Management Accounting: Systems, Methods, and Planning for Budgetary Control

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
P1. Explaining management accounting systems along with its essential requirements............3
P2. Assessing different methods that can be used for managerial accounting reports................6
P4. Explaining the benefits and drawbacks of different planning that can be used for budgetary
control..........................................................................................................................................7
P5. Comparing how management accounting systems can be adapted by firm for responding
monetary problems....................................................................................................................12
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting practice is associated with the preparation of managerial reports
that provides manager with suitable framework for decision making. In the context of
organization, managerial accounting reports are highly significant which assists manager in
evaluating and monitoring internal business performance. Managerial reports are highly
prominent as it contains information about both monetary as well as non-monetary aspects and
thereby helps in developing suitable policies. This report is based on the case scenario of Lets
Grow Ltd which is involved in manufacturing related activities and operations. In this, report
will highlight the significance of various managerial accounting reports with regards to Lets
Grow. Along with this, report will also develop understanding about various managerial reports
which aid in organizational decision making. It also entails how planning tools can be employed
by the firm in order to fulfill the aspects pertaining to budgetary control. Further, report will
shed light on the manner in which management accounting system helps in addressing monetary
problems.
P1. Explaining management accounting systems along with its essential requirements
Management accounting refers to the process of preparing reports by applying financial
tools and provisions. MA system advices firm about internal operational management in
monetary terms and thereby ensure development (Weetman, 2019). There is mainly four
management accounting system which in turn highly significant for the firm from the perspective
of decision making and maximization of profitability such as:
Job costing
It may be served as a technique which can be used by the firm for tracking specific cost
related to particular job. Using this method, owner of Lets Grow can accumulates expenses
related to material, labor as well as overhead and thereby ascertains cost of specific job.
Advantages
 Cost can be identified at any stage of job completion and thereby helps in exerting
control where required

 Estimation of each job and activity can be assessed through the means of previous
records (Advantages and Disadvantages of Job Costing, 2020).
 Facilitates budgetary control and remedial measures
Disadvantages
 Expensive and time consuming due to the inclusion of more clerical work
 Lack of standardization affects its significance
Cost accounting
Cost can be ascertained and meanwhile Lets Grow can set price of the products or
services. Moreover, by taking into account cost accounting system firm can determine per unit
cost and thereby determines price by adding profit margin into it. Thus, referring following
formulas Let Grow can asses both cost as well as price:
Cost per unit = Total expenses / number of units produced
Price = cost per unit + (CPU * profit %)
Advantages
 Helps in reducing the level of wastage, losses and inefficiencies
 Cost accounting helps in reducing cost and identifying the reasons pertaining to profit or
loss
 Advise company for taking decision about making or buy
Disadvantages
 It is not future centric because only past information’s available
 Further , it is based on the assumption of full capacity utilization which not appropriate in
all context