Management Accounting Systems and Reporting

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management Accounting Systems........................................................................................1
P2: Management Accounting Reporting......................................................................................3
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
TASK 3............................................................................................................................................5
P4: Advantages and Disadvantages of planning tools.................................................................5
TASK 4............................................................................................................................................7
P5: Comparison of organizations in adaptation of management accounting to solve financial
problems.......................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management Accounting refers to using of different types of financial provisions which
will help in deriving the right results for the future time period (Abernethy and Wallis, 2019). It
is quite helpful in deriving the advantage for the company. It helps the managers a lot by
ensuring that they are able to take short-term and long-term decisions. Through it, analysis and
interpretation can be done to derive conclusions and recommendations in an effective manner.
This report is based on Innocent Drinks. It is a company which specializes in providing
smoothies and other drinks to its customers. In this assignment, focus will be made on
demonstration of understanding of management accounting systems, methods for preparation of
its reports. Additionally, explanation of the use of planning tools and comparison of ways in
which the companies can make its use to respond to financial problems will be made as a part of
this assignment.
TASK 1
P1: Management Accounting Systems
There are various types of systems which are used in management accounting. These are
explained as follows-
Cost Accounting System- In this system, there is an estimation of various costs in the
company (Armitage, Webb and Glynn, 2016). Thus it can be very helpful for the purpose of
determining the costs. For the management of Innocent Drinks it is essential that they are able to
make its use for segregating the costs and determining the overheads. These overheads can be
allocated according to the expenses which are made by the various departments such as
Production, Finance, HR, Sales and Marketing etc.
Essential requirements-
 This system needs to ensure that the different types of costs are calculated in an effective
manner within the organization. Thus in the context of Innocent Drinks it must be able to
identify and segregate the various costs and expenses which are being incurred.
 This system must be able to advise the management on the techniques which can be used
so that costs can be reduced and profits can be maximized. For Innocent Drinks, it is
important that the company is able to consider it and reduce costs for enhancing the level
of profits.
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Inventory Management System- This system is used in order to track the stock levels
and manage them in an effective manner (Arunruangsirilert and Chonglerttham, 2017). By
making its use, inflows and outflows of various items can be tracked in a better manner. Thus for
the managers of Innocent Drinks it is extremely helpful so that they are able to ensure that stock
is properly managed and there is not misplacement of the items.
Essential requirements-
 In a good inventory management system, there should be identification of different items
and their related information. Thus the managers of Innocent Drinks will be able to
identify various stock items by making appropriate use of it.
 In an inventory management system, there must be the use of a software which can be
helpful in the tracking and managing of stock items. Thus in the context of Innocent
Drinks it can be quite useful for ensuring that there is no misplacement of goods.
Job Costing System- In this method, there is an estimation of various job costs. It is
essential to be used in those companies which are indulged in the process of manufacturing
(Aureli and et.al., 2019). In the context of Innocent Drinks, it can be very helpful to manage its
job order inflows and outflows effectively. In this way the firm will be able to make sure that it
can attain a higher level of efficiency and effectiveness.
Essential requirements-
 In a good job costing system, there must be tracking of job performance. Innocent Drinks
will be able to ensure that they can identify deviations and variances and remove them.
 A good job costing system ensures that the level of profits can be enhanced effectively by
ensuring that the costs and expenses which are associated with them are reduced. In this
way, Innocent Drinks will be able to maximize its level of profitability.
Price optimization system- In it, there is setting of price by the managers through the
use of appropriate methods and techniques (Bedford and Speklé, 2018). Therefore, for the
managers of Innocent Drinks are required to ensure that they make the use of this system by
forecasting the change in prices in the market.
Essential requirements-
 In a price optimization system, there must be use of mathematical methods to forecast the
changes in demand of goods. This will help Innocent Drinks to set a right price.
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