Management Accounting Systems and Its Applications

MANAGEMENT
ACCOUNTING
SYSTEMS AND ITS
APPLICATIONS

Table of Contents
INTRODUCTION...............................................................................................................3
MAIN BODY.......................................................................................................................3
Task 1............................................................................................................................3
Task 2............................................................................................................................6
Task 3..........................................................................................................................11
Task 4..........................................................................................................................13
CONCLUSION.................................................................................................................16
REFERENCES................................................................................................................17
REFERENCES................................................................................................................18

INTRODUCTION
Management accounting is an act of taking relevant monetary & costing data and
turning the data into valuable information for administrators and managers within a
company. This is also known as managerial accounting, in other words it can be defined
as a method of analysing costs of doing business and procedures to prepare inner
financial reports, records to help managers for making decisions to achieve business
objectives (Crosson and Needles, 2013). The objective of project report is to evaluating
importance of MA for companies. In the project report, KEF limited company has been
chosen which operates in manufacturing sector.
The report covers detailed information about types of MAS, MA reports, costing
techniques and planning tools. In the end part of report role of MA in sorting monetary
issues is covered.
MAIN BODY
Task 1.
Meaning of management accounting and requirements of various MAS.
MA- Management accounting is the practice of preparing management statements and
accounts which provide reliable and appropriate numerical and qualitative information to
executives. This information is needed to make brief-term and lengthy-term judgements.
There are various types of MAS:
 Inventory management system - The inventory management system is intended
to improve the work of producers who need to constantly monitor the flow of
stock across different manufacturing stages (Hart, Wilson and Fergus, 2012).
Essentially, even before the manufacturing process starts, a business uses the
inventory management system to identify the materials. Such raw materials
gradually transform in real-time to finished products. It is essential for companies
in order to track movement of material in entire production process. In the KEF
limited company, their manufacturing department implies this system which helps
in managing overall value of stock and for minimising cost.

 Cost accounting system - It is a method that businesses use to determine the
cost of their goods for the study of productivity, stock assessment and controlling
costs. It is important for successful operations to determine the exact cost of
products. A business must know that goods are competitive and which ones are
not, and this can only be calculated if the appropriate cost of the product has
been measured. Hence, it is essential for companies for accurate estimation of
costs and for reducing total expenditures. In the KEF limited company, their
finance department applies this system for managing cost of overall operations
and activities.
 Price optimisation system – It is a type of accounting system which is aligned to
process of assessing how demand fluctuates at various price segments and after
that combining that data with information on costs to suggest prices which will
enhance profitability. This accounting system plays a key role for those
companies who want to make focus on targeted customers. In the aspect of KEF
limited company, they apply this accounting system which contributes them in
setting prices of products and services.
 Job order costing system- Job order costing system is a cost accounting process
which accumulates manufacturing costs of each job individually. This accounting
system is applied in those businesses which manufacture products and services
in accordance of order of any party. As well as it is essential for companies in
computing cost of job which involves in process of operations.
In the KEF limited company, they apply this accounting system for better
management of cost of job.
Different method of MA reports.
MA reports- Management accounting reports can be defined as those written
documents which provide data that companies want to cut costs, award fast-performing
workers, cut stagnating products and reinvest in the products which provide the
company with the best possible return (Schwaiger and Abmayer, 2013). Below some
types of reports are described in such manner: