Requirement of Management Accounting Systems And Overview

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Management accounting

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Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................3
Requirement of Management accounting systems and their benefits....................................3
Various Management accounting reporting...........................................................................4
Integration of management accounting system and reports...................................................5
Task 2.........................................................................................................................................5
Calculation of cost using absorption and marginal costing...................................................5
Calculation of breakeven units...............................................................................................7
Variance analysis...................................................................................................................7
Task 3.........................................................................................................................................8
Different planning tools and their application in budgetary control......................................8
Task 4.........................................................................................................................................9
Use of management accounting systems to respond to financial problems...........................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
In the business there is requirement for proper accounting and in that there will be a recording
of all the events which are taking place. Management accounting is a tool which includes
collection, recording, and interpretation of the information will be made possible. In this,
there are various aspects that need to be understood and they will be considered in the report
below. There are various types of management accounting systems that are involved in this
process and they will be discussed with the importance of the same. The reports are made in
the process and various types of reports will be identified in the report. The calculation will
be made by using marginal and absorption costing and the total cost which is involved will be
ascertained. There will be the determination of the breakeven point and the variance analysis
is to be discussed. There are several planning tools that are involved in the budgetary control
process and they will be taken into consideration. The manner in which management
accounting systems help in dealing with the financial tools will also be discussed by which
the required understanding will be gained.
Task 1
A requirement of Management accounting systems and its benefits
The operations are required to be performed in a business and this will be done in manner
that all the business objectives are fulfilled. In addition to the financial accounting, there will
be carrying out of the management accounting in which all the financial and non-financial
elements will be considered (Arroyo, 2012). There will be the use of all the information
which is involved in relation to the business. In this process there are various systems that are
involved and an understanding of them shall be obtained by which the benefits which are
gained with them can be identified.
Inventory management system: There is a need for the business to manage the inventory in an
adequate manner and for that this system is used. There is the stock maintenance and it
should be appropriate otherwise the funds will be blocked. The level of inventory that shall
be maintained will be considered and then the final decisions will be made accordingly. The
balance of the inventory will be valued with the help of the appropriate method and that
decision about the FIFO and other available methods will be made (Chenhall, 2012). This is
beneficial as the inventory management will be improved and cost will be controlled.

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Cost accounting system: The cost which is involved in the business shall be identified so that
proper recording in that respect can be made. There will be cost ascertainment and then that
will be classified in a proper manner. There are fixed and variable costs that are involved and
it is required that proper classification shall be made among them. The cost will be
ascertained and in that proper method will be used which will be involving the standard
costing, normal costing and actual costing (Maas, Schaltegger and Crutzen, 2016). This will
be helping in taking further decisions such as pricing decisions that are based on cost.
Job costing system: In the manufacturing business various jobs are involved which are
carried and there is the need to identify them (Drury, 2015). The cost which is associated with
them will be ascertained and that will help in managing the cost appropriately and also the
allocation will be made in the required manner.
Various Management accounting reporting
The information that is present in the company shall be taken into account for the reporting
purpose in an adequate manner and for that various reports are prescribed which are used.
With the help of this, the collected information will be reported adequately and will be used
by all the parties for several processes (Edmonds and Olds, 2013). The explanation of various
reports is provided by which the required knowledge will be gained.
Cost report: The cost-related data which is collected will be considered in preparing this
report. The information will be available in one place with this report and that will be used in
making the required decisions (Hiebl, 2014). The proper evaluation of cost will be made and
with that, the control will be established on the same. The benefit of the reduced cost will be
attained in the form of increased profits.
Performance reports: It is necessary that the performance shall be maintained in the business
and for that, there are various performance metrics that will be used. They all will be
specified in this report by which all the staff members will be having an idea about the targets
which are to be met by them (Seal et al., 2014). This will be improving their efficiency as the
motivation will be involved and every employee will try to perform better.
Variance report: The budget is made and it is required that they are followed in an adequate
manner. In actual the performance which is made deviates from the budgeted values and for
that variance report is prepared. In that, all the deviations which are involved will be