Management Accounting Systems and Techniques

MANAGEMENT ACCOUNTING SYSTEMS AND TECHNIQUES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1: Explaining management accounting systems along with their essential requirements........3
Management Accounting:...........................................................................................................3
P2: Explaining different methods that can be used for MA reporting........................................5
LO2..................................................................................................................................................7
P3 Calculating cost and preparing profitability statement as per absorption & marginal costing
system..........................................................................................................................................7
LO3..................................................................................................................................................7
P4: Explaining planning tools used in budgetary control with their advantages and
disadvantages..............................................................................................................................7
LO4..................................................................................................................................................9
P5: - Comparing organizations in relation to the adaptation of management accounting
systems for responding financial problems.................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting (MA) helps the business to prepare reports that are essential for
decision-making. There are many types of management accounting like inventory management,
cost accounting, job costing, and price optimization which provides many benefits and
drawbacks to organization. There are many managerial reports which help the organisation to
evaluate its performance. This project introduces various planning tools that are used in
budgeting and the advantages and disadvantages that they pose in Capital Joinery Ltd. It has
reflected the budgets that are prepared by applying expertise like the flexible budget and zero
based budgeting. The project also highlights the various techniques in the management
accounting which are applied to solve the financial problems that arise in an organization.
LO1
P1: Explaining management accounting systems along with their essential requirements
Management Accounting:
Management accounting helps in preparing the business operation reports that help the
manager of Capital Joinery Ltd to make short term and long term decisions. It helps the
management accountant to decide the important factors that help the company to improve the
profitability and growth. There are many management accounting reports that help the business
to measure performance and profitability of organization.
Vital requirement of MAA system
It is developed to support decision-making process of company, internal process of
company,resource application of any company like capital joinery ltd
Accuracy
Accuracy principle states that accounting record fully reflects all of supporting facts. All
transactions should be recorded on time regardless of actual cash flow. This principle helps
capital joinery Ltd to analyse its actual position.
Reliability
This principle says that all available information should be most accurate and relevant.
This helps CJL company to have true information regarding its transaction so actual profit and
actual position of business can be known.
Trustworthy

Trustworthy principle states that all information available should be available as evidence
so it can be presented at the time when capital joinery company can be proved to be trustworthy
to its clients and other important parties.
Up to date
The data available while recording transaction should be updated information so capital
joinery company can have updated information for making new strategies.
Future Planning
Future planning helps company to use these available data to for planning like
what strategies and decision can be modified to achieve target
Different Types of Management Accounting:
Inventory Management system:
Inventory management system of Capital Joinery Ltd is the process of monitoring and
maintenance of stocked products (Tan and Low, 2019). The inventory management system helps
business unit like CJL to be efficient and effective as it manages both the revenue and return. It
also provides assistance to the manager in relation to deciding price of the products offered by
them and also deciding the price of rooms and distribution techniques, and also it helps to
prepare for flexibility for accepting the changing preference and taste.
Benefits Drawbacks
 Lowering cost of inventory  Expensive technique
 High efficiency of management  Breakage and spoilage cant not be
detected
 Each material can be produced in
economic quantity
 Increased insurance charges
 Positive control over desired level of
inventory
 More space required
 Cost saving of the organization  Hides production problem
 Data security  Difficult to control
Cost accounting system: