Review of Management Accounting Literature

This assignment involves a thorough examination of management accounting research, covering various topics such as the role of management accountants, management control systems, intellectual capital accounting, and more. The review aims to provide an overview of the current state of knowledge in the field, highlighting key findings and contributions from leading researchers. Students are expected to critically evaluate the literature, identify gaps and opportunities for further research, and discuss implications for practice.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Management accounting and its requirements of various management accounting system. .1
P2 Various method that is used for management accounting report...........................................3
M1 Merits of managerial accounting system and application.....................................................5
D1 Evaluation of management accounting system and its integration within organisation........6
LO2..................................................................................................................................................6
P3 Calculation of cost by using marginal and absorption costing method .................................6
M2 Application of management accounting techniques..............................................................8
D2 Financial reports which interprets the business activities......................................................9
LO3..................................................................................................................................................9
P4 Merits and demerits of different type of planning tools in budgetary control........................9
M3 Use of planning tools and their application for preparation and forecasting the budget.....14
LO4................................................................................................................................................14
P5 Adoption of management accounting system to give response of financial problems.........14
M4 Management accounting can lead enterprise to sustainable success ..................................16
D3 Planning tools for accounting respond and solve financial problems..................................17
CONCLUSION..............................................................................................................................17
REFRENCES.................................................................................................................................18

INTRODUCTION
Management accounting is a procedure that involves in collection, analysation,
measuring, monitoring and controlling data to improve the performance of company. It is a tool
used by the organisation for the purpose of managing overall functioning of business (AF Ragab
and Arisha, 2013). This method is adopted by the managers in order to achieve higher
profitability and growth. The company which has been selected in the following report is Alpha
financial market consultancy which is a medium-sized organisation situated in London. It was
established in the year 2003 by CEO Jonathan Austin and provides financial services regarding
asset and wealth management to the clients. The main objective of this organisation is to become
best place to to work for in the market and attracting large number of customers to achieve
success.
In the report detailed analysis of management accounting has bee done. It covers topics
like types of management accounting systems, methods of management accounting reporting,
cost analysis on the basis of marginal and absorption costing, planning tools their advantages and
disadvantages and comparison between the organisation in the ways they use management
accounting system to deal with financial problems (Bedford, 2015).
LO1
P1 Management accounting and its requirements of various management accounting system
Management accounting is a process which is used to analyse, measure, monitor and
control data related to business in order to maintain the performance of organisation. Managers
of Alpha financial market company requires different types of management accounting system to
manage day to day transactions happening in the organisation. Incorporating these systems can
helps the organisation in identifying issues which are causing efficiency in the business
(Budding, Grossi and Tagesson, eds., 2014). Appropriate actions are then taken to reduce them
to increase the profitability of business. The four main type of systems are as follows:
Cost accounting- This system is required to analyse cost of products, measuring the
profitability and control of expenditure. It takes into account different types of cost such as
direct, indirect and overhead that adds to the value of products. Alpha financial market
consultancy managers uses this system to analyse expenses incurred on financial products and
services and take decisions regarding how to control such costs and effectively manage business.
1

Importance of this system can be seen as to how the organisation is performing currently, if the
company is dealing with losses then this method provides help in figuring out mistakes and
changes can be made as per requirements. It essentially required to adopt this system by the
management so that extra cost of organisation can be found as reducing such expenditure will
help in maximising profits.
Profit optimisation- This system used mathematical analysis to assess customer
response with the changing prices. The organisation used this system to set prices of company's
products and services. As it is essentially required for managers to set prices which are neither
too high nor low so that cost which has been occurred on producing the product and services can
be covered. Alpha financial marketing consultancy used this system to set rates for their financial
products and services like advising clients on various matters therefore this system helps in
meeting customer expectations. Requirement of these system is essential as they ensured costs
which has put in the production of goods and services can be covered.
Inventory system- This system is used to manage record of company's products and
services. It consist of entire data such as quantity, location, stock level and orders etc of products
and services. By using this method operations of business can be effectively manage. For
instance information related to mortgage loan clarification can be identified using this system. It
is essentially required for managers of Alpha financial marketing use this system in order to
track and maintain the status of products and services (Chang, 2013). This helps in providing
smooth functioning of organisation. Issues regarding stock availability can also be avoided by
adopting this process.
Job costing system- This method is used to measure the expenses related to different sort
of jobs that are being performed in the organisation. It is associated with cost attached to
production of an individual unit of products. Organisation involved in multitasking mainly apply
this method in their operations. There is an essential requirement to determine costs in terms of
money, time and efforts has been put in different activities so that wastage can be minimised.
Alpha financial marketing uses this system to manage expenditure incurring on activities such
making portfolios for the clients, this leads to smoothness in the operations of business and
effectively achieve objectives.
2

