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...........................................................................................................9
D. Critically evaluate how the management accounting systems and management accounting
reporting are integrated into your organization.........................................................................10
Task 2.............................................................................................................................................11
A- 1) Explain absorption costing and marginal costing methods..............................................11
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...........12
B. a) breakeven units.................................................................................................................13
B. b. breakeven sales in value....................................................................................................13
B. c. Units to be sold for 10000 profit.......................................................................................13
B. d. Calculation of margin of safety.........................................................................................13
C. Apply the range of management accounting techniques and produce appropriate financial
reporting documents accurately for the scenarios given in Task 2............................................14
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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.....................................................................15
Task 3.............................................................................................................................................16
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...................................................................................................................16
B. Show the application of the planning tools for preparing, forecasting and analyzing budgets.
...................................................................................................................................................18
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.................................................................................................19
D. Analyse how your management accounting techniques could respond to financial problems
and lead the organization to sustainable success.......................................................................21
E. Evaluate how planning tools could be used to solve financial problems and lead the
organization to sustainable success...........................................................................................22
Conclusion.....................................................................................................................................23
References:....................................................................................................................................24
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Introduction
In the report which is to be presented all of the aspects which are there in relation to the
management accounting will be taken into consideration. In this various systems which are to be
used will be considered and with the help of them, the reporting will be made. The company will
be making various calculations in which the profit will be calculated and also the break-even
points will be identified with the determination of margin of safety. All the planning tools which
will be used for the proper attainment of the objectives will be considered. There will be a
determination of the financial problems which are faced and then the manner in which they will
be resolved will be considered so that it is possible for the entity to attain the sustainable success.
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Task 1
Introduction:
The management accounting and the other aspects which are related to it will be discussed in the
report provided below. All of the importance and the systems will be considered by which
further reporting will be made possible.
A. Explain management accounting and give the essential requirements of different types
of management accounting systems to the chosen scenario giving examples.
Management accounting is the process which will be used by all the companies as it helps in the
completion of the operations in such a manner that the objectives of the company are attained. In
this, the data will be collected, interpreted and analyzed for the proper making of the decisions in
the company. By the help of them, all of the goals which have been set by them will be achieved.
In this, the various aspects which are there will be considered and for the inclusion of the
financial aspects, there will be the use of another technique which is a financial accounting
(Taipaleenmäki and Ikäheimo, 2013). With the help of that, it will be possible to include all of
the important information in the accounts so that it can be used for the carrying of various
processes. The information that will be needed will be collected with the help of the systems
which are available and the main are discussed below:
Cost accounting systems: This is the system which will be useful in reference to the cost which
is involved in the business. For that there will be required to identify the costs which are there
and they will be classified in the types which are basically two variable costs which will be
changing on the continuous basis with the deviation in the volume and the fixed expenses will be
the ones that remain same and no change will be made in them (Lopez-Valeiras, et. al., 2015).
The calculation of the same will be made with the help of various methods that are available and
that include normal costing in which the overheads will be based on the targets set and other
expenses on actual amounts. The standard costing will be used when the set standards will be
used and the actual costing will be used for the calculation of the actual cost which is incurred in
the business.
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Price optimization systems: In the company, the product will be provided by it to the
consumers at a certain rate and that is known as the price which is a very essential part of the
business. It is required that there shall be the appropriate price which shall be set so that the
profits are increased and also they are affordable for all. For that, the response of customers at
different prices will be analyzed and feedback will be obtained to take the further decisions about
price. The calculation will be made by using the various strategies which are there and for that
the company will be considering them such as the price skimming, cost-based, value-based and
various approaches.
Inventory management systems: The processes which are undertaken in the business required
the inventory and that shall be maintained in a proper manner and for that effective decision in
this respect shall be taken. The proper inventory management techniques shall be used such as
economic order quantity or just in time approach by which the required level of stock will be
managed. This will be ensuring that there is no wastage which is made and also shortage is not
faced. The valuation will be made in an appropriate manner so that proper recording in the
accounts is made possible and this will be with the help of methods such as weighted average,
FIFO, and LIFO.
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