Management Accounting Systems and Techniques Solved Assignment

Management
Accounting Systems and
Techniques

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Explanation of management accounting along with assorted types of systems....................1
P2 Elaborate diverse methods of management accounting reporting.........................................4
Task 2...............................................................................................................................................5
P3 Figure out cost by the usage of cost analysis techniques by making useof absorption as
well as marginal costs.................................................................................................................5
TASK 3............................................................................................................................................1
P4 Explain the advantages and disadvantages of different types of planning tools used for
budgetary control........................................................................................................................1
TASK 4............................................................................................................................................4
P5 Compare how organisations are adapting management accounting systems to respond to
financial problems. .....................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7
.........................................................................................................................................................7

INTRODUCTION
Management accounting is also referred to cost or managerial accounting. It is a process
of analysation of business cost along with operations for preparing internal financial records,
report as well as aids management within decision-making activities that assist in attainment of
business goals (Aldehayyat and Maan, 2013). It is the presentation of accounting information for
formulation of policies that must be opted by management for carrying out their everyday
activities. This report is based on Bright Star which is a financial organisation and is in United
Kingdom. They serve diverse organisations which deals in retail, manufacturing, food & safety
and various others. Stitchland Ltd is one of them who deals with manufacturing of clothes and
takes assistance from Bright star for carrying out their finances. This report deals with
management accounting along different types of its systems. In addition to this, diverse methods
are used and cost analysis is carried out for preparation of income statements. Furthermore, their
advantages as well as disadvantages have been illustrated with respect to budgetary control.
Apart from this, management accounting systems will be compared.
Task 1
P1 Explanation of management accounting along with assorted types of systems.
Management accounting: It is known as managerial accounting and it refers to a
process that furnish financial information and resources to managers of organisation within
decision-making process (Anandarajan, Anandarajan and Srinivasan, 2012). This is utilised
within internal teams of organisation as this is the only method which makes organisation
different from financial accounting. For an example, Stitchland Ltd organisation can make use of
this kind of accounting system for carrying out their operations within process associated with
manufacturing.
Management accounting system: This refers to system that comprises of internal
system and is used by organisation for measurement as well as evaluation of their performance.
The major objective of suck kind of systems is to render appropriate information to managers by
which they can carry out effectual decisions. So, Stitchland Ltd needs to make use of accounting
systems so that they can have specific data for development of effectual decisions (Christ and
Burritt, 2013). It is crucial tool as it comprises financial and non-financial information that aids
within business management.
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Importance to integrate different accounting systems within the organisations: Diverse
kinds of accounting systems exists which will aid Stitchland Ltd organisation. For an instance,
cost accounting system will assist within computation of cost along with inventory management
system that can be utilised within effectual management of stocks. Along with this, price
optimisation systems furnish a framework for determination of prices (Cohen and Karatzimas,
2013). This denotes that these accounting systems for their own significance.
Origin, role as well as principles of management accounting:
As per the history, they are being developed in England before as well as during
industrial revolution. It comprises of implementation o0f diverse tasks within series for
enhancing financial problems associated with organisation. Principles of management accounting
deals with relevance, influence as well as formulation of trust with respect to organisational
orientation.
Difference Between Management Accounting and Financial Accounting:
Management Accounting Financial Accounting
The aim is to render qualitative as well as
quantitative information to managers for
assisting them to formulate decisions.
In this case, goal is to provide accurate and just
financial position of the organisation to diverse
parties.
This is being used within internal reporting
such as report to CEO, managers.
It is utilised for external reporting and basically
for stakeholders.
They are not regulated by any kind of law as
well as confined to audit.
It has to be conferred according to specified
standards as well as their financial reports
needs to be audited.
There do not exist any kind of defined
frequency for generating reports and they can
be furnished wither quarterly, monthly or
weekly.
Financial reports are created at the end of
financial year (Cooper, 2017).
Diverse kinds of management accounting systems have been elaborated below:
 Inventory management system: Such kind of systems are taken into consideration for
tracking movements of services as well as products into an entire procedures. It assists in
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evaluation of raw materials as well as finished goods which will assist organisation to
carry out production accordingly. Along with this, it will alleviate a way through which
demand as well as supply of services or products can be met. Its key function is to
maintain records of entire products that have been transferred into the warehouse (Daoud
and Triki, 2013). Stitchland Ltd is making use of this accounting system in diverse
services so that they enhance their productivity within specified time duration.
 Price optimisation system: It is a type of accounting system which renders a basis for
determination of prices at an effectual level. It is responsible for allotment of prices by
taking into consideration cost as well as needed profit by taking into consideration
satisfaction of their customers. When prices offered by Stitchland Ltd will be fixed then it
will enable them to grab attention of ample number of customers.
 Cost accounting system: It denotes accounting system that is also referred to costing
system. It is liable for rendering a framework for figuring out cost of products as well as
services. Along with this, due to accounting systems organisation compute overall cost
associated with production as well as services. Finally, it is serviceable for organisation
that carry out their operations within manufacturing sector. For an instance, Stitchland
Ltd organisation have executed these systems for management as well as controlling
entire cost related with production of clothes (Dillard and Yuthas, 2013). It is crucial for
organisation to predict entire cost as well as evaluate profitability which has been attained
by rendering services.
 Job costing system: It is a system that is obligated for assigning and computing of cost
related with assorted activities separately. Finally, this accounting system will be helpful
in entities where there are lot of activities and jobs that have to be carried out. With
respect to Stitchland Ltd, accounting system are effectual as organisation can have
information related with cost of job within manufacturing activities.
Assets of management accounting systems:
Management accounting system comprises of different types of systems and each possess
their own importance. Stichland Ltd makes use of diverse management accounting systems, their
significance has been illustrated below:
Cost accounting system: Through this entire cost of system can be calculated with
respect to activities and operations that have been carried out (DRURY, 2013). It is necessary for
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Stitchland Ltd organisation to measure accurate profit that has been earned by them by carrying
out comparison of incurred cost with amount that has been attained.
Inventory management system: This system is responsible for tracing movements of
services or products that are responsible for carrying out inventory management with respect to
stock that is available within warehouse. In context of Stitchland Ltd, this will assist them to
check that raw material is available and can be used for furnishing final product.
Price optimisation system: It assists in determination of prices of goods and services.
Within Stitchland Ltd, it will alleviate them to have a structure for assigning products with their
prices. Along with this, it will aid them to examine the influence on customers with respect to
amount for specified services (Hall, 2012).
Job costing system: This system can be used for furnishing information related with cost
of each job respectively. Along with this, it will aid them to have data related with amount
required for carrying out various activities within production process of Stitchland Ltd
organisation.
P2 Elaborate diverse methods of management accounting reporting.
Management accounting reporting is liable for management accountant which renders
direction to higher level management through which effectual decisions with respect to business
can be carried out. These reports can be utilised by management for evaluation of performance of
employees. Some of these are illustrated below:
Inventory management report: This is a crucial activity of management accountant for
preparation of report as it gives entire information related with inventory of Stitchland Ltd like
cost of storage, closing stock, etc. Inventory management report also renders information related
with methods that are valuable for closing the stock (Harrison and Lock, 2017). The major
objective of such kind of reports is to furnish balance in between customer services along with
inventory investment.
Accounts receivable ageing report: This report furnish details related with invoices that
are provided to customers with respect to credits that will aid Stitchland Ltd to find unpaid
customers amount as well as unpaid credit memos. This is a original tool that can be used for
determination of effectualness of credit, overdue for payment as well as gathering of functions.
Performance report: It is developed for carrying out performance measurement of their
employees and has been carried out by management accountant with respect to detailed
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