Management Accounting Systems and Cost Analysis by Absorption and Marginal Costing

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1. Explain the concept of Management Accounting systems.................................................3
2.Explain the various type of management accounting systems............................................4
3. 5. Advantages and implications of management accounting system.................................5
4. Methods of management accounting reports......................................................................6
5. Assessment of management accounting report and system in organisation.......................7
b) 3. Explain the method of Cost analysis by using absorption costing and marginal costing by
formulating income report......................................................................................................7
Part B.............................................................................................................................................10
Prepare a flexed budget for the actual activity for the year..................................................10
1. Advantages and disadvantages of various types of planning techniques useful in budgetary
control...................................................................................................................................10
PART C..........................................................................................................................................12
a) Evaluation of how the organisation Nasty Gal Vintage can adapt the management
accounting system for retorting to the fiscal problems........................................................12
Recommend by giving an analyses how management accounting approaches can lead an
organisation towards sustainable success.............................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is a concept which is used for preparing reports related to the
monetary and non – monetary position of the company. It helps in making choices for the
maintaining the sustainability of the organisation by analysing and communicating the data or
information which is essential for the managers. The Report has taken the organisation named
Nasty Gal Vintage. It is a retail clothing organisation whose headquarters are situated in
California and was founded in 2006. This report has been divided into 3 parts. Part A includes
the concepts of the management accounting by addressing the types, pros, cons and the various
methods of the systems and management accounting reports (Aldredge, Rogers and Smith,
2021). Further, in this part the integration of the management accounting is illustrated.
Moreover, the concept of costing is describes pointing towards the difference of the techniques
used in making the economic decisions. In Part B, the budget for the organisation is prepared
using the planning tools which are used to control the budgetary measures. In Part C, the
financial problems are described by solving these issues adapting the management accounting
and how comparing it with the organisation of the same industry at the end.
PART A
1. Explain the concept of Management Accounting systems.
There are four principles of the Management Accounting System: representing expansion,
arrangement, and positioning control at foundation bookkeeping and the board by a
particular case.
 Planning and arranging: This is one of the foremost things that help the management
keep the account books (Agyekum and Singh, 2018). It helps in keeping the records
of the accounts, on the basis of the evidences to know the performance of the past,
present and predict the future.
 Executive by exemption: In this the data is being showed to the board. The board use
these data for the purpose of decision making. It consists of standard costing policies
and monetary policies for making the continued framework for the administration.

 Control at Source Bookkeeping: Costs are controlled by management by keeping the
data of the accounting and taking into consideration various aspect for ascertaining
the cost.
 Representing Expansion: The capital invested by the proprietor is to be properly
invested and the capital invested should show some return on the sum invested.
2.Explain the various type of management accounting systems.
Management Accounts mainly focuses on the classifying and estimating the objective of the
organization regarding the financial and non-financial objective of the business concern
from the top of the to management to the bottom. Managers use this information for
formulating various budgets and analyse the performance of the employees of the business
concern (Triantafillou, 2020). Financial statements and management accounting both are
different concept. Former is prepared for the external users of the accounts and the latter is
performed in context of preparing entries for the business transactions of the business. It
helps in forecasting the future cash flows and also helps in decision making and forecasting
for the future operation of the business. These forecasts helps the manager in creating
budgets and future planning.
Management Bookkeeping system is technique of influencing and controlling the
employees as the cost associated with the production and also in achieving organisational
goals. In Nasty Gal Vintage this system provides beneficial information for the insights of
the business and its planning process. The data is present in form of charts, flow charts and
tables by the accountants which is used by the top management in preparation of budget and
decision-making process. Below are the various types of Accounting system that can be
explained in context of Nasty Gal Vintage,
 Cost Accounting System is a framework which helps management in estimating the
price of a product and also helps in stock valuation. It helps in identifying the
products which are more beneficial and provides maximum benefits (Loft, 2020).
This system equips the accountants in preparing the financial accounts of the
business concern. This system considers two types of costing job order costing and
process costing. The organization uses both the methods of costing for the
production of clothing and various departments in order to perform its activities. This