Management Accounting Systems

Management
Accounting Systems

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Description of management accounting and providing essential requirements of different
systems of management accounting: ..........................................................................................1
P2 Describing various methods of management accounting reports:..........................................3
M1 Evaluating advantages of management accounting system and its application in context to
business:.......................................................................................................................................4
D1 Critically evaluating ways in which management accounting reports and systems are
integrated within process of organization:...................................................................................4
TASK 2............................................................................................................................................5
P3 Calculation of adequate techniques of cost analysis for the purpose of preparing income
statement by marginal and absorption costs:...............................................................................5
M2 Accurate application of techniques of management accounting for production of financial
reporting documents:...................................................................................................................9
D2 Production of financial reports that accurately applies and interprets business activities:....9
TASK 3............................................................................................................................................9
P4 Evaluating advantages and disadvantages of different planning tools of budgetary control: 9
M3 Uses of different planning tools that are applied for budget preparation and forecasting:. 11
TASK 4..........................................................................................................................................11
P4 Comparing adoption of management accounting systems by organizations as a respond to
financial problems:.....................................................................................................................11
M4 Analysis of respond towards financial problem with management accounting for achieving
success of business:....................................................................................................................13
D3: Evaluating ways in which planning tools respond for solving problems related to finance
for leading organization to sustainable success:........................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting can be explained as a practice that involves identification,
measurement, analysis, interpretation as well as communication of financial data that an
organization pertains. This information is utilised by managers of company with the motive of
obtaining goals of an enterprise. It differs from financial accounting as purpose consisted with
management accounting is providing assistance to internal users of an entity for making well-
informed decisions (Bebbington, 2017). Basis of this report is examination of management
accounting practices incorporated in Capital Joinery. In this report various types of management
accounting systems are evaluated along with their essential requirements. Further, management
accounting reports are described and essential requirement incorporated with it is analysed.
Along with it, income statement in prepared on the basis of marginal as well as absorption
costing. Further, planning tools consisted for budgetary control is identified and their advantages
as well as limitations are discussed. Additionally, financial problems are interpreted and
monitory control measures which can be implemented for solving such issues are identified.
TASK 1
P1 Description of management accounting and providing essential requirements of different
systems of management accounting:
Management accounting is a technique that records transactions related to finance
which can be used by managers to gain necessary information about company's position for
improving their strategy making procedure and making adequate decisions regarding important
matters of n organization (Bromwich and Lapsley, 2017). Management accounting system is a
platform that tracks financial details of an enterprise. It enables management of Capital Joinery
to gain clear overview about fund transactions pertained in business. Management accounting
system are of various types which are discussed below along with their benefits:
 Price optimisation system: This system is utilised for calculating variations in demand
in relevance to changes in price level of products of company. This data results in
combination of cost information and level of stock for recommending suitable price that
leads to profit improvement.
Essential requirement: Application of this system in Capital Joinery results in providing
financial benefit to an enterprise as adequate price level of product helps in attracting and
1

retaining customers for longer time period. It fulfils information requirement of an enterprise in
relation to customer reactions through demand variations. It helps is aligning business goals and
expectations of consumers (Burritt, 2015). It automates the process of price setting and helps in
gaining optimization in context to price. Hence, quick decisions can be made by management
which pertains positive influence on company.
 Job costing system: It involves procedure of information accumulation in relation to
costs that is associated with specific job or production process. This tracking method
determines cost of separate job which enables Capital Joinery to track information
regarding performance of each job.
Essential requirement: This system of job costing enhances profitability of Capital Joinery as it
separately assigns cost to each operations which provides required information to managers to
calculate profit margin of each job. This helps in setting adequate organizational structure in a
way that ensures expense minimization and performance maximization. It improves accuracy
and scalability in monitoring of business operations (Callahan, Stetz and Brooks, 2016).
 Inventory management system: Utilization of this system is for the purpose of
managing and monitoring position of stock in in organization. It tracks amount of
inventory available in Capital Joinery which provides warning to managers to purchase of
required inventory and avoid over stocking as well as under stocking.
Essential requirement: Inventory management system is vital for analysing level of stock in
business. This helps management in keeping required information regarding stock and ensuring
that needed safety stock is available so that business operations are not hindered. This
information play a critical role in adopting efficient management style for productivity
improvement.
 Cost accounting system: It is a platform which tracks cost information associated in
business. In other words, this framework helps managers of Capital Joinery in estimating
cost of its products with the motive of profitability analysis (Davies and Crawford,
2018). This system computes expenses associated with manufacturing or production
costs. Different types of costs, such as, labour, raw material, overhead etc. are taken
consideration while preparing this system. Hence, cost accounting report provides
summary of information regarding expenditure.
2