the development of the industrial revolution in
late 1990 as if before there were no proper set of system to provide managers with the
information about the company financial performance and position in competitive aspect. But
with the evolution of the industrial revolution the system of management accounting has
developed as a source of producing the value added and real time reports which can provide the
users with the information as if they require for decision making purposes. Thus it can be
established that with the development in changing technologies and wider business competition
there was a need to recognize one system that can fulfil the information requirement of the
management and the management accounting function has been serving the same form that
period only (Coast, 2015).
Different kinds of management accounting systems and the essential requirements:
Cost accounting system – The cost accounting system is the system which helps in extracting
and recording the information related with expenditures that have been incurred in the company
during the period and helps in preparing and presenting the income statement of the company by
using all the cost information.
Essentials:
 The alignment of this system with the financial accounting system is necessary to obtain
better results.
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