Management Accounting: Assael Architecture

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting and it's systems:.............................................................................1
P2: Different methods used for management accounting reporting:...........................................3
TASK 2............................................................................................................................................4
P3 Profit and cost calculation by using appropriate management accounting techniques..........4
TASK 3............................................................................................................................................7
P4 Advantages and disadvantages of various type of planning tools..........................................7
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
...................................................................................................................................................13

INTRODUCTION
Management accounting is defined as a process of identifying, measuring, analysing,
interpreting and communicating the information to managers so that they can achieve the targets
of business (Songini, Gnan and Malmi, 2013) It is an application of applying skill and
knowledge in the activities of a business so that it's operations are under control. For this project,
Assael Architecture is chosen which is a construction company in UK. It was established in 1994
and is located in London. This report includes the meaning of management accounting, it's
systems and how it is different from financial accounting.
TASK 1
P1: Management accounting and it's systems:
Management accounting system: It is a systematic process in an organisation where
directors prepare and manage budget reports that are to be presented to the top level
management. This system provides accurate information which helps in conducting different
activities of a business. Management accounting system can be also be defined as a tool used in
planning, organising and providing detailed facts regarding business operations that can help the
managers in effective decision making. It is required by entities to project their goals and
objectives in generating revenue. Assael Architecture ensures that financial security is
maintained in the working of construction contracts with the help of management accounting
systems. Listed below are some of the accounting techniques used in this system:
Cost accounting system: It refers to a system which is used by firms to estimate the cost
associated with products and services that help managers to analyse profits as well as cost
control techniques. They add value by determining measures that can monitor cost of an
organisation such as, fixed, variable, opportunity, incremental etc. This includes two concepts of
job order and process costing. It is required by managers as this helps them in estimating closing
value of raw materials and finished goods for the purpose of preparing accounting records.
Assael Architecture uses cost accounting system to measure the monetary value of different
types of cost like, fixed, variable, direct or indirect etc (Salterio, 2012) .
Job costing system: It is a process which involves collecting information about the cost
related to a product or job. This helps in monitoring and tracking of expenses in an organisation.
To understand the working of this system, it needs to include data related to direct material,
1