Management Accounting Systems Benefits

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management Accounting & Its Systems:...............................................................................1
P2 Management Accounting Reporting:......................................................................................3
M1 Benefits of Management Accounting Systems:....................................................................4
D1 Integration of management accounting system and management accounting reporting in
organizational processes:.............................................................................................................5
TASK 2............................................................................................................................................5
P3 Calculation of cost using management accounting techniques:.............................................5
M2 Applying a range of management accounting techniques:....................................................6
D2 Interpretation of profit as calculated by different costing techniques:...................................7
TASK 3............................................................................................................................................7
P4 Different types of planning tools used for budgetary control:................................................7
M3 Use of planning tools and their application in forecasting budgets:.....................................9
TASK 4..........................................................................................................................................10
P5 Management accounting techniques used to identify financial problems:...........................10
M4 Analysis of how financial problems can lead an organisation to sustainable success:.......11
D3 Planning tools respond appropriately to solving financial problems to lead organisations to
sustainable success:....................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
1

INTRODUCTION
At the beginning of nineteenth century, the huge private business owners felt the need of
such system or structure that can help the internal stakeholder to control over the internal
environmental factors of the business so that organization can survive. For that purpose, an
accounting system has been created that is called management accounting which is different
from traditional financial accounting in so many aspects (Ahmad, Ismail and Anantharaman,
2015).
For optimistic knowledge of management accounting term, the new trainee managerial
accountant of Oshodi Plc, which is a manufacturing company involved in production and
distribution business of JOJO fruit juice products for all age brackets, is presenting a repost that
covers definition of management accounting, management accounting system and reporting and
planning tools and budgetary control process (Management accounting, 2019). It also includes
solution of financial problems by the help of financial governance techniques and critical
evaluation of entire repost in different parts.
TASK 1
P1 Management Accounting & Its Systems:
Management accounting: Management accounting which is also known as managerial
accounting is a professional method to represent all financial and non-financial data in such a
skilful manner that internal stakeholders such as managers and directors can use this information
in organizational planning and decision making in order to achieve organizational goals
(Angelakis and et.al., 2015). This accounting method is not mandatory to be adopted hence it
does not follow any specific formate which make it easy, adaptable and convenient for the
company.
Management Accounting System: The further step in process of managerial accounting,
is to create management accounting system. This system is formed to collect, record, prepare and
present different accounts and estimations for inside stakeholders such as managers. It records
and presents a whole approximation prospect of operations and transactions which may take
place in particular time. These systematic statements also provides assistance in preparation of
financial accounts and documents of Oshodi Plc at the end of financial year. The establishment
follows various types of management accounting systems which are:

Price Optimisation System: Price optimisation system is a mathematical tool that
studied about the customer behaviour towards different pricing policies of various products. This
system is used to decide and control the prices of different products at the same time. It examines
the flow of demand with the fluctuation in price at different levels so that the best price for the
product can be opt out in accordance with customer needs (Berry, Broadbent and Otley, 2016). It
also consider the effective life cycle of the product, competitors' pricing policy, profit margin
goals, etc. The Oshodi Plc uses price optimisation system in tailoring the prices of its fruit juices
for various customer segments by evaluating their responses to the pricing policy. The
administration of the company also take the help of this system in deciding pricing structure for
initial pricing, promotional pricing and discounted pricing.
Cost Accounting System: Cost accounting system is a part of managerial accounting that
revolves around the cost calculation, cost analysis and cost reduction. This system is a structure
that assists the manufacturers of Oshodi Plc to record the stream of assorted costs in order to
manufacture of each product. This accounting system consists approximation of different fixed
costs as well as variable overheads, allocation of cost centres and absorption of costs. The
essential for a good cost accounting system is to be flexible and easy. With the help of flexible
cost accounting system, respective firm is capable to calculate appropriate cost and ascertain the
profitability of the company.
Inventory Management System: This management accounting system is related with
management and supervision of inventory and non-capitalized assets of the enterprises. It helps
the managers in keeping a view over the flow and movement of inventory available within the
firm for the sale. This assists the management in advanced operation and cost calculation for
carrying and selling the products. The line manager of selected firm is capable to track goods
through the entire production and distribution process or the portion of it a business operates in.
this system includes each and everything from warehousing to dispatching for sale, production
to retailing and all the movements of stock and parts between.
Job Costing System: Job costing method is used by the companies when every
manufactured unit or batch of product has specific significations from each other in terms of
quality, quantity, measurements, etc. Job costing systems determine manufacturing costs
systematically by dividing them in overhead, direct labour and direct material costs and
estimating them at their actual value (Bhattacharya, 2014). The goods produced on customised
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