Management Accounting: Types of Systems and Methods Used for Reporting

This presentation provides an overview of management accounting, including its definition and scope. It discusses the different types of management accounting systems, such as cost accounting, inventory management, job costing, and price optimizing systems. The presentation also covers the methods used for management accounting reporting, including budget reporting, cost reporting, and performance reporting. The benefits of using management accounting systems for an organization are also discussed.

MANAGEMENT
ACCOUNTING

MANAGEMENT ACCOUNTING
Management accounting is the process of
presenting reports and accounts that are
relevant for management. These reports and
accounts provide concise, to the point and
accurate financial information that is required
to make short term as well as long term
decisions by the mangers.
Management accounting is all about
generating weekly and monthly reports for the
internal audience of the company such as
managers and top managerial personals.

CONTINUE……
Management accounting combines accounting,
finance and management under the same
head as it integrates the benefits of all the
three. Management accounting is vast in its
scope and helps the organisation to run
smoothly.

DIFFERENT TYPES OF MANAGEMENT
ACCOUNTING SYSTEMS
 Cost-Accounting Systems
 Inventory Management Systems
 Job- Costing Systems
 Price- Optimising systems

CONTINUE…..
 These management accounting system vary
in their use.
 All the above systems are designed to give
management of an organisation the
information that will help them to make the
decisions for the betterment of the
organisation.

COST-ACCOUNTING SYSTEM
 Cost- accounting system is also called as
product costing system.
 This framework is used by the firms to
estimate the accurate cost of the product.
 With the help of this method the products
cost is estimated for profitability analysis,
cost control and inventory valuation.

CONTINUE….
 The cost accounting system is further
classified into:
 Job order Costing
 Process Costing.
 In the cost accounting system, the allocation
of cost is done on the basis of either activity-
based costing system or traditional costing
system.

INVENTORY MANAGEMENT SYSTEM
 Inventory management system is the system
of supervising the stock items and non
capitalised assets (inventory).
 Inventory management system is a
component of supply chain management.
 This system keeps a track of the sales order,
inventory levels and deliveries made.
 This is also helps in creating production
related documents.

FUNCTIONS OF INVENTORY
MANAGEMENT SYSTEM
 Relocate, receive and inventory disposal.
 Purchase order creation
 Sales order creation
 Physical inventory counts

BENEFITS OF INVENTORY
MANAGEMENT SYSTEM
 Improvement in the organisations bottom
line functions.
 Improves the accuracy of the inventory.
 Improves the workflow of the organisation.

JOB COSTING SYSTEM
 This system is ideally for assigning cost of
manufacturing to the individual product or
batches.
 This system is generally used when the
products manufactured are sufficiently
different from other products.
 This system ascertains the information
about the cost associated with the specific
product.

CONTINUE…..
Job costing system main purpose is to
accumulate the information about these three
costs majorly these are:
 Direct Labour
 Direct Materials
 Overhead Costs.

PRICE OPTIMISING SYSTEM
 These are mathematical programs that
calculate how the different price levels effect
the demand.
 The data that consists the information about
the costs and inventory levels will help in
recommending the prices that will help in
improving profits.

HOW PRICE OPTIMISATION SYSTEM
WORKS
This system focuses on the three pricing
elements these are:
 Pricing strategy
 The value of the product
 Tactics to increase the profitability.

THE USE OF PRICE OPTIMISATION
SYSTEM IN ORGANISATIONS
This helps the organisation to determines
these three prices mainly:
 Initial Price
 Promotional Price
 Markdown Price.

METHODS USED FOR MANAGEMENT
ACCOUNTING REPORTING
 Budget reporting
 Cost Reporting
 Performance Reporting

BUDGET REPORTING
 This helps the company to analyse their
performance and segment wise analysis can
also be done with the help of this.
 The budget of the company is based on this
as it is based on the performance of the
company.

COST REPORTING
 This helps the management accountants to
compute the cost of items.
 The cost of the item is produced though the
unprocessed data.
 The unprocessed data consist of overheads,
cost of project, direct labour and direct
material.

PERFORMANCE REPORTING
 These are used by management accountants
to assess the substantive revenues and
expenditures to the amounts that have been
allocated.
 This will help in processing the new budgets.
 Administrators need these reports to
determine and forecast the future of the
company.

CONCLUSION
The study is all about the use of management
systems in the working of an organisation and
the choice of right system to increase the
profitability and growth of the organisation.
The reporting of the managerial systems that
provide precise and to the point information to
the top managerial person.
The benefits of using management accounting
system for an organisation.

REFERENCES
 Horngren, C. T., Sundem, G. L., Stratton, W. O.,
Burgstahler, D., & Schatzberg, J. (2002).
Introduction to Management Accounting: Chapters
1-17. Prentice Hall.
 Bromwich, M., & Bhimani, A. (2005). Management
accounting: Pathways to progress. Cima
publishing.
 Horngren, C. T., Bhimani, A., Datar, S. M., Foster,
G., & Horngren, C. T. (2002). Management and cost
accounting. Harlow: Financial Times/Prentice Hall.
 Hansen, D., Mowen, M., & Guan, L. (2007). Cost
management: accounting and control. Cengage
Learning.