Management Accounting Systems and Techniques

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
LO1 .................................................................................................................................................1
Types and benefits of management accounting systems and its application in organisational
context..........................................................................................................................................1
Integration with the organisational process.................................................................................3
Methods used in management accounting reporting. .................................................................3
LO2 .................................................................................................................................................4
Different types of costing techniques used by GSK ltd...............................................................4
LO3..................................................................................................................................................5
Different types of planning tools used in management accounting ............................................5
LO4 .................................................................................................................................................7
Methods which organisation uses in management accounting for responding to the financial
problems. .....................................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Management accounting is the process where internal systems are used by organisation
for measuring and evaluating the process for management of organisation. Management
accounting has been used by organisation for achieving sustainable growth and success in the
organisation. GSQ is a manufacturing concern on which present report is based. Report will
cover meaning of management accounting and different types of management accounting
systems used in the business with their benefits and limitations and their application in the
organisation. It will cover the methods used for management accounting reporting. Different
techniques of costing used in management accounting will also be explained. Also t will give an
understanding about the management accounting planning tools and the use of management
accounting in solving financial problems.
LO1
Management accounting
Management accounting involves preparation and making available the financial &
statistical information’s to the business managers for carrying out managerial decisions for day
to day activities of business (Bui and De Villiers, 2017). It is different from financial accounting
as management accounting is of importance to internal management where the financial
accounting is for external reporting to stakeholders.
Types and benefits of management accounting systems and its application in organisational
context.
There are different types of management accounting systems which are used by GSQ ltd.
Inventory Management Systems
Inventory management is a technological and process & procedures combination which
oversee maintenance and monitoring of the stocks, whether the stocks are related with the assets
of company, supplies, raw materials or the finished products manufactured by the organisation
for sale to customers. Inventory management is widely used process that is essential for keeping
track of the movement of inventory within the processes and out of the organisation. The
methods used in inventory management are just in time and material requirement planning
Just-in-time-
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In this method organisations do not tend to store the stocks of inventory in the organisation.
Inventory is made available on demand by the production departments which saves the carrying
cost and risk of becoming outdated.
Material Requirement Planning-
In this method company stores the inventory that cannot be made ordered on urgent basis.
This involves planning about the requirement of inventory base on the previous trends. Bulk
purchases provide discounts.
Benefits
 Inventory management systems helps GSQ to have proper record of all the movement of
inventory.
 It also helps the company to reduce its costs using the approaches like just-in-time and
MRP.
 Inventory prevents interruptions in production process as it helps company to order in
time.
Application
Inventory management is applied in the production process for ordering the materials as
and when required (Hiebl, 2018). It helps GSQ in having proper record of the inventory stored in
warehouse.
Cost Accounting Systems
Cost accounting systems refers to recording all the costs incurred in manufacturing a
product. It account for all the direct and indirect costs associated with the product. Cost
accounting systems estimates the profitability of every item manufactured. It provide and
important base to management of GSQ for decision-making. The costing methods are direct cost
Direct costing – In this costing systems only variables costs associated with the products are
considered. Fixed costs are treated as period cost incurred during the period.
Standard costing – It refers to costing method in which actual output are compared with the
budgeted output. Corrective measures are taken for reducing the variances.
Benefits
 It helps the management in implementing improved methods for reducing the cost.
 It aims at identifying the reasons of variances between the outputs.
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