Management Accounting System and its Application Assignment

MANAGEMENT
ACCOUNTING SYSTEM AND ITS
APPLICATION

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
1. Management accounting system and requirements of different types of management
accounting system........................................................................................................................1
2. Different management accounting reports...............................................................................2
3. Benefits of management accounting system and their application with context of
organisation..................................................................................................................................3
4. Integration of managements accounting system and management accounting reports...........3
TASK 2............................................................................................................................................3
TASK 3............................................................................................................................................3
1. Advantages and disadvantages of different planning tools uses in the budgetary control......3
2. Analysing use of panning tools and their application for for casting and preparation of the
budgets.........................................................................................................................................5
TASK 4............................................................................................................................................6
1. Adaption of management accounting system in order to respond to the financial problems.. 6
And also Analysing the way through which organisation can leas to success by responding to
the financial problems..................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Management accounting system is the process of analysing the cost of business
operations, in order to prepare the financial reports and records which aid manges in decision
making which leads to the achievement of organisational goals and objectives.
the present study is based on the ABC Ltd. Company which exist in manufacturing industry
deals in production of goods and services. This is the medium sized enterprise.
The report will explain about the requirement of management accounting system and
management accounting reports which helps the internal uses in generation of essential
information which aids in decision making. The report will also explain about different
techniques of costing which generate and provide reasons for difference in the net profit of the
company.
Furthermore, the report will explain about different planing tools which can be used by
the company to forecast the budget. In addition to this some of the tools including balance score
card, benchmarking will also be explained for understanding of the tools which helps in solving
the financial problems .
TASK 1
1. Management accounting system and requirements of different types of management
accounting system
Management accounting system is the internal system of the organisation which helps
them in measuring and evaluating their processes (Kaplan and Atkinson,, 2015). This is
considered to be the process of preparing of the management reports and also the accounts which
can further help its users in making effective and efficient decision by using the financial
information generated by reports (Management Accounting – Meaning, Advantages &
Functions. 2018). These reports helps in generating in formation related to finial and statistical
data which helps mangers in making long term and short term decisions.
Management accounting is also called as managerial accounting and the cost accounting.
This is considered to be the process of analysing the cot of business operations, in order to
prepare the financial reports and records which aid manges in decision making which leads to the
achievement of organisational goals and objectives(Renz, 2016).
1

Management accounting plays essential role for the mangers of ABC Ltd. for
implementing their functions of planning, organising,controlling and the decision making . Their
aim is to provide the support decision making by mangers by collecting , processing and
communicating the important information to the Internal users as these will aid them in their
decision making efficiently .
There are different types of management accounting system which helps the business
and managers in generating different information based on the requirements and needs of the
management(Maas, Schaltegger and Crutzen, 2017) .
Some types of management accounting system are as follows:
Cost accounting system
This is also called the costing system or product costing which is the framework used by
the firms in order to estimate the cost of the products for analysing their profitability, cost control
and also for the inventory valuation. ABC Ltd. Use cost accounting system so that it helps them
in ascertaining the cost of every activity in which they need to incur expenses in order to
accomplish their activies and generating income.
Inventory management system
Inventory term is generally used to represent the stock, material, goods .Inventory
management system leads to the combination of the use of desktop software, barcode printers,
barcode scanners and also the mobile devices in order to streamline the management of the
inventory(Quattrone, 2016). This system also helpful for ABC Ltd. in tracking of the goods that
is receiving and shipping of the goods. This helps in controlling the inventory and also to
ascertain the current levels of the inventory which resulting in automatically reduction in under
stock and overstock situations. There are different method of this system which includes LIFO
and FIOFO method.
LIFO is the management system which focuses on selling of the inventory which produced in the
last and the fresh stock is being sold by the company in order to attract more customers.
FIFO is the inventory management system which focuses on selling of the product which
produces initially that is which ABC Ltd .have produced first are required to be sell first in order
to remove the older stock.
Job costing system
2