Management Accounting: Principles, Techniques, and Applications

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
An explanation of the principles of management accounting.....................................................3
The role of management accounting and management accounting systems...............................3
The use of techniques and methods used in management accounting by presenting
calculations for an income statement using variable costings to show how these financial
reporting and statements support business growth and success..................................................4
Evaluation of how management accounting is integrated within the organisation.....................4
The benefits of the function to the organisation..........................................................................5
Comparison between Management and Financial accounting:...................................................7
Managerial accountancy systems' advantages and applications.................................................8
Analyze the pros and cons of different reporting and accountancy systems..............................9
Different sorts accounting techniques.......................................................................................11
Dataset Analysis and Interpreting.............................................................................................11
PART 2..........................................................................................................................................12
Your judgements should be supported by examples to demonstrate advantages and
disadvantages............................................................................................................................12
Using specific case studies as examples, compare ways in which management accounting is
applied, the effectiveness of management accounting in dealing with financial problems and
preventing financial problems in organisations........................................................................14
Provide conclusions and recommendations to the organisation on which methods to apply in
order to achieve sustainable business success, based on your findings and evidence provided.
...................................................................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Management accounting is the process in which managers use accounting information in
decision-making. It is a practice of measuring, analysing, interpreting financial information to
achieve organizational goals. In response, a range of management accounting principles has
emerged to cater essential requirements in report. The present report is based on Sollatek (UK)
Limited, founded in 1983. the company deals and manufacturing equipment such as electronic
equipment and industrial electrical. The current report will outline the understanding of
management accounting and explain the various methods used in cost accounting reporting.
Along with that report will describe about planning tools and their advantages and disadvantages.
At last report will also justify the comparisons in which the company uses management
accounting system to deal with financial problems of the organization.
PART 1
An explanation of the principles of management accounting.
Management accounting method is being defined as undertaking the financial
information. The main objective of management accounting is to identify past trends and predict
future requirements to achieve financial goals.
Principles of management:-It includes budgetary control and costing system in company. This
is designed in such a way showing relevant data. The accounting information can be adopted to
meet the needs of management. Let us discuss few important principles of management
accounting.
 Integration- This principle assists firm in integrating all the required information which
company need to use at time of decision-making and attain overall objective of business.
 Designing and compiling- this principle of management accounting assist Sollatek in
designing the various reports so that all information relating to the business can be
analysed properly (Maheshwari, Maheshwari and Maheshwari, 2021). This in turn will
assist company in taking effective decision.
The role of management accounting and management accounting systems.
The main objective of management accounting is to maximize profit and minimize losses. The
system assists company in decision-making process and achieve organizational success. Sollatek
must work on risk management, planning, budgeting, investments, strategic planning (Massicotte

and Henri, 2021). This system plays a vital role in company to influence members in
organizations to achieve firm's target.
The use of techniques and methods used in management accounting by presenting calculations
for an income statement using variable costings to show how these financial reporting and
statements support business growth and success.
Cost accounting system: It is designed to record production activities using inventory
system and is also known as product costing system. It is helpful to estimate the cost of their
products for inventory valuation and profitability analysis.
When a firm uses a combination of both above mentioned system is known as hybrid cost
system.
Advantages Disadvantages
1. Cost accounting system assist in proper
planning as it involves accounting
relating to machine, labour, material,
overhead costs which assist company in
making proper strategies.
2. It is helpful in decision-making process
related to cost analysis, financial
analysis, control over materials.
3. Reducing price and profit maximization
is the main objective of cost accounting
system.
1. Cost accounting system is expensive in
nature. It consumes a good amount of
finance.
2. Unnecessary and time-consuming
process
3. cost accounting is based on estimates
and therefore cannot be relied upon.
Thus, it is not reliable process.
Evaluation of how management accounting is integrated within the organisation.
Job costing system:
Business unit must follow job costing system as it gives detailed information about cost
of material, production, labour (Hadid and Al-Sayed, 2021). Also cost associated with particular
production or service job are taken into consideration in the books of cost accounting.
The cost associated with a specific production or service job are taken into books of cost
accounting system.