TABLE OF CONTENTS INTRODUCTION 1 SECTION 11: Introduction of Management Accounting System and its Application

Management Accounting
system and its application

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
1. Explaining importance of management accounting in decision making process for
improving performance of company...........................................................................................1
2. Explaining different types of management accounting systems used for management
accounting reporting....................................................................................................................3
3. Critically evaluating benefits of types of management accounting systems and their
application...................................................................................................................................5
4...................................................................................................................................................5
a) Preparing Profit and Loss statements using absorption and variable costing.........................5
b) Explaining why profits from both systems are different........................................................7
c) Producing reconciled statements of profits or loss.................................................................7
SECTION 2......................................................................................................................................9
PART A.......................................................................................................................................9
Comparison and contrasting the three planning tools that used in management accounting......9
PART B.....................................................................................................................................11
Different ways in which management accounting will be applied for increasing effectiveness
...................................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is that process of business which is concerned with making out
profits and loss statements of particular period so that the efficiency of firm could be taken out
by management. This function is majorly concerned with management or highest authority
within business so that they could easily collect and then allocate all funds that are available. The
collection of all the important and relevant data of business which would then be used and
applied in firm so that decision could be taken and they must be appropriate as well. In the
present assignment we would be learning in more depth about what is management accounting
and how its systems are to be used within the context of Williams Performance Tenders which is
medium sized boat manufacturer company. The report would also be including and explaining
reporting systems which are been used and employed by company so that it could tell about how
and what are the reporting systems.
SECTION 1
1. Explaining importance of management accounting in decision making process for improving
performance of company.
Management accounting is very much important for all the business enterprise so that
they could easily understand the meaning and its decision making uses. All the effective decision
regarding business, use and allocation of funds would be related to this process. There are many
factors which would be helping this system to be different from financial accounting (Why
Management Accounting Is Important in Decision-Making, 2018). The role that this system is
playing within Williams Performance Tenders should be related to its main function of helping
in forecasting of future. Management accounting would also be implementing about sales and
cash flow forecasting that how much cash would needed to do or carry out planning and
manufacturing of boats. If company is investing within one particular project then what would be
the rate of return in that project this is also been analysed within framework of manufacturing
firm.
All these are role which management is playing in application of firm now we would be
learning about all importance of it in decision making process which would thus be improving
performance of business of Williams Performance Tenders. In small and medium firm like that
of Williams Performance Tenders it becomes very much important that they are taking correct
1

decisions in regard to profit margin or labour utilization. Other importance of management
accounting within the context of manufacturing firm are as under:
Relevant cost analysis- all data which is been collected and used in this management accounting
techniques would be clearly determining that what all should be sold and how would it be sold.
All the marketing efforts which are to be used by business are to b chosen in that way that is
making or lowering down cost of business (Griffiths, Brockelsby and Walshaw, 2018). All cost
which are to be incurred by firm must be included within this process so that owner of that firm
is having quite clear idea about which activity is incurring how much money in this respect. Cost
particularly refer to that part of organisation which relate to value or amount that is invested in
one activity or product of firm to produce it. So management accounting would be able to tell us
about how much amount to be spend on each manufacturing of per unit of product so that firm
could analysis the amount of profits which they should be earning in near future.
Make and Buy analysis- An essential utilization of administrative bookkeeping data is to give
data utilized as a part of assembling. For instance, an entrepreneur might think about whether to
make or purchase a part expected to make the organization's essential item. By finishing a make
or purchase investigation, she can figure out which decision is more gainful. While this system is
surely helpful, entrepreneurs should just utilize these examinations as a factor in the choice.
There could be other non-budgetary measurements that are vital to consider that would not be a
piece of the investigation.
Activity based costing- Once the organization has figured out what items to offer, the business
needs to decide to whom they should offer the items. By utilizing movement based costing
procedures, independent venture administration can decide the exercises required to create and
benefit a product offering. Inserted in this data is the cost of clients (Ahmetshina, Kaspina and
Molotov, 2018). Choosing which clients are pretty much gainful enables the entrepreneur to
centre publicizing toward the purchasers who are the most productive
Utilization of data- Administrative bookkeeping data gives an information driven take a gander
at how to grow an independent company. Planning, monetary proclamation projections and
adjusted scorecards are only a couple of cases of how administrative bookkeeping data is utilized
to give data to enable administration to control the fate of an organization. By concentrating on
2