Management Accounting Report for Tech (UK) Limited

Management Accounting report for Tech (UK) Limited
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Contents
Introduction:...................................................................................................................................................4
Task 1 Report:................................................................................................................................................5
A) Explanation of management accounting and the essential requirements of management accounting
system which entails:.................................................................................................................................5
1. Distinguishing Management Accounting from Financial Accounting:.................................................5
2. The importance of management accounting information as a decision-making tool for department
managers....................................................................................................................................................6
3. Cost management systems:....................................................................................................................7
4. Job cost systems:....................................................................................................................................7
5. Inventory management systems:............................................................................................................7
b) Presenting financial information:..............................................................................................................9
M1 Evaluate the benefits of management accounting systems and their application within an
organizational context..............................................................................................................................10
D1 critically evaluates how management accounting systems and management accounting reporting is
integrated within organizational processes..............................................................................................11
Task 2...........................................................................................................................................................12
a) Calculate costs using appropriate techniques of cost analysis to prepare an income statement using
marginal and absorption costs..................................................................................................................12
M2 accurately apply a range of management accounting techniques and produce appropriate financial
reporting documents:...............................................................................................................................16
D2 Produce financial reports that accurately apply and interpret data for a range of business activities:
..................................................................................................................................................................17
Task 3...........................................................................................................................................................18
a) Different kinds of budgets and their advantages and disadvantages...................................................18
b) The budget preparation process including determination of pricing and different costing systems
that can be used........................................................................................................................................21
c) The importance of budget as a tool for planning and control purposes...............................................22
M3: Analyze the use of different planning tools and their application for preparing and forecasting
budgets.....................................................................................................................................................23
Task 4...........................................................................................................................................................24
a) Balance scorecard approach.................................................................................................................24
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M4 Analyze how, in responding to financial problems, management accounting can lead organizations
to sustainable success...............................................................................................................................26
D3 Evaluate how planning tools for accounting respond appropriately to solving financial problems to
lead organizations to sustainable success................................................................................................27
Conclusion:..................................................................................................................................................28
References:...................................................................................................................................................29
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Introduction:
The major aim of preparing this report is to analyze usage and significance of management
accounting and tools for making accurate and successful decisions. This reading will be going to
explain various methodologies and types of management accounting systems, importance of
management accounting reporting in the context of Tech UK limited. This report will explain the
features of cost techniques and analysis in order to measure transparency and reliability to
manage the business and they're objective to get long-term achievements. This report will
provide knowledge about balance scorecard as decision making management tools which will
help the reader to assess the capability of the company to decisions and attain effective meaning
outcomes through this; it will also include a description of budget and their significance of
budgets in the company.
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Task 1 Report:
A) Explanation of management accounting and the essential requirements of management
accounting system which entails:
Management accounting is a profession which helps in managing, observing and inter-
relating all the things related to business activities. It is a study of collecting managerial,
financial and operational data, evaluating the systems and make standards related to that in
order to make effective decisions within the management. Management accounting is
essential to be adopted by the company to maintain working environment and decision
capability stable.
1. Distinguishing Management Accounting from Financial Accounting:
Basis Financial Accounting Management accounting
Nature Financial accounting is the
tool which is utilized by the
company to manage financial
activities.
It is flexible in nature which is
used in the company to manage
decision making possibilities.
Objective The major objective of
adopting financial
accounting is to define
accuracy and transparency in
financial accounting and
records (Legaspi, 2014).
But management accounting is
adopted in the company to make
various kinds of decision more
flexible and accessible.
Scope Financial accounting has a Management accounting is not
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wide scope in the
organization because it is
mandatory to be utilized
while producing financial
and annual reports.
compulsory for the company and
management to be adopted due to
its limited scope in the company
(Lunkes, et. al., 2013).
Accounting
compliance
Financial accounting is based
on the regulatory process of
accounting principle and
norms which is necessary to
comply with accounting
standards, regulations and
laws while making financial
statements.
In Management accounting,
accounting norms and regulations
are not compulsorily adopted, it is
just related to the operational
reports.
Interest It is basically used for
internal plus external both
users who have interest in
company’s financial status.
Management accounting is
generally adopted when its
compiled with only internal users
of consumption.
2. The importance of management accounting information as a decision-making tool for
department managers.
1. Pricing decision: management accounting is adopted by the company to determine
their product prices as per market trends and competition demand. Management
accounting allows the company to have competitive analysis and evaluate the market
condition. It is important for the company to monitor market changes and set prices to
increase sales volume.
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