Management Accounting and Systems: Creams Ltd Case Study

Management
Accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Description of management accounting and its systems along with their essential
requirements................................................................................................................................1
P2 List of method which are used by companies to report information of management
accounting....................................................................................................................................2
M1 Application and benefits of management accounting systems used by companies..............4
D1 Analysis of the way in which systems and reporting of management accounting is
integrated with organisational processes.....................................................................................4
TASK 2............................................................................................................................................5
P3 Use of different costing techniques to determine cost and profits.........................................5
M2 Application of range of management accounting techniques...............................................7
D2 Interpretation of data..............................................................................................................7
TASK 3............................................................................................................................................7
P4 Analysis of different types of planning tools used in budgetary control................................7
M3 Use of different planning tools and their application to prepare budget and forecasts.........8
TASK 4............................................................................................................................................9
P5 Use of management accounting in responding financial issues.............................................9
M4 Analysis of techniques which are used by companies to deal with financial challenges....11
D3 Use of planning tools to deal with financial challenges......................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is an approach which is used by managers to keep track record
of internal reports of the business. It guides employees and other internal stakeholders to make
sure that their entity is performing good or not in the market. For all the companies it is very
important to make sure that they are able to meet the predetermined goals or not and for this
purpose they are required to be aware of the concept of management accounting (Alyousef and
Mickan, 2016). While planning to enhance or improve performance it facilitates managers to
formulate strategic decisions for future. This assignment is based upon Cream Ltd which is a
medium sized company of UK and offer doughnuts, waffles and ice-creams to the customers.
Present report is focused with different topics which are management accounting systems, its
report, accounting techniques to calculate cost, planning tools for budgetary control etc. Along
with this, comparison of organisations on the basis of use of management accounting techniques
to deal with finance related problems is also covered in this project.
TASK 1
P1 Description of management accounting and its systems along with their essential
requirements
Management accounting is a technique which is mainly used for the purpose of recording
information of organisational activities that are performed for the purpose of meeting long-term
business goals. It is very important for all the companies to make sure that they are focused with
it so that effective strategies for future could be formulated. Managers of Creams Ltd are also
using it as they want to make sure that business is executed in systematic manner. For this
purpose, various types of systems are used by them. Description of them along with essential
requirements of them:
Cost accounting system: It is a management accounting system which is used by
companies for the purpose of recording information of cost which have taken place during the
accounting year. With the help of it, managers in Creams Ltd get aware of the expenses which
are arising while carrying out operations so it is used by them. The essential requirement of it for
the entity is that it guides the management to analyse costs and arrange funds accordingly to
meet them (Aouni, McGillis and Abdulkarim, 2017).
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Inventory management system: All the companies which are making any type of
product or item use it so that details regarding the stock which is used to carry out operations
could be kept. In Creams Ltd. it is utilised by the management to make sure that the enterprise is
able to meet requirements of all the customers regarding doughnuts, waffles and ice creams by
managing the items that are required to make them. There are three types of it which could be
used by entities according to their requirements. All of them are as follows:
 LIFO: When this inventory management system is used by enterprises then they make
sure that recently bought items are used to make products.
 FIFO: If it is used by companies then already purchased goods are used to make the
final product.
 AVCO: In this system of inventory management the goods are used for business on the
basis of their average cost.
From all the above described systems of inventory management first in first out method is
used in Creams Ltd. Its essential requirement for the company is to use fresh and good quality
goods to make all the items ordered by the customers (Arunruangsirilert and Chonglerttham,
2017).
Price optimisation system: All the organisations which are focused with meeting the
long-term business goals by attracting large number of customers use it because it helps them to
set appropriate price for all the products that are sold by them. In order to determine the right
price for all the items that are sold by Creams Ltd to its customers this system is used by the
entity. It is essentially required for the organisation because it can help to decide best suitable
price for all the items that can help to meet expectations of customers.
Job order costing system: When entities want to keep track record of all the activities
that are performed by them then it is used as it is highly focused with performing all the jobs
according to specifications of customers. In Creams Ltd. it is used by management so that the
managers can record the requirements of clients separately and try to meet them all. It is very
important for the enterprise to use it as it facilitates to meet the demand of targeted audience
(Bedford and Speklé, 2018).
P2 List of method which are used by companies to report information of management accounting
When an organisation records information of all its activities in different reports then it is
known as management accounting reporting. While formulating strategies for future it is very
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