Management Accounting: Systems, Techniques, and Applications

Management accounting
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Table of Contents
Introduction...................................................................................................................... 4
LO1: Demonstrate an understanding of management accounting systems.....................5
P1 Explain management accounting and give the essential requirements for different
types of management accounting.................................................................................5
P2 Explain different methods used for management accounting reporting..................7
M1 evaluate the benefits of management accounting systems and their application
within an organizational context................................................................................... 8
D1 provides a critical evaluation of how management accounting systems and
management accounting reporting are integrated within organizational processes.....9
LO2: Apply a range of management accounting techniques..........................................10
P3 Calculate costs using appropriate techniques of cost analysis to prepare an
income statement using marginal and absorption costing..........................................10
M2 Apply a range of management accounting techniques and produce appropriate
financial reporting documents.....................................................................................12
D2 Produce financial reports that accurately apply and interpret data for a range of
business activities.......................................................................................................13
LO3: Explain the use of planning tools used in management accounting......................14
P4 Explain the advantages and disadvantages of different types of planning tools
used in the budgetary control.....................................................................................14
M3 Analyze the use of different planning tools and their application for preparing and
forecasting budgets.................................................................................................... 15
LO4: Compare ways in which organizations could use management accounting to
respond to financial problems........................................................................................16
P5 Compare how organizations are adapting management accounting systems to
respond to financial problems.....................................................................................16
M4: you should analyze how, in responding to financial problems, management
accounting can lead organizations to sustainable success........................................18
D3: how planning tools for accounting respond appropriately to solving financial
problems to lead organization to sustainable success:..............................................19
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Conclusion..................................................................................................................... 20
References.....................................................................................................................21
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Introduction
In the changing environment, there are various aspects which will have to be taken into
consideration by the company. All of the factors by which the accounting of the
company is affected will be considered and then they will be taken into consideration so
that proper accounts are prepared. In this report, the management accounting will be
discussed and there will be an explanation of the systems and reports which are used
under this. The company will be using various methods for the making of the income
statements and they will be discussed. Together with them, the planning tools which are
there will be taken into account by which it will be possible for the company to attain the
sustainable success. The issues which arise in the business will have to be resolved in
an effective manner and the tools which will be used in this context will be described.
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LO1: Demonstrate an understanding of management accounting systems
P1 Explain management accounting and give the essential requirements for
different types of management accounting.
The business is undertaken with the aim of maximizing the returns and for the
achievement of the same, there are several functions which are performed such as
organizing, planning and controlling. It is required that they shall be performed in the
most effective and efficient manner. There will be a requirement of the information for
the carrying out of them and that will be collected with the help of the systems which are
available under management accounting. The data which will be collected will be used
by the company for the making of the plan and also various decisions will be taken with
the use of them (Legaspi, 2014). Zylla will be using them so that all of the functions will
be undertaken in the most effective manner. All of this will also be requiring the use of
the principles of causality and analogy.
The business will be required to focus on the financial aspect and for that financial
accounting will also be taken into use which is having some of the differences from the
management accounting and they are as provided below:
Management accounting Financial accounting
The information which is tee under them
will be used in the internal processes of
the company.
The company will be providing the
information to the third parties so that they
can make the decisions on the basis of
them.
There will be the inclusion of all the data
which is related to the company.
Only the financial data will be incorporated
under this.
The reports under this will be prepared by
considering the policies which are
formulated by the company as there are
no specific formats which are there.
They will have to be prepared by the use
of the standards which are set by the
authorities and board.
The accounting will be made in the context
of any particular department of the
business.
There will be the consideration of the
complete organization which will be done
under this.
The process will be performed with the use of several systems and an understanding of
them is provided below:
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Cost accounting systems: The manufacturing process of the company will be
requiring various costs and it will be required that they are calculated at the appropriate
time. For that, there are several approaches which can be used and in that various
aspects will be taken into consideration. There will be actual costing in which all of the
amount spent in actual will be considered. The standard costing is another method in
which all the target cost which is set will be included. There will be normal costing also
in which all of the actual amounts will be taken except for the overheads.
Inventory management systems: The stock of the company will be required to be
maintained in the best manner and for that, it will be required that the need of the same
shall be ascertained so that they can be arranged by the company in the best possible
manner. In that, the techniques such as Just in time approach and economic order
quantity will be taken into use (Lopez-Valeiras, et. al., 2015). The company will be
required to perform the valuation in an appropriate manner and for that method such as
FIFO, LIFO, and weighted average will be used.
Price optimizing systems: The Company is undertaking various operations with the
aim of the maximization of the profits and for that, it will be needed that such price shall
be calculated which will be making this possible. For that various practices which are
available shall be taken into use (De Toni, et. al., 2017). There are basically two
categories in which they are divided and they are based on the cost and based on
market factors. In that, some of the most important is market skimming, price
penetration.
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