Management Accounting: Essential Requirements and Reporting Methods

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and essential requirements of its systems.......................................1
P2 Different methods used for management accounting reporting.............................................4
TASK 2............................................................................................................................................5
P3 Calculation of cost using different costing techniques...........................................................5
........................................................................................................................................................10
TASK 3..........................................................................................................................................10
P4 Advantages and disadvantages of different planning tool used for budgetary control........10
TASK 4..........................................................................................................................................13
P5 Comparison of the way in which organisations are adapting management accounting
systems.......................................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting is a branch of accounting that deals with locating, presenting, and evaluating
data for a variety of purposes, including , making decisions, maximising resource use, formulating
resources and preserving assets. It tends to deal with policy creation and plan formulation in order to
readily attain intended objectives. The company which was chosen in this assighnment is Eastern
Engineering Co. Ltd. on 6 July 1999 it is incorporated as manufacturing concern. In Uk It is established.
The definition of management accounting and the key needs of a management accounting system were
considered as part of this project. This paper also includes an explanation of several management
accounting reporting approaches. This project includes a cost analysis with supporting illustrations. The
advantages and disadvantages of planning tools for budgetary control are also examined in the relevant
assignment. This study also explains in full how management accounting is used to address difficulties
with financial concepts.
TASK 1
P.1 Explain management Accounting and give the essential requirement of different type of
management accounting system?
Management accounting: It is the process of analysing financial data collected from financial
statements in order to make key decisions that will allow a company to meet its organisational goals
within a certain time period.
Origin and evaluation of management accounting: At the time of industrial evaluation, this idea is
commonly introduced. Management accounting based on the concept of financial accounting is tends to
be created. Financial and cost accounting data are routinely used to generate management accounting
data. M.A. addresses both long-term and short-term planning.
Management accounting system: The following system cannot be implemented without financial
accounting system and cost. Companies use a variety of measures to assess their real and fair financial
situation in order to get a competitive advantage. Because the company Eastern engineering pvt ltd.
operates in the manufacturing industry, it is necessary to them to evaluate the benefits of various
systems so that they became capable to apply them properly in the business.
Difference B/w management & financial accounting
Management accounting Financial accounting
It reveals the information related to product, It reflects actual financial status of the company on

process, inventories, operational cost, job role etc. the basis of cash flow, p&L, balance sheet.
It is not concerned to legal constraits & generally
accepted principles.It can frame their own forms ,
rules and procedure as the information developed is
used internally only in this.
But it is governed by the principles of GAP
because to outsiders such as shareholders,
underwriters, financial institution, merchant
bankers, Qualified institution buyers etc it caters
important financial information.
Types of management accountingsystem
Cost Accounting System: this strategy facilitates the presentation of information about a company's costs
related with the production of various products & services. "the determination of actual cost, , budget,
standard cost, variance analysis, process activity and other associated activities." It is largely concerned
with acquiring, analysing, and presenting relevant cost data for the aim of interpreting and presenting
various types of management difficulties. It tends to be used in business to calculate the cost of items as
well as to services. It is also concerned with current expenses as well as cost estimation is to be incurred
in the near future.
Inventory management system: Its utilised to keep track of inventory data, which is useful for meeting
consumer demands. Different sorts of methods, such as Weighted Average, LIFO, HIFO and FIFO
approach, can be used to manage inventor.Various approaches are used by different organisations
depending on the nature of the business.. This is critical to its control since concerns such as
understocking and excess inventory tend to be reduced or eliminated with its support. It also aids in the
control of ordering costs and carrying cost by keeping inventory in shops in accordance with economic
order quantities. The right accounting system will require the company to decide regarding raw
materials, semi-finished goods, completed product and many other inventory-related considerations.
Price optimization system: As manufacturing company, Eastern engineering pvt ltd uses this strategy to
keep the cost of manufactured items at an optimal level, since it adds value by allowing them to analyse
the pricing that entities set for their products, as well as providing assurance that clients' expectations
are met or not. This approach must be followed by an entity in order to fulfil the goal, and only then will
it be feasible to fix the most appropriate price for a commodity or item, allowing the business to acquire
a competitive edge.