Management Accounting: Essential Requirements, Methods, Benefits, and Techniques

Management Accounting

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................4
MAIN BODY...................................................................................................................................4
Defining Management accounting and also the essential requirements to the different types of
management accounting system..................................................................................................4
Different methods used for the management accounting reporting.............................................5
Benefits of management accounting systems..............................................................................6
Critical evaluation of management accounting systems and management accounting reporting
......................................................................................................................................................6
TASK 2............................................................................................................................................7
Calculation of the Production cost per unit, Total production cost and total cost of sales..........7
Application of techniques for the production of the budget profit and Loss statement...............9
Amount £..................................................................................................................9
Reconciliation statement of profit figures......................................................................................10
TASK 3..........................................................................................................................................11
Explaining advantages and disadvantages of different types of planning tools used in
budgetary control.......................................................................................................................11
Explaining use of different planning tools and their applications for preparing and.................13
forecasting budgets....................................................................................................................13
Evaluating planning tools for management accounting respond appropriately for...................14
solving financial problems to lead organizations to sustainable success..................................14
TASK 4..........................................................................................................................................15
Explaining how management accounting system is adopted by organization to respond to
financial problems .....................................................................................................................15
Responding to the financial problems can lead the organization to sustainability success.......16
Evaluation of planning tools for the management accounting for responding to the appropriate
solution of the financial problems..............................................................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Management accounting is the process which helps the business in the preparation of the
business operations which helps the managers in the short-term and long-term decision-making
with the help of financial analysis. The management accounting is the identification,
measurement, analysation and interpretation and communication of the financial information for
the better decision-making. In this project the chosen organization is the ABC Ltd for which the
management accounting will be discussed. This project helps the business in providing essential
requirements of the different types of management accounting systems. This project will also
provide the discussion of the different methods of management accounting reporting. In this
project the calculation of the costs which are used for the analysation of the appropriate

techniques of the cost analysis and the preparation of the income statement for the application of
the marginal and absorption cost system has been utilized. This project also provides the
advantages and disadvantages of the different types of planning tools which is used for budgetary
control. In this project the comparison of how the organization is adapting to the management
accounting systems for responding to the financial problems.
TASK 1
MAIN BODY
Defining Management accounting and also the essential requirements to the different types of
management accounting system
The management accounting system is that process which helps in the preparation of
different reports about the business operations which help the managers for making short-term
and long-term decisions which helps the business in the pursuing the goals and also the
identification, measurement and analysation of the interpretation of the communicated
information to the managers of the organization (Quinn and et.al., 2018). This is also very
helpful for forecasting the future which helps the business in the management of the upcoming
issues. Management accounting also allows the business in the making the decision related to the
cost and production of the organization which allows the business in understanding the factors of
the purchasing choices of the data from the managerial and accounting empowerment of the
decision-making of the operations in the strategical level. Management accounting is known for
being very important for the analysation of the future cash inflows in the business. The essential
requirements in different types of management accounting system are,
Cash flow analysis :
In the management accounting the performance of the cash flow analysis for the
determination the cash which impacts the business decision of the organization. This
management accounting system helps in the analysation of the inflowing cash which allows the
business of in financial information which is considered to be the best way in which the future
performance of the business can be considered (Alabdullah, 2019.).
Inventory turnover analysis :
The Inventory turnover analysis is the part of the management accounting system which
helps the business in the calculation of how many times the company has sold all the stock which
it purchased. This cycle of inventory getting replaced is known as the turnover of the business

which is considered important factor that helps the business in the management of the
organizations importance and other operations.
Job costing system :
This is that part of the management accounting system which manages the accounts
receivable report of the organization that is considered to be categorized to have a very positive
effects on the company's bottom line (Zandi, 2019). The management of the accounts receivable
ageing report is said to be categorized in the AR invoices which helps the business in the length
of time of how outstanding this business can be.
Price optimization system :
Preparation of the budgets is very essential for the organization as it creates the
quantitative expression of the company's plan on what it wants to implement in its operations
that will allow the business in the utilization of the performance reports for noting the deviation
of the actual results from budgets and positive or negative deviations from the budget.
Different methods used for the management accounting reporting
Different types of management accounting reporting which this business needs to
consider in the management accounting are,
Budget Reports :
The managerial reports of the organization is directly related to the creation of the budget
managerial accounting reports that is considered to be very critical for the measurement of the
company's performance (Wahyuningsih and et.al., 2021.). These reports are prepared with the
help of the estimation of the previous experienced budget which can create an unforeseen
circumstance that might arise in the organization.
Account Receivable Ageing Reports :
The preparation of these reports is considered to be very dependent over the breaking
down of the customers remaining balances of what the business will receive. The corporate
culture of the organization is decided with the help of business to estimate how much the
business will receive.
Cost managerial accounting Reports :
Management of the cost reports is very essential for the business as it help the busies in
the estimation of how much expenditure it will for the generation of a certain revenue. This is the

reason why it is considered that with the help of this cost managerial accounting the business is
able to fix a selling price which contains the margin of profit in the organization.
Inventory Reports :
In an organization which deals with a certain type of product it is important for the
business to manage its inventory which is considered to be the essential factors which helps the
business in the management of organizational performance. It also helps the business in gaining
fasted turnover (Astuty and Pasaribu, 2021).
Benefits of management accounting systems
The benefits of the management accounting system and their application for the business
are,
Increases Efficiency :
The management accounting system is considered to be one of the most effective way in
which the business can increase its efficiency. This happens as the business plans its expenses
according to the analysed reports of the company finances.
Maximization of profit :
The management accounting's budgetary control and capital budgeting tool helps the
business in the development of a plan which can be used by the business for creation of the
reduced costs and increasing the profit maximization.
Controlling Cash flow :
Controlling cash flow is very essential part of the management accounting as it helps the
business in creating a control of cash flow and also help it in the management of the cash which
is considered to be better with the foxed properties (Javed and Malik, 2021).
Decision-making :
Management accounting system is very important for this organization to develop a
decision-making process. Which is essential for the organization in the management of the
organization and also the development of a reliable management that is essential for the decision-
making of the business.
Simplification of financial statements :
In this business it is very important that the organization is able to manage the financial
statement as it is useful for the business to create comparison with other competitors that can
allow the business to grow.