Management Accounting Techniques- Doc

Management
Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and different types of system.........................................................1
M1 Benefits of accounting system in organisation-....................................................................2
P2 Methods of management accounting reporting-....................................................................3
M2 Management accounting techniques.....................................................................................3
TASK 2............................................................................................................................................4
P3 COST & MARGINAL COST vs ABSORPTION COST- ..................................................4
M3 USE OF PLANNING TOOLS IN PREPARING & FORECASTING BUDGET- .............8
TASK 3 ...........................................................................................................................................9
P4 The advantages and disadvantages of different planning tools used for budgetary control.. 9
TASK 4..........................................................................................................................................11
P5 Management accounting system to respond the financial problems...................................11
M4 Management accounting lead to sustainable growth and success of the organisations. ...14
CONCLUSION .............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting is preparation of financial information for the internal people of
the company so that they can take day to day short term decisions with its help.
Company called CAPRICORN WEALTH MANAGEMENT LIMITED is taken to understand
the accounting management in an organisations. It is an UK's small scale financial consultancy
company which was incorporated on 23rd January 2008. it is a private limited company with less
than 50 client base.
Further this report include discussion of management accounting and planning & measurement
tools in context of the CWM Ltd. It also includes the preparation of income statement with the
help of marginal costing and absorption costing and a small comparison has also done to help
the user to understand which one of them is perfect for the organisation. Impact of planning tools
on budget forecasting has also discussed in this report .
TASK 1
P1 Management accounting and different types of system.
Management accounting is a process that Capricorn Wealth Management Limited uses to
prepare its financial reports and accounts it help them to analyse information required to take
their day to day decisions on the basis of amount of available cash with them, amount of orders
in their hand, sales revenue generated by them , state of account payable & receivable,
outstanding debts, raw material, inventory etc. CWM Ltd generate their monthly reports for
department managers and chief executive officer (Agrawal and Cooper, 2017).
Different type of management accounting system: job costing system- Company require this accounting system because it help them to get
the information about association of cost with product or services. They do it by
combining these three costs i.e. direct material, direct labour & overhead cost.
Combination of these three result into complete cost of their services which they can
reduce by taking corrective actions in future. Cost accounting system- This is the framework for the companies to estimate the cost of
their products. Capricorn Wealth Management Limited should use this because it help
them to analyse their profitability, inventory valuation and cost control through the
estimation of cost of their product with the help of the participation of executive.
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 Inventory management system- CWM Ltd can able to check their present inventory,
how much orders they have, sales and deliveries done. This help them to supervise and
manage their stock which in return bring the effective & efficient flow of inventory. It is
a small scale company because of which it may not have sufficient inventory so for
managing it they are require to follow this system (Ahmad and Mohamed Zabri, 2015).
 Price optimising system- It is beneficial to the Capricorn Wealth Management Limited
because it help them to optimise the price of their product by deciding the price of
multiple products at a time. This help company in segmenting the price according to the
customers responses. Other benefits for company using this system is that they can
determine price structure for initial, discount and promotional prising.
M1 Benefits of accounting system in organisation-
There are some benefits in context of Capricorn wealth management limited-:
System Benefits
Cost accounting  It is beneficial for CWM Ltd because it
help them to estimate cost which in
future they can reduce by appropriate
methods.
 It is beneficial for them because it helps
ion analysing the profit and how they
can increase it in future.
Inventory management system  It is beneficial for the Capricorn Wealth
Management Ltd because it gives them
an estimate about the stock they have
and what is the future requirement.
 Other benefit to the company is
efficient & effective flow of inventory
from the organisation.
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