P2 Various method that is used for management accounting report
Management accounting plays important role in the working of business. These are
prepared by the each organisation to analyse each and every vital information which helps
managers in effective decision making. Such reports collects data from sources like income
statement, balance sheet, and cash flows that consist of transactions Different types of reports
such as cost managerial, budgetary, performance and accounts receivable are created that serves
the purpose of improving the performance of company (Chiwamit, Modell and Scapens, 2017). It
is important to meet all the requirements of enterprise therefore creation of such reports is
needed to carry out all the tasks in an effective manner. On the basis of such statements,
management able to plan for the future uncertainties and take appropriate decisions. Alpha
financial marketing uses these reports to gain information on important matters and regulates the
business. Reports are discussed below:-
Cost managerial report- This report comprises of information related cost incurred on
products and services. It estimates the profits earned by the company after calculating the
expenses and revenue of each unit. All types of costs such as labour hour, inventory waste and
direct and indirect are part of these statements. This helps in showing the position of business by
checking if the costs are more than the amount earned than company is facing losses and incase
the revenues are more than expenses, hence this is a situation of profits. Managers of Alpha
financial marketing prepare this report to understand the profitability of business and making
plans about controlling the extra cost to avoid losses. It helps in attaining optimum utilization of
resources.
Account receivable report- These reports are associated with acquiring complete
information about creditors of business. If the company indulges in dealing with too many credit
transactions and then preparing such reports is vital as it helps in showcasing defaulters.
Managers of Alpha financial consultancy uses this reports to identify the non payments from the
clients and make decisions regarding tightening the credit policies. These are mainly prepared to
save company from unexpected losses by keeping track of collections from customers (Clinton
and White, 2012).
Budgetary report- These reports are concerned with acquiring information about
weather tasks being performed as per set budgets or not. It helps in comparing actual
performance with the budgeted and if the deviations are occurring managers take decisions to
3

control and improve the working. Managers of Alpha consultancy prepares this report to
estimates expenditure and income of business so that organisational goals can be achieved within
the pre specified boundaries in an effective manner. Strategies are created such as negotiation
with clients and cutting costs are part of decision making.
Performance reports- These reports are prepared to analyse the performance of
employees and organisation. Evaluating the performance is important as managers of
organisation uses this information to identify weather the different individual and divisions are
performing appropriately or inappropriately therefore measures can be taken for their betterment.
Alpha consultancy prepares this report to provide rewards, incentives based on the performance
of individual and unit in order to increase productivity.
Difference between Management & Financial accounting:
4

