Management Accounting and its Essential Requirements

Management
Accounting

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
TASK1.......................................................................................................................................3
P1 Management accounting and its essential requirements of different types of
management accounting systems...........................................................................................3
P2 Methods used for management accounting reporting.......................................................5
TASK2.......................................................................................................................................7
P3 Calculating costs using suitable methods of cost examination to make an income
statement using marginal and absorption costs................................................................7
TASK 3......................................................................................................................................9
P4: Benefits and disadvantage of various tools of planning..................................................9
TASK 4....................................................................................................................................11
P5: Compare how organisations are managing the function of management accounting to
deal with different financial problems & issues...................................................................11
CONCLUSION........................................................................................................................12
REFERNCES...........................................................................................................................13

INTRODUCTION
Management accounting can be defined as in that part of organisation which is
directly related to managing the provisions of the accounting information system and help the
stakeholders in identifying the current financial position of the organisation by managing
different kind of accounts. In relation to the current report, Tesco is the chosen organisation.
It is a British multinational retail organisation which is selling products used in the global
world. Tesco is operating in more than 13 countries within the retail industry since 1919.
Under the current report, there is a discussion about the management accounting and the
requirements of different kind of management accounting system within the organisation
where the explanation related to method used for management accounting will also be
considered (Gibassier, 2017). There is also use of practical illustrations to define the
absorption and fixed cost implemented by the organisation. In the end of the report, there is a
discussion about the advantages and disadvantages of various budgetary control tools as well
as comparison between management systems to respond different financial problems by
using two organisations.
MAIN BODY
TASK1
P1 Management accounting and its essential requirements of different types of management
accounting systems
Management accounting can be defined as a process within organization which is
related to identification and valuation of different accounts to determine the financial position
of the company as well as use the information for management of finance. In relation to the
organization, management accounting can be defining as system which provides a particular
process to the organization for recording its different accounts to identify its current position
for achieving the goals and objectives.
According to institute of management accounting "Management accounting is that
field of management which is related to Management of financial and cost accounts of the
organization which help the management in taking different decisions related to planning and
increasing the performance of the organization (Armitage, , Webb, and Glynn,, 201). This
system is directly associated with the current position of the organization because it provide
the analysis of financial accounting system of the firm which are prime standard for
determining the financial position of the organization in the current market. Management

accounting can also use and system which is related to controlling and monitoring the cost of
different products and services offered by the organization and various activities which are
involved in process of business”.
In relation to Tesco, there are ample of benefits to organization by using the management
function which are discussed below:
Profit maximization: management accounting is helpful to the organization in
maximizing the profits because it is related to management of cost the organization which it
implements on different kind of activities. With help of management of cost organization
and easily identify with actual amount of profit as a financial position of the company within
market.
Efficiency booster: Management accounting also acts as a tool to increase the
efficiency of employees within the organization as well as other resources of the firm. This is
because management accounting helps in identification of various cost involved which
directly related to evaluation of the performance of different individuals and their roles. This
will increase the efficiency of individuals while working on a job because they can identify
their performance and can use the tools of management accounting in management of cost
(Kihn. and Näsi, , 2017).
Various systems that are used in management accounting
Price optimization system: under the system of management accounting or
organization use a calculation instrument which is directly related to managing the
performance of accounting system within the organization to identify the response of
customer behavior and use this customer behavior for managing the prices of the product
offered by organization (Sugahara, , Daidj and Ushio, 2017). It is the best suitable method for
the organization like Tesco, because It helped the firm in determining the price of the product
identification of their actual cost and expenditure which is involved while producing the
products and services. Major objective behind this system is to increase the profitability of
the organization by using appropriate pricing strategies and structure for the products and
services offered by the firm within the market.
Inventory management system: Inventory management system is also important
part in the marketing accounting system which is related to focusing on the organization
product by managing inventory and classifying the inventory in finished, unfinished and