Management Accounting Systems and Cost Calculation

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems..........................................................................................1
P2: Management accounting reporting........................................................................................3
M1: Benefits of Management accounting systems......................................................................4
D1: Critical evaluation of Management accounting systems......................................................4
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
M2: Application of management accounting techniques.............................................................9
D2: Producing of financial reports...............................................................................................9
TASK 4............................................................................................................................................9
P4: Planning tools for budgetary control.....................................................................................9
M3: Analysis of planning tools..................................................................................................11
TASK 4..........................................................................................................................................11
P5: Comparison of organizations...............................................................................................11
M4: Analysis of response to financial problems........................................................................13
D3: Evaluation of planning tools...............................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a process through which management reports and accounts
are prepared so that accurate and timely information is obtained in order to facilitate taking of
different types of decisions (Alyousef and Mickan, 2016). Through it, analysis and interpretation
of the available financial data, facts and information is done which will be helpful in the
attainment of the goals as well as objectives. Thus, In this way it is useful for the organizations to
find out their problems and issues so that rectifying actions can be taken quickly. By using it the
management can make sure that it can work towards making the financial system of the company
better by using it. This report is based on Capital Joinery Ltd. It is a manufacturing company
which deals in joinery, made-to-measure doors, windows etc. In this assignment, detailed focus
will be made on demonstration of management accounting systems, calculation of costs,
explanation of the use of planning tools. Additionally, detailed analysis on comparison of way
organizations make the use of management accounting to respond to financial problems will be
covered as a part of this project.
TASK 1
P1: Management accounting systems
Management accounting is an important decision-making tool which is used internally by
the management. For The managers it is therefore crucial that it used properly (Baños Sánchez-
Matamoros, 2020). Thus in this way Capital Joinery Ltd. Can make its use so that important
decisions can be taken. It is very useful method for the companies which is helpful for them in
ensuring appropriate use of their funds.
In an organization the following types of Management accounting systems are used. The
explanation of these systems is given as follows-
Cost accounting system- It is a system which is helpful for the firms in their profitability
analysis, inventory valuation as well as cost control (Brukhanskyi, Yazlyuk and Bincharovska,
2018). Therefore, Capital Joinery Ltd. can use it so that estimation of the overall level of costs
can be made effectively and efficiently. It has to make sure that by using this system the
estimation of the costs as well as use of techniques and methods for cost reduction can be made.
This is helpful in the enhancement of the overall profitability level.
Essential requirements-
1

 In this system, there must be a cost flow assumption because it has to identify the way the
flow of cost occurs in an organization. This will help the company in ensuring that it is
able to estimate the level of costs easily. There must be a lot of accuracy in it because if
this assumption is wrong then this can lead towards the creation of a lot of problems and
issues as the calculations will not be accurate thereby creating difficulties. Thus accuracy
is an essential feature which must be present in this accounting system.
 This system must ensure that inventory cost flows must be recorded at certain intervals.
For the organization it will be helpful in the estimation of the level of stock effectively
and efficiently.
Inventory management system- In this system, there is recording of different stock items
within the organization and the information which is associated with them (Cokins, 2016). Thus
it is important for the firms like Capital Joinery Ltd. To make its use so that the assessment of
stock level within the company can be made in a proper manner.
Essential requirements-
 In this system, there must be an use of inventory management software which can record
the details of different stock items effectively and efficiently. Thus in this way the
company will be able to identify its different inventory items. The inventory management
software which is being used must be relevant so that the management of different types
of stock items can be done properly which will help in the attainment of the overall
efficiency and effectiveness. In this way the assessment of the movement of the stock
items can be done in the right way effectively and efficiently without problems and
issues.
 This system must have processes and policies for the purpose of labelling, documentation
and reporting of stock items. This allows an organization to easily track the inventory
items.
Job costing system- In this system, there is an analysis of different types of job costs. Also the
job performance of the organization can be estimated by using this system (Cools, Stouthuysen
and Van den Abbeele, 2017). Thus, for Capital Joinery Ltd. It is quite crucial that it uses it
properly because it is a manufacturing company and is required to make sure that it can ensure a
reduction in the overall costs by making the use of this system.
Essential requirements-
2