Management Accounting Systems & Techniques

Management
Accounting Systems &
Techniques

Table of Contents
INTRODUCTION ..........................................................................................................................3
P1Meaning of management accounting and the requirement of various type of management
accounting systems .....................................................................................................................3
P2The different methods used for management accounting reporting.......................................5
TASK 2............................................................................................................................................6
P3 Calculation of cost by using appropriate techniques in cost analysis....................................6
TASK3.............................................................................................................................................9
P4The advantages and disadvantages of different types of planning tools used in budgetary
control.........................................................................................................................................9
TASK 4..........................................................................................................................................12
P5 Comparison of application of management accounting system by different organisations to
respond financial problems.......................................................................................................12
CONCLUSION .............................................................................................................................14
REFRENCES.................................................................................................................................14
Books and Journal.....................................................................................................................14

INTRODUCTION
Management Accounting is a process under which the records are maintained that helps
the organisation to achieve its long term as well as short term objectives. It is a process by which
the goals of the organisation are identified, measured, analysed, interpreted and communicated to
the managers of the company. It is used as the information is better understood and the decision-
making is done effectively. Management accounting is different from financial accounting in the
sense that the information is used only by the internal team. The report is based on Capital
Joinery Ltd, which is a medium sized business and makes a variety of doors, windows and
joinery (Abdusalomova, 2019). The organization is working from last 20 years and has its
operations in West London. The report discusses about the understanding of management
accounting system along with the methods used make reports in management accounting. The
report is about the techniques used for cost analysis. These is discussion about the merits and
demerits of various tools used for budgetary control. Also there is comparison about how
different organizations are using management accounting to solve their financial problems.
TASK 1
P1Meaning of management accounting and the requirement of various type of management
accounting systems
Management Accounting also called managerial accounting is a process used by internal
management to make decisions with the help of analysing the reports and operations to achieve
the business goals in time. It is a task that converts the data and info4rmation into reports that are
useful for the organisation in decision making process. It is important to use different types of
management accounting systems as they help to formulate the financial strategies that help the
company to achieve the financial goals effectively as well as efficiently. They help to monitor
expenses and make budget for the organisation that will lead proper use of financial resources.
The profitability is also dependent on the methods used by the organisation and how effectively
they have implemented those methods (Rikhardsson and Yigitbasioglu, 2018). In relation to
Capital Joinery Ltd. the different management accounting methods that should be used by them
are as follows:
 Cost accounting system: It is a method used by organisations to analyse the cost of its
products and services that will be delivered to the customers. It is important to estimate

the right cost for any product and to know which product is profitable and not. Capital
Joinery Ltd should decide the cost of the product by doing analysis and then decide the
cost so that is good for the organisation and increases the profitability. They must check
the raw materials, work in progress and finished goods to make the financial statements
(Burritt,et. al., 2019). This is helpful for management as it helps to reduce unnecessary
expenses by the organisation.
 Price optimisation system: It is a m,mathematical method that is used by companies to
evaluate the relationship between demand and price of the products and services that are
sold by the company and then decide the cost that is acceptable by the customers. It is a
important method used by Capital journey Ltd. To attract more customers and satisfy
them by offering at the price they expect the products at. It is done by top executive level
of the organisation and should be implemented in a good way. This methods helps the
organisation to achieve the customer satisfaction that it the most essential part of any
organisation.
 Inventory management system: This system is used by organisations to manage the
inventory and it is an vital part in an organisation as the production process of the
organisation depends on how effectively the inventory is managed. It is a process used by
organisations to track the inventory in through out the supply chain that is from
purchasing for production to the end sale of the product. Capital journey Ltd also needs to
manage its inventory to complete the production process faster so as the sales of the
organisation are more and that will directly impact the profitability of the organisation. It
is important to know and have record of inventory by an organisation to order the
inventory as when required (Hiebl and Richter, 2018) . There are three methods under
inventory management:
LIFO: It is the method by which the stock that is purchased at last is sold first and is called last
in first out.
FIFO: This is called first in first out method as the name says the produ8cts that are p[purchased
early are sold first.
AVCO: The goods are sold on the basis of average cost for business, and the name of the
method is Average Cost Method of inventory management.