Management accounting Financial accounting
Management accounting is used for internal
management.
While it is used for internal and external
purposes.
This accounting system is not compulsory to
maintain.
Financial accounting is needed to be done. It is
compulsory.
It is not mandatory to complete in accounting
period.
It should be done according to the accounting
period.
This does not follow any accounting rules and
regulation.
Financial accounting is done according to the
accounting rules and regulation.
M1 Merits of managerial accounting system and application
Different types of management accounting system are used by the Alpha financial consultancy
that are helping the organisation in functioning effectively they are being discussed below:-
System Uses Benefits
Cost accounting system This system is used by the
Alpha consultancy to manage
the expenses of various
financial products.
This system provides benefits
of identifying the extra costs
so that decisions can be taken
to minimise them.
Profit optimisation It is used by the Alpha
consultancy to set rates for
portfolios which they are
providing along with charges
of services like providing
financial advices to clients.
This provides benefits of
meeting customers
expectations in terms of prices
and achieving higher
profitability.
Inventory systems This system is used to
maintain stock level of
organisation. Assets and
wealth of Alpha consultancy is
The main benefits of this
system are that it
systematically arrange
information of company's
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managed with the help of this
system.
products and services at single
place.
Job costing system Alpha consultancy uses this
system to determine the
expenses of various jobs
performed by the employees of
organisation.
It is advantageous to use this
method as the productivity of
organisation can be increased
by eliminating unnecessary
expenses.
D1 Evaluation of management accounting system and its integration within organisation
Management accounting system and management accounting reporting, both are
important for each other. This is why because for the preparation of different accounting reports,
organisations needs the information from various accounting system. In the absence of proper
coordination among these two, companies can't make the reports. Apart from this, both have link
with the organisational process. Herein, the selected company Alpha financial market
consultancy, they prepares various kind of accounting reports like cost managerial reports,
budgetary reports, performance reports etc. All of these reports consists the financial data which
directly comes from the accounting techniques which are price optimisation system, inventory
system etc. In addition, this integration between accounting system and reporting brings
smoothness in the organisational process. It is important to know that in the absence of this
linkage, other functions of organisation will also impact including processes.
LO2
P3 Calculation of cost by using marginal and absorption costing method
Marginal costing : This is a important tool of management accounting that helps in
management in making certain decision. It provides management with information about
behaviour of cost incidence of such cost on profitability of an undertaking. This involves
increase and decrease the cost of production and get the payment information about company
(De Harlez and Malagueno, 2016).
Absorption costing: It considers all cost that incurred and may be arise in any industry.
Basically it includes overall cost of manufacturing enterprise that are absorbed by total unit
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produced. This is also known full costing method that helps to define all incurred costs such as
direct material, direct labour, fixed and variable cost that helps to calculate profits.
Income statement by absorption costing method
Sales £25 £250,000
cost of sales £14 £140,000
gross profit £110,000
less: selling, admin, general cost
fixed selling & admin
variable selling /admin cost £30,000
£30,000
Net profit £50,000
Income statement using by marginal costing method
Sales £25 £250,000
cost of sales £10 £100,000
prod. Contri. margin
£150,000
Variable selling \ admin cost
contribution margin £30,000
less; total fixed cost £120,000
fixed manufacturing overhead
fixed selling & admin £40,000
£30,000
Net profit £50,000
Financial reporting document with material and labour variance
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Labour price variances
(Budgeted price- Actual price)*Actual HOURS
( 5- 5.20)* 3400
-680 unfavourable
Labour usage variance
(Budgeted hours – Actual hours) * Budgeted price
(3000-3400)*5
-2000 Unfavourable
For packaging boxes
Material price variances
(Budgeted price- Actual price)*Actual usage
(10-9.5)*2200
1100 Favourable
Material usage variance
( budgeted use – actual use)* budgeted price
(2000-2200)*10
-2000 Unfavourable
Budget and variance
Flexible Budget £ £
5000 units 10000 units
Sales 125000 250000
cost of sales 50000 100000
prod. Contri. Margin 75000 150000
Variable selling \ admin cost 15000 30000
net contribution margin 60000 120000
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less: total fixed costs
fixed manufacturing OH 40000 40000
fixed selling & admin 30000 30000
Net profit -10000 50000
Working notes:
Calculation of sales (10000* 25) - 250000
Calculation of cost of good sold -140000
(Direct material+ direct labour+ fixed manufacturing overhead+ variable manufacturing over
head- 50000+ 30000+ 40000+20000)
Selling and administrative expenses (30000+30000) - 60000
(fixed selling and administrative overhead + variable selling and administrative
overheads )
M2 Application of management accounting techniques
Management accounting techniques plays a crucial role in the preparation of financial
documents. It is so because management accounting techniques consists all the required
information for the purpose of preparing financial reporting documents. The combination of
these two makes a platform for the financial statements. Basically, accounting techniques like
price optimisation method, inventory management helps in offering required data for the
financial reports. The Alpha financial marketing consultancy company use their accounting
techniques in the making of financial statements like income statement, P&l etc. Due to
coordination of both, company enables to make required financial reports (Serena Chiucchi,
2013).
D2 Financial reports which interprets the business activities.
Financial reports are kind of reports which are necessary to show all the business
activities in a way which concludes the financial performance. As well as these reports helps in
checking about which activities are beneficial and which ones are not. In the business there are
lot of business related activities which are financial and non financial. Herein, it is important to
know that in the absence of preparing financial reports a business can not reflects its financial
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position and situation. Basically, financial reports includes balance sheet, profit and loss account,
income statement etc. The selected company Alpha financial market consultancy prepares use
different accounting reports to interpret their business activities because it is a kind of framework
which shows all the business activities. This beneficial for not only to the business but also for
the external parties like shareholders. Company prepares income statement to check the profits
and loss of year. So overall financial reports are the kind of platform which interprets the
business activities (Grabner and Moers, 2013).
LO3
P4 Merits and demerits of different type of planning tools in budgetary control
Budgetary control is a important technique that helps to formulate and preparing
financial budgets in every year. This is accounting technique to control budget and maintain the
profits of any organisation. Moreover, budgetary control helps in formation of future financial
plans and set goals by evaluating the past budgets. This tools is used by managers of any
organisation in order to control and monitor the financial operations and budgets. This plays a
crucial role to control the budget if expenses are excess than revenues then budgetary control is
used that helps to reduced the cost and maintain budgets. This tools provides an estimation of
incomes and expenses which is going to be incurred in a year for making profitable organisation.
In Alpha financial company managers focuses on expected budgets that is prepared by
accountant with the helps to previous budgets. It involves past year financial statements such as
trading, profit and loss account and balance sheet that make easy to estimate next year budgets
and control costs of company (Granlund, and Lukka, 2017). Consequently, it has various
advantages and disadvantages of planning tools that are used for bugetary control-
Contingency planning tool: This means to manage risk and losses that may be occur
suddenly in an organisation. This planning is associated with unwanted and unexpected situation
that has chances to arises while performing different operational function. This tools helps to
make provision and planning to overcome the contingency losses and maintain the business.
Alpha financial company who provides finance and give suggestion of investment makes
budgets and contingent provision that helps to reduce the loss that may be occur in future such as
bad debt, loss by fire and damage of building (Ruch, and Taylor, 2015). It can use contingency
10

