Management Accounting System & Techniques

Management accounting
system & techniques

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1.Managerial accounting and various types of MAS: .........................................................3
P2. Several methods utilised for management accounting reporting: .................................5
M1.Several benefits of management accounting system along with their application within an
organisation:...........................................................................................................................6
D1.Integration of different MAS and managerial accounting reporting within an entity's
business processes:.................................................................................................................7
TASK 2............................................................................................................................................7
P3. Preparation of income statement using marginal and absorption costing techniques:.....7
TASK 3..........................................................................................................................................11
P4. Advantages and disadvantages of different types of planning tools:.............................11
M3. Use of planning tools and applications in preparing and forecasting budgets:.............13
TASK 4..........................................................................................................................................13
P5. Adoption of management accounting system to respond financial problems:...............13
M4. Role of MAS in responding several financial problems and maintain sustainable success:
..............................................................................................................................................15
D3. Planing tools used in solving financial issues:..............................................................15
CONCLUSION..............................................................................................................................15
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting system is a procedure by which an organisation represent its
financial information in such a way that helps such organisation in running its day to day
operations effectively and for other internal works. MAS also helps the an entity in planning its
future operations and take decisions accordingly to control the future business activities.
Managerial accounting is strongly recommended with providing valuable data to the
management and board of an entity to run its day to day business processes efficiently and
effectively. For better knowledge of such topic, an organisation named Asda is chosen which is
engaged in retail sector (Abdelmoneim Mohamed and Jones, 2014).
This report gives the important requirements of different types of managerial accounting
system as well as various method that may be used by the an organisation for reporting purposes.
A company may utilised several planning tools for its budgetary control are also stated in this
report in detailed manner. A comparison between two organisations regarding adopting the MAS
for resolving its some financial issues.
TASK 1
P1.Managerial accounting and various types of MAS:
Management accounting: As name suggest, this is such type of accounting that helps
the management staff of an entity in taking several important decision and assist them in making
new policies that will consider in planning its future operations. An effective planning may be
made by including several methods and concepts of management accounting.
Management accounting system: It is an internal system that an entity implement in its
business environment to assess its ongoing business processes and providing various tools to
shape its future operations as company want. For this, an organisation shall have option to adopt
and implement any type of MAS as various types are available. Some of types of managerial
accounting system are as follows:
 Inventory management system: As name suggests, such type of MAS is very helpful for
company in controlling its inventory related cost and related aspects. It provides the way
through which an organisation like Asda Limited may value its inventory (both raw
material and finished goods) in accurate manner to show its correct financial position.
Such MAS type also helps the company in ordering its inventory requirement in optimum

manner so that cost may be reduces related to its inventory. This system provides the
various methods for inventory valuation. It includes FIFO, LIFO, weighted average
method and so on, company may utilise any one of them according to its requirement and
its business nature (Bagautdinova, Kundakchyan and Malakhov, 2013).
 Cost accounting system: Such system is utilised by manufacturing firm like AsdaLimited
to oversee its manufacturing process to identify non value added activities and plan to
eliminate such activities to control its cost in effective and efficient manner. It helps the
management in producing cost effective products along with maintaining same quality
that such company is providing before implementation of such system. In calculating
correct costing of its product, a company may implement various techniques which
includes standard costing, relevant costing, budgetary control and so on.
 Job costing system: After implementing such system, company is able to identify its cost
related to specific job very easily in all respect. As a result, an organisation like
AsdaLimited may enable to reduce its cost which is not generating any value on
completion of its task. It is generally used in those organisations where various items
produced are different from each other. Due to this, separate job cost records are required
to be kept for each item or job. For example, constructions of custom designed buildings,
production of various type of machines as per customer specifications.
 Price optimisation system: This is a system that is used by the company to finding an
optimal price for its products. This is determined by trial and error approach, which
means that company sets different prices to a product to see the attitude of the customers
for regarding different prices for the same product. Thereafter, manufacturing
organisation like AsdaLimited select that price at which company's product has highest
demand. This is most effective method for finding the best suited price for its various
products. Under this, to calculate a price of a product, organisation often apply various
price strategies.
P2. Several methods utilised for management accounting reporting:
An entity in doing its day to day business uses management accounting system, as a
result, it requires to report related information for management staff. For this, various method of
managerial accounting reporting is used, which are as follows:

Management accounting
system & techniques

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
TASK 1............................................................................................................................................3
P1.Managerial accounting and various types of MAS: .........................................................3
P2. Several methods utilised for management accounting reporting: .................................5
M1.Several benefits of management accounting system along with their application within an
organisation:...........................................................................................................................6
D1.Integration of different MAS and managerial accounting reporting within an entity's
business processes:.................................................................................................................6
TASK 2............................................................................................................................................7
P3 Calculation of cost using different costing techniques......................................................7
PART 2..........................................................................................................................................12
TASK 3..........................................................................................................................................12
P4. Advantages and disadvantages of different types of planning tools:.............................12
M3. Use of planning tools and applications in preparing and forecasting budgets:.............13
TASK 4..........................................................................................................................................13
P5. Adoption of management accounting system to respond financial problems:...............13
M4. Role of MAS in responding several financial problems and maintain sustainable success:
..............................................................................................................................................15
D3. Planing tools used in solving financial issues:..............................................................15
CONCLUSION..............................................................................................................................15
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting is defined as the system which is associated with representation
of financial information so that day to day operations of organisation can be executed in most
effective manner. In this manner internal working of the business can be improved and various
internal obligations can be completed (Akpanabia and Ekwutosi, 2021) . Management
accounting system is associated with planning various operational activities for future business
aspects. Managerial accounting is recommended with gaining valuable data so that in broad
sense day to day activities can be executed in most effective manner. In order to get appropriate
knowledge regarding management accounting a medium-sized financial consultancy named
Equilibrium Asset Management is taken which is having various clients such as Ryder
Architecture. Ryder Architecture company is taken which is construction company situated in
UK. This report is providing various types of managerial accounting system and methods those
can be used by the organisation in order to understand purpose of reporting and other constraints.
There are various tools which are being used by an organisation in order to render significant
planning and to provide controlling measures as well. In this manner with the help of significant
tools of management accounting system financial issues can also be resolved by the organisation.
PART 1
TASK 1
P1.Managerial accounting and various types of MAS:
Management accounting: Management accounting system is associated with accounting
entries and the same are being used by business managers in order to execute the process of
decision making and to control various functions including business performance. The major
objective of management accounting is to maximise profits and minimise overall losses so that
various inconsistencies within financial records can be predicted and at the same time important
decisions can also be taken. Using various methods and concepts effective planning can be made
and consistent decisions can be taken.
Management accounting system: This is defined as an integral system which is
implemented within business processes so that to understand business operations and to shape
future as well (Alabdullah and Ahmed, 2020). Within management accounting system various