Management Accounting - Sample Assignment

Management

Table of Contents
INTRODUCTION...........................................................................................................................1
P 1 management accounting system and its essential requirements in business.........................1
P 2 Different methods of management accounting reporting.....................................................3
M1 Benefits of different management accounting systems and their applications in the
organisation.................................................................................................................................4
P3 Different types of costs and costing techniques and calculation of various costs to analyse
and interpret different costing techniques and preparing income statements.............................6
M2 Description of costing techniques and using these for preparation of financial reporting
documents.................................................................................................................................10
P4 advantages and disadvantages of different planning tools of budgetary control.................16
P5 Adoption of management accounting systems to respond various financial problems. .....18
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

INTRODUCTION
Management accounting is the systematic presentation of financial activities in such a
manner that provides useful information to manager in taking rationale decisions. The purpose of
this accounting is to assist internal management in forming policies and strategies. The present
report will cover meaning, advantages and requirements of management accounting system. The
report will also shown the calculation of budgeted and actual costs by using different costing
techniques. Further, use of planning tools in management accounting for maintaining
profitability and sustainability of company will be discussed.
P 1 management accounting system and its essential requirements in business
Management accounting
Management accounting is a branch of accounting which helps the management in
taking managerial decision relating to the financial position of the company (Akhmetshin, E. M.
and Osadchy, E. A., 2015). It can be defined as applying the professional knowledge and skills in
preparation of the financial statements of the company so that they could provide relevant
information to the mangers in taking appropriate decisions and formulate the best policies for the
enhancement of business and increasing the financial position of the company.
Management accounting system
Management accounting system is a system of accounting which deals with the analysing
and controlling the internal system of the business including various resources of the business are
needed to operate the regular operations of the company. Management accounting system helps
the management in enhancing the overall capacity of the business in order to enhance its
efficiency and profitability.
Requirements of management accounting system
Management accounting system plays a vital role in the success of the company. Each
firm needs inclusion of a better management accounting system in order to enhance its financial
position over a time.
Types of management accounting system and their requirements
Cost accounting system, inventory accounting systems, job costing systems, price
optimization system, etc. are the various types of management accounting systems which could
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be adopted by the company in order to enhance its capacity and efficiency at various departments
of the business. Key requirements of these management accounting system are as under:
 cost accounting system
Cost accounting system deals with the analysing the cost efficiency of the business and
developing plans for the company in order to make it more cost efficien (Doluwarawaththa
Gamage, S. D. and Gooneratne, T., 2017)t. Management can identify cost incurred by the firm
on each product manufactured by the company. It helps in determining the selling price of the
product as well.
Requirements
 This system of management accounting is required by the company as it helps
them in having better control over the cost of the company.
 With the help of cost accounting system, business can determine cost incurred at
each level of production. It helps managers in identifying the wastage of cost at
each level and eliminate them.
 This system helps in determining the cost of each product incurred by the firm.
Managers can determine the selling price of each product after adding set profit to
be earned by the company.
 Inventory management system
It is the system which deals with the planning and controlling the inventory of the
company (Bedford, D. S., 2015). With the help of it, company can record the flow and
requirement of inventory in the firm. By maintaining the inventory accordingly company can
reduce the risk of insufficiency of the stock in the business.
Requirement
 It leads it proper maintenance of record of the inventory.
 This system is required by the manufacturing concerns, as with the help of it they can
identify the minimum requirement of the business to held the inventory for
eliminating the insufficiency or excess of the stock with the company.
 Through inventory management system, business can record each movement of
inventory, whether it is within the business of outside the business. It results in
enhancement of efficiency of the company in context with the inventory.
 Job costing system
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It is the system with the help of which company can determine cost incurred by the
company in performing each job or manufacturing a particular lot of the product or services.
Requirement
 Job costing system is required by those companies which are engaged with
manufacturing the product or services as per the requirement of its customers.
 Business concerns required this system of accounting if they want to determine the
cost of each type of product of services manufactured by them.
 With the help of this system they can also determine the selling price of the
customised product or services by additing the set profit of the company in order to
achieve the organisational objective of gaining profit from the products.
Critical evaluation of management accounting system and reporting
From the above analysis, it can be evaluated that involvement of management accounting
system can help the company in maintaining an effective control over all the financial transations
of the business. Although, for the purpose of adopting management accounting system, the
business needs to involve huge cost in the business.
Further, maintenance of management accounting reports could help the managers in
effectively analysing the actual position of the business and developing their strategies and plans
accordingly. On the other hand, for preparing the management accounting reports, company
needs to appoint professional accountants, that may increase the cost of company.
In this order, a company should adopt management accounting systems and maintain its
reports as well. As, although both involves a huge cost, but the company can recover the cost and
generate additional profits with effective management.
P 2 Different methods of management accounting reporting
Management reporting
Management reporting is a process of management in which deals with
documentation of all the relevant information to the managers including finacial reports and
reports of different accounting systems of the business (Collis, J. and Hussey, R., 2017).
Management reporting helps the management in financial control, project management,
presentation of business in business meetings, etc.
Methods of management reporting
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