Management Accounting Systems & Techniques: A Comprehensive Analysis

Management Accounting Systems &
Techniques
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Table of Contents
Introduction......................................................................................................................................4
Task 1............................................................................................................................................5
A. Explain management accounting and give the essential requirements of different types of
management accounting systems to the chosen scenario giving examples.................................5
B. Explain different management accounting reports used by your chosen organization and
justify the importance of such reports to management................................................................7
C. Evaluate the benefits of the systems you have mentioned in A and how they are applied in
the given business context...........................................................................................................8
D. Critically evaluate how the management accounting systems and management accounting
reporting are integrated into your organization...........................................................................9
Task 2.............................................................................................................................................10
A- 1) Explain absorption costing and marginal costing methods..............................................10
A- 2) prepare an Income Statement based on the calculations of costs as per the information is
given above using both a) absorption costing method and b) marginal costing method...........11
B. a) Breakeven units.................................................................................................................12
B. b. Breakeven sales in value...................................................................................................12
B. c. Units to be sold for 10000 profit.......................................................................................12
B. d. Calculation of margin of safety.........................................................................................12
C. Apply the range of management accounting techniques and produce appropriate financial
reporting documents accurately for the scenarios given in Task 2............................................13
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D. Produce financial reports that accurately apply and interpret the data for the business
activities shown in the scenarios in Task 2 above.....................................................................14
Task 3.............................................................................................................................................15
A. Explain the advantages and disadvantages of different types of planning tools for budgetary
control. Here, you should provide examples of at least two types of planning tool used for the
chosen organization...................................................................................................................15
B. Show the application of the planning tools for preparing, forecasting and analyzing budgets.
...................................................................................................................................................17
C. Compare how your organization (Scenario chosen for the purpose) is different in adapting
management accounting systems to respond to financial problems. This should be supported
with examples and illustrations.................................................................................................18
D. Analyse how your management accounting techniques could respond to financial problems
and lead the organization to sustainable success.......................................................................19
E. Evaluate how planning tools could be used to solve financial problems and lead the
organization to sustainable success...........................................................................................20
Conclusion.....................................................................................................................................21
References:....................................................................................................................................22
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Introduction
In the changing environment, it is required that all of the elements which are required to be noted
in the business shall be involved in the accounting process of the company. This will be covering
all of the reports which are to be prepared and the systems which are used in this process. There
is the need to ascertain the profitability and this will be done by using the marginal and
absorption costing. There will be the breakeven point which will also be calculated in the given
report which will be helpful in the maintenance of the appropriate level of sales. There are the
planning tools and the discussion in respect of them will be made together with the other
measures which will be used so that all the problems which are faced can be eliminated.
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Task 1
Introduction:
The systems which will be used in the business will be described in the report below and then
with the help of the information that is collected reports will be made.
A. Explain management accounting and give the essential requirements of different types
of management accounting systems to the chosen scenario giving examples.
In the entity, it is required that the best and relevant approaches shall be undertaken so that they
can be used in the carrying out of all the activities in such manner that the appropriate results are
attained. The company will be required to maintain the proper accounts and for that financial and
management accounting will be used. In them, all the aspects of the business will be covered and
by that, it will be possible for the company to make the best decisions which will be in the
interest of all. The data which will be related to the financial matters will be considered in the
financial accounting and in management accounting, all other factors will be undertaken
(Legaspi, 2014). The company will be making the decisions in this and for that, they will be
collecting the info ration which will be done with the help of the systems of management
accounting. There is no specific standard or format in this which will have to be used so the
entity will be using the methods as per its wish. The main systems which will be used under this
and which will be helpful are as follows:
Cost accounting systems: The production process and other services which are provided by the
company will be requiring the use of the funds and all the amount which is used in the process is
known as the cost which is incurred. There are various elements which are included in this and
all of them will be covered in the calculation of the total amount of cost. There are several
approaches which can be taken into consideration in this process and that include normal costing
in which there will be the standard cost which will be used for the overhead and all the other
amounts which will take into account on actual values. The actual costing will be used in which
all the actual amount and standard costing in which all the standard values will be used by the
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business. This way the cost will be ascertained and the management will be making arrangement
for the same so that all the activities are carried in a successful manner.
Price optimization systems: The Company is in the need to increase the level of the profits and
for that customer, views are very much relevant. This system will be used by which all the
aspects will be included and the reaction of the consumers on the price change or different prices
will be analyzed. By that, it will be possible for the company to make the required decision and
take such steps by which the process which will be providing maximum returns will be selected
(Lopez-Valeiras, et. al., 2015). The price calculation will be made with the help of the various
techniques which are available such as cost-based or market-related strategies. There are various
methods in them and they will be used to choose the best price so that the benefit will be
attained.
Inventory management systems: The stock which is used in the business is required to be
maintained in an appropriate manner and for that, all the requirements will be determined and
then they will be managed. There will be need of various methods to be used in this and they
include economic order quantity. By the help of this the optimum level of the inventory which is
required to be maintained will be identified and then the orders will be placed accordingly. This
will help in reduction of the stock which is wasted or remains unutilized. The value at which it
will be required by the company to record it will be determined and for that, the valuation tools
such as LIFO, FIFO, and weighted average will be taken into use.
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