Management Accounting

Managemnt
Accounting
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INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
P1. Management accounting and essential requirements of management accounting systems
(MAS)..........................................................................................................................................3
P2. Explain the different types of management accounting reports which are used for reporting
purpose.........................................................................................................................................5
M1. Benefits of different management accounting systems (MAS) along with its applications 5
TASK 2............................................................................................................................................6
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................6
M2. Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents...................................................................................................10
TASK 3..........................................................................................................................................10
P4. Explain the advantages or disadvantages of different types of planning tools which are
used for budgetary control.........................................................................................................10
M3. Analyze the use of different planning tools and their application for preparing budgets
and forecasts..............................................................................................................................12
TASK 4..........................................................................................................................................12
P5. Compare how organizations are adapting management accounting systems to respond to
financial problems.....................................................................................................................12
M4. Analyze how, in responding to financial problems, management accounting can lead
organizations to sustainable success..........................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
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INTRODUCTION
Management accounting has many methods used by organisations in the finance sector. It
could be seen as accounting rules wherein professional accountants evaluate financial and non-
financial information for disclosure aspects for internal as well as external management (Busco
and Quattrone, 2015). This accounting carries a large set of roles and obligations for business
organizations. Innocent Drinks UK has selected for this report and it offers Smoothies dairy free
variety for targeted customers and it will provide better understanding
of management accounting concept. There are several forms of management accounting systems
and organisational positions are covered in the study. Various types of financial reports are used
for reporting purposes. In addition, financial reports are also produced in line with MAS
'contribution to resolving financial problems faced by corporations.
MAIN BODY
TASK 1
P1. Management accounting and essential requirements of management accounting systems
(MAS)
Management accounting:
Management accounting can be described as a financial accounting whereby descriptive
knowledge is frequently managed in order to meet the requirements for internal reporting.
Financial reporting plays an essential role in several areas where it assists in financial planning,
decision-making processes, greater control of production process etc (Cooper, 2017.
Management accounting is beneficial for management teams to obtain reliable information, as
well as being able to make appropriate business choices with regard to the organisation. The
Innocent Drink UK managers follow several management accounting systems which are
discussed below:
Different management accounting systems:
Cost accounting method: It is regarded as a structure that is ideally linked to the process of
business enterprises which estimating future expenditures. This system's function is not limited
until estimation, and moreover seeks to determine cost variances. In companies, this cost
accounting system is useful in helping manage operational activities, so that the amount of
expenses can be reduced. This management accounting model is implemented under Innocent
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Drinks UK, with the goal of minimizing the cost of their daily free price compare to the
approximation.
Price optimization system: This system is associated with the technique used to measure
the price of a product & service which is based on the demand and reliability of their products)
(Fleischman and Parker, 2017). It is possible as it collects information about consumer demand,
and the price is determined. Along with all the business entity, the sales department uses
such information about their regular products such as Smoothies on the help of this performance
and classifies their demand in different customer segments.
Investment management system: This is another form of management accounting system
that deals with the method of maintaining ownership over all products purchased and delivered
by corporations for a given period of time. In the organisation of Innocent Drinks UK, valuation
of stock is given in combination with advanced methods, such as the LIFO, FIFO process and the
(weighted average cost methodology) WACM. All of these techniques play an essential role for
companies to track accurate inventory quantities at the present time it is necessary. As with
Innocent Drinks UK, with their production staff is using critical knowledge for manufacturing
systematic approach of raw material handling.
Job costing method: This could be defined as management accounting system (MAS)
that is related to the process of measuring cost in each unit of production. MAS 'purpose is
to reduce the overall cost of jobs (Gray III, 2015). Because of the limited range of products that's
not suitable for small businesses. It is suitable for large organizations which have a wider range
of products. As far as the above-mentioned company is concerned that is Innocent Drink UK,
this accounting scheme is applied to cover the costs of each Smoothies product produced by the
production line.
Essential requirements of MAS:
• Reliable: It is an essential requirement of management accounting systems that the
gathered information should be reliable and which further help in final results.
• Up-to - date: accounting professionals can use current data for the right results, or modify
their financial reports on a quarterly and annual basis for successful or effective business
decisions.
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