Management Accounting Case Study Assignment

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
ACTIVITY 1....................................................................................................................................1
PART A..................................................................................................................................1
PART B..................................................................................................................................6
ACTIVITY 2..................................................................................................................................11
PART A................................................................................................................................11
PART B................................................................................................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Management accounting is a branch of accounting that is afraid with the identification,
measurement, analysis and interpretation of accounting information. It can be used to provide
help to managers for make the decisions and manage company's operations (Astuty, 2019). It is
different from financial accounting because it provides reports and books to top management to
help in decision making process. On the other hand, financial accounting focus on preparing
information for external parties and define about the company position. To understand the
concept of the report selected engineering organisation, Network rail which was known as
Railtrack plc before 2002. It is an arm length publicly body of the department for transport with
no shareholders. There are includes several topics such as essential requirement of various types
management accounting system and several types of management accounts reports. It also
defined that how to use absorption and marginal costing method in order to calculate of net profit
as well as compute labour variances. This report also tells about the merit and demerits of several
planning tools and compare that how company are selecting different management accounting
system in reference to overcome the financial problem.
ACTIVITY 1
PART A
Management Accounting and their necessary requirement
Management accounting is a process of measure, analyse, interpret, communicate
information and support to decision making process of top management. It is also known as
managerial accounting as well as cost accounting. It focuses on the several fields of accounting
which mainly aim to provided various types of information to top level management about the
metrics in business operations. Through management accounting system an organisation can
arrange their business activities in effective manner. Network Rail Ltd apply several types of
management accounting systems in reference to change their functional skillfulness to cut down
their overall manufacturing cost improve profitability of the company (Barnard and Mostert,
2015).
Management accounting system is a profession that include partnering in management
decision making, develop planning and performance management system. The particular system
can analysis of different systems to control of business activities and provide guidance to
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manager in the execution and implementation of an organization strategy (Weygandt and others,
2018). Following are the different types of management accounting system -
Inventory Management system – It is a system which is based on the technology,
procedures and process to maintain and monitor of the Engineering process. The manufacturing
company have different types of product and at every stage need to analysis of quantity of the
material. The stock of a business stock in their warehouse then check that whether the product
which are stored as raw material supplies, finished goods which are ready to sale out in market.
In Network Rail Ltd, essential requirement of the system to aware for the inventory and helps to
manager to manage in stocks in effective manner. The company use different types techniques of
inventory - LIFO – The particular method defines that inventory for the business come in last that
will sale out first. FIFO – According to this method inventory come first that is first out from the company
for the sales.
 AVOC – In this method sale out inventory on average cost to the customers and
distributors.
Price optimization system – It is a system where manager focus on the price of the
different products. Price optimization system can help to manager to set price structure after the
analysis of market. It uses analysis of mathematical activities and determine that how customers
might respond to several prices in reference to products and services. In Network Rail Ltd apply
particular system to analysis perception of different customer and know about their taste &
preference. As a result it can help to fulfil the requirement of company and maximize the profit
(Bedford and Speklé, 2018).
Cost accounting system – A cost accounting system mainly applied by manufacturing
company in order to record manufacturing activities through perceptual inventory system. It is a
measurable accounting system which can use to tracks the flow of inventory continually with the
help of several stages of manufacturing. The system predicts the cost of various products to
ascertain the profitability and productivity in reference to particular organisation. In Network
Rail Ltd, manager apply the system to estimate cost and analysis that how much profit they can
gain in future.
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