Management Accounting: Essential Requirements, Cost Calculation, Planning Tools and Advantages

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ..........................................................................................................................................4
Management accounting and essential requirements of management accounting system..........4
Different methods and their use for management accounting reporting......................................5
TASK 2............................................................................................................................................6
Calculation of cost with use of appropriate techniques for formulation of income-statement....6
TASK 3............................................................................................................................................9
Advantages and disadvantages of different planning tools with their use for budgetary control9
TASK 4..........................................................................................................................................11
Management accounting systems and their respond towards financial issue............................11
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
The practice of identifying, analysing, measuring and communicating financial
information to managers for accomplish of organisation goals and objectives according to
decided strategy and policy is known as management accounting. The primary purpose of
management accounting is to assist and cognisant internal management for make and induce
effective and informed decisions. Along with this management accounting helps to deliver and
encompasses right facts and figures related with business operation metrics and this aids
management to take appropriate and right decisions for organisation (Cleary, 2015). This report
is written from the perspective of ASDA which is a international retail organisation. Further,
report assist to understand about management accounting and essential requirements of various
types of management accounting system. Along with this different planning tools and accounting
methods for management accounting will also included in the report. In the last, report will
highlights on advantages and disadvantages of different planning tools used for budgetary
control.

TASK 1
Management accounting and essential requirements of management accounting system
Financial manager utilise the process of management accounting as this aids them to
collect and deliver accurate as well as reliable information which is used by the managers for
control routine operations in an organised manner. Along with this management accounting also
helps to translate and convert the financial data into effective information which helps manager
for formulate effective decision-making.
Management accounting system and their essential requirements in the organisation
The main role of management accounting system is to formulate an appropriate
framework for the organisation and this helps manager for formulate proper financial reports and
accounting system in order to make sound and right decisions (Cv and et. al., 2020). Some types
of management accounting systems are mention as below:
COST-ACCOUNTING SYSTEM
This also refers to the product costing system and it helps to formulate appropriate
framework that helps to estimate and analyse future cost of the business that incurred for
manufacture products and services. ASDA utilise management accounting system because it
helps to analyse future cost and profitability of business.
 Cost-accounting system is essential required by the management of ASDA because it
help to analyse the cost of overall inventory cost which is offered by the management in
their stores to customers.
 Another essential requirement of cost-accounting is that this helps management for
allocate all resources within the budget through including all types of cost such as
overhead, fixed and variable cost.
JOB-COSTING
The job-costing method is to determine overall cost of manufacturing and it means that
cost of each single manufactured unit is included under job-costing systems (Fiondella and et.
al., 2016). Management accounting method helps to generate effective decisions so by involving
each separate cost in manufacturing this is easy for ASDA to formulate right and appropriate
budget.