Management Accounting Assignment: UK

MANAGEMENT
ACCOUNTING

Table of Content

INTRODUCTION
Management accounting is the procedure of analysing operations and business cost to
prepare records, accounts, internal financial report to aid decision making process of managers.
This will helps them in attaining business goals in a proper manner (Ax and Greve, 2017). This
assignment is covered in context with The Austin Company which is a UK based engineering
company providing services in design, engineering, consulting, construction and management,
Headquartered in North London. Company carry-out construction processes to upgrade or create
public and commercial buildings, industrial processes, research etc. This report will cover
management accounting and various kinds of management accounting system and management
account reporting. Beside this, cost is calculated by using appropriate technique of cost analysis
to prepare income statement. Advantages and disadvantages of different planning tools for
budget control is discussed. At last, comparison is carried out to show how companies adapt
management accounting system to respond to financial problems.
TASK 1
P1
Management accounting is referred to the process of measuring, analysing, identifying,
communicating, interpreting information to managers so that organisational goals can be attained
in a proper manner. Managerial accounting will helps the manager in The Austin Company in
taking right decisions for business organisation. It handles margin analysis so that profits can be
assessed when weighted against different kind of costs. Concepts of management account are
associated with estimating and tracking costs which can be incurred by company in future
business operations. It will benefits The Austin Company in eliminating wastage of funds due to
which high profitability can be attained (Management accounting and its importance, 2019).
The Austin Company can use different management accounting systems so that their
financial records can be prepared in an organised manner. Beside this, it will help company in
taking those decisions that helps them in achieving their targets and goals easily. Below are
mentioned some management accounting systems that can be adopted by The Austin Company:
Cost accounting system: This system is beneficial in analysing the cost of services and
goods involving fixed, variable costs etc. In order to attain high output, it is essential for
organisations like The Austin Company to have proper estimation about their invested costs
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throughout the year. This will benefits them in calculating their profit margins. Company can
adopt this accounting system with the aim of analysing cost for various services or product that
can be offered in market with added margins to achieve high returns (Bennett and James, 2017).
Price optimisation system: It is an accounting system that assists The Austin Company
in understanding the buying behaviour of their potential and existing consumers. This help
company in setting prices with additional margins so that company can attain high profitability
without creating a major impact on purchasing power of people. In this context, accounting
manager in The Austin Company is required to research about satisfaction rate of customers
regarding their pricing policies. This will allow them in revising their prices as per market
conditions and customer's perceptions.
Job costing system: It is referred to a system that will assists The Austin Company in
calculating total cost spent while providing their services and products to customers. It is best
suited for those companies which offer services in different range. The Austin Company can use
this accounting system in proper estimation of unit cost to acknowledge future profit margins by
selling of different products or services (Cheng, 2012).
Differences between management accounting and financial accounting:
Management accounting Financial accounting
 This system provide useful and relevant
details to management so that they can
prepare effective policies and plans.
These plans will help the company in
attaining their desired targets and goals.
 In this system, main emphasize is on
formulating financial statements
involving loss and profit accounts along
with balance sheets. This helps a
company in acknowledging their
current financial position in market.
 This system is used by management
and manager of a company that posses
authority to formulate plan and monitor
business operations.
 It is used by external parties like
financial institutions, investors etc.
which posses the authority to take
financial decisions.
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