planning to reduce the uncertainty and control costs. Contingency planning tool has various
benefits and barriers that helps to make budget such as-
Advantages:
 Such planning give benefits to selected enterprise by reducing the chances of
uncertainty and make confident to grow the business by reducing losses.
 It also helps to formulate effective back up plans that helps to minimise risks.
 It address and takes corrective action against unexpected problems and issues in
Alpha financial company as result it expanding its business by using this tool.
Disadvantages:
 It can create conflicts and misunderstanding among managers who prepares
contigency planning and expected budgets.
 This may be difficult to deal with uncertainties because lack of money and not
appropriate funds.
 It involves number of cost and consume time that may be a linger process that
needs more time to prepare budgets.
Flexible budgets: This is a tools that helps in bringing changes in budgets at the time of
preparing estimated budgets. This is used by most of the industry that makes changes if is
required. Flexible budget means to get changes if expenses are more than incomes. Any firm or
industry make budgets each year and measure with past budgets. Past budgets give ideas that
how much expenses are requires to maintain profits and focuses on current outputs. In Alpha
company managers make flexible budgets by evaluating past performance and statements that
can be change according to requirement in case of expenses are more than incomes (Jacobs and
Cuganesan, 2014).
Advantages:
 It brings effective coordination among various activities in Alpha finance
company that helps to increase productivity.
 This type of budgets provides accurate results after making changes and also
cover range of activities individually.
Disadvantages:
 It becomes difficult to formulate and addressing the fluctuate budgets because it
involves lots of variables.
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 It may be difficult to understand for Alpha finance company's manager because it
does not remain fix and certain.
Forecasting tools: This tools plays a crucial role in budgetary control that helps to predict future
expectation by evaluating the past and present budgets in any enterprise. Such tools are helpful to
use and preparing budgets with the help of previous information. It helps to make future planning
and expand business activities by maintaining cost of enterprises. In Alpha finance managers use
this technique to assist employees and accountant where need to invest more in order to increase
profit margin.
Advantages:
 It provides benefits to Alpha's manager to predict and forecast the budget and make
planning according to budgets.
 It also helps to forward excess incomes at excess expenses. Such as if manager find there
is need to spend more in marketing department then it can use from excess fund sources.
 This tool can give benefits in a selected company in formulating better future by
containing valuable financial data.
Disadvantages:
 For Alpha it is difficult to forecast or predict future planning because it depend on
past financial data that may be incorrect.
 Collected information for chosen company may be incorrect because new changes
and cost can be incurred and it will not be easy to make future budgets and
programme.
Capital budget- Capital budget is a kind of budget that estimate long term expenses like
plan, machinery building. It predicts that whether an organisation have sufficient fund to expand
these long term assets or not. Alpha financial marketing company use this budget to take long
term decisions for buy fixed assets. It has some advantages and disadvantages which are
followings:
Advantages:
 It helps the company in making long term financial decisions. Like they can make
decision of purchasing and selling the fixed assets according to this budget.
 This budget makes possible about analyse the risk and reducing that risk wisely.
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Disadvantages:
 Wrong estimated budget can impact the company in a huge loss because it is
related to the large income and expenses.
 This budget making process consumes too much time as well as it occurs huge
cost of the company.
Operating Budget: This is used to prepare annual budget that helps to keep records of
day to day transaction. It helps to give information about daily transaction and information that
occurred in an organisation. Manager of Alpha finance used this budget to maintain day to day
transaction and earns profits by managing budgets.
Advantages:
 It helps Alpha finance to keep track of running business and control the cost.
 By maintaining day to day transaction Alpha finance can increase the profit
margin such as if it keep records then estimate of incurred cost and that can be
reduce.
Disadvantages:
 It is time consuming process that takes too much time because it includes
numerous transaction.
 It reduces the revenues estimation and increase expenses estimates by involving
daily business activities.
SWOT analysis: To analysis the financial problems SWOT of Alpha finance has been
given that helps to show the how manger of Alpha company can solve the financial problem and
what are strength and weakness of this organisation such as-
Strength:
 Successful track record of financial
services.
 Highly skilled employees.
 Strong level of customer satisfaction.
Weakness:
 Interest rate is higher than
competitors.
 Not proper and efficient
financial planning.
 High attrition rate in work
force.
Opportunity: Threat:
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 Stability in cash flow by providing
attractive services.
 Adopting new technology in order to
provide financial services.
 Changing customer by adopting
financial services from other.
 New finance policy or regulation
reduces customer.
PEST: PEST means political, economical, social and technological factor that can affect
any business organisation and its decision in order to solve financial problems. Theses factor
shows the financial position of Alpha finance company who provides finance such as-
Political: This factor affect Alpha finance company such as changes in Government Tax
policies increases the tax amount that needed to pay by Alpha's manager as result its profit
margin will reduce.
Economical: If government increase inflation rate and interest rate then definitely it will
affect Alpha's business such as it has to spend more money hence, its need to more funds to be
sustain in a competition market place.
Social: This is influencing factor that impact on Alpha's business such as if population
growth increase their taste and fashion will changes hence, Alpha has to spend more expenses to
attract customer and need to give discount on providing financial services.
Technological: This includes Innovation and automation that can be affect Alpha's
business if any new technology come in market it has to adopt new technology to influence the
customer to obtain finance from Alpha finance.
M3 Use of planning tools and their application for preparation and forecasting the budget
The planning tools of budgetary control provides a basis for making new budgets. This is
possible because of information provided by the different planning tools. Generally, planning
tools includes budgets, fixed budgets, variable budget etc. The application of these tools helps in
estimation of new time period's budgets. The above company Alpha financial market
consultancy company use different planning tools like contingency planning tool, forecasting
tool etc. for accurately estimation of future happening financial activities. Basic fundamental of
working this process is that budgetary planning tools includes all the past financial informations
14

which becomes basis for forecasting new budgets. So overall planning tools of budgetary control
helps in accurate forecasting of budgets (Jacobs, 2012).
LO4
P5 Adoption of management accounting system to give response of financial problems
Management accounting system are techniques that helps to manage accounts in an
industry by preparing many accounts such as profit and loss account, balance sheet and fund
flow statement that helps to make profitable company. Financial problems are related to finance
issues that may be arises in any business because of lack of funds. It includes different financial
issues that directly impacts on profits and operational functions of an enterprise. Financial
problems arises because of scarce factors, focuses on principal budget, limiting factors, spending
more than incomes and governing factors that can create finance problems (Kastberg and
Siverbo, 2016). Manager of Alpha finance consultant makes different provisions to solving
financial problems that is discussed as below-
Cash flow problem: This problems occurred in an organisation when it does not have
sufficient funds to pay liabilities. Its main reason is high spending and low incomes. In other
words, outflows are more than inflows that reduces profits of an enterprise. Manager of Alpha
finance are facing financing issues because expenses and creditors are high than revenues, hence
it is not able to pay its liabilities (Kraus and Strömsten, 2012).
Risk management: This is common factor that reduces the profits because of uncertain
and sudden risk that can be arises in any corporation. Risk management involves various
strategies to minimize risk associated in an enterprise. Manager of Alpha finance need to adopt
different strategy to eliminating risk such as to make planning and set budget, check plans time
to time, inventory management and cost accounting strategy that will helps to manage risk.
Money measurement: It is a technique that helps to saving, budgeting, tracking and
spending monetary values in an industry. It helps to measure the monetary resources in order to
achieve maximum profits. In Alpha finance managers should focus on monetary activity and
need to evaluate the monetary transaction that will helps to solve financial problems.
Financial governance: It defines the way that an organisation stores, records, manages,
monitors and controls financial information. It also involves how an corporation track financial
data, manage performance and can control finance transaction that helps to solve financial
15

problems. It is regulated by government in public company and by owner in private company in
order to make profitable organisation. In Alpha finance managers has duty make control the
accuracy and make solid strategy that would helps to solve finance problems (Lee and Cobia,
2013).
Management accounting approach: This states accounting approach help managers to solving
organisation's issues by using management techniques. Such management approach helps to
provide accurate and appropriate information in order to maintain profits. In Alpha finance
managers are using this technique to resolve the enterprise's problems and it also helps to utilize
available resources in an enterprise. It contains various approaches such as-
Key performance indicators: KPI is the tool that is used to measure the performance of
enterprise as well as employees by comparison of with other industry. Key performance indicator
helps to evaluate the performance of industry