Management Accounting: Avian Limited

MANAGEMENT
ACCOUNTING.

Table of Contents
INTRODUCTION...........................................................................................................................1
ACTIVITY 1....................................................................................................................................1
Part A...........................................................................................................................................1
Different techniques and methods used for management accounting reporting:.........................3
Management accounting system and management accounting reporting is integrated within
organisational processes:.............................................................................................................5
PART B........................................................................................................................................6
Annex (A)....................................................................................................................................6
Annex (B).....................................................................................................................................6
ACTIVITY 2....................................................................................................................................8
Part A...........................................................................................................................................8
Uses of different planing tools in forecasting budget..................................................................9
Annex (c)...................................................................................................................................10
Part B.........................................................................................................................................11
Comparison of how organisations are adapting management accounting systems to respond to
financial problems......................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting refers to systematic and managed presentation of financial and
accounting information or data to prepare new policies which is used by management to perform
their day to day activities in effective manner (Bromiley and et.al, 2015). This report exhibits
management accounting system, essential requirement of various management accounting
system and various management accounting reporting along with benefit of these system and
their application in the context of Avian Limited, an UK based reputed engineering company.
Company is engaged in manufacturing of hang gliders and other markets recreational aviation
products. This report also contains explanation about different planning tools, use of planning
tools to handle financial problems,advantages and disadvantages of different types of planning
tools used for budgetary control and, how management management reporting and system is
integrated within organisational processes.
ACTIVITY 1
Part A
◦ Management accounting system is mainly used by business organisation for
internal analysis. It is a set of various activities like identification, selection, analysis, collection
and evaluation of raw information data or information in order to convert them in relevant
information for management. Managerial personnel with help of such information, formulates
and implements one or more strategies to achieve organisation's goals and objectives within
scheduled time. Key focus of system of management accounting is to develop a systematic
framework which open the path for success of business organisation (Takeda and Boyns, 2014).
In Avian Ltd., this system is applied by managerial personnels to recognise, select, collect and
evaluate accounting and financial information that assist in framing strategies and action plans.
Various type of management accounting system such as cost accounting system, job costing
system, inventories management system price optimisation system etc. are adopted by
management to track problems and analyse overall performance of company for a specific
period. Following are some key management accounting system applied by management of
Avian Ltd., as follows:
Inventory management system: It is most essential system used by business enterprises.
This management accounting is adopted by business enterprises to trace or monitor inventories
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during the whole supply chain. This system is used to analyse the real time movement of
inventories in business organisation. In Avian Ltd, this system is used by company to manage or
organise the various kind of inventories like raw material, finished goods, work in progress and
other spare tools to ensure that demand and availability of particular inventories in
manufacturing of hang gliders. This also help to minimise the overall inventories and storage
cost to maximise profits. Company has unique inventories because company is manufacturing
aviation products, so it is essential for company to record and track them to avoid loss or theft of
inventories.
Price optimisation system: Price optimisation system is a type of management
accounting system which is adopted by business enterprises to evaluate in which way consumer
can respond at one or more price levels in respect of different - different products and services. It
also help to evaluate the relationship between price and demand of product. This system is help
in fixing the most appropriate retail price of product (Boiral, 2016). Avian Ltd apply this method
to minimise price of different hang gliders, para gliders and rigid wing hang gliders, to gain
competitive advantages while marinating their profit margin. This system support company's
policy of providing its product at lower price as comparison to its competitors.
Cost accounting system: It is essential management accounting system for business
organisation engaged in production and manufacturing of various products. This system is
mainly used by business organisations to optimise there production and manufacturing cost of
each product or unit. It assist accountants to identify any excessive or unproductive cost incurred
within organisation. Its also point out towards any area of operation in which any additional cost
may be incurred in near future. In Avian Ltd, cost accounting system is applied to minimise
company's various cost related to manufacturing of hang gliders, para gliders and rigid wing
hang gliders. Company takes some big contract to supply large number of hang gliders at lump-
sum amount, such lump-sum amount is determined by company by using cost accounting
system.
Job costing system: This is job or task oriented management accounting system which is
adopted by business enterprises that require allocation of different cost to various jobs and task.
This system is applied for internal analysis of different costs by segregating them in particular
job or task analyse the efficiency of specific job. In Avian Ltd, this is applied to accumulate and
allocate manufacturing and production costs to single unit. Company is using this system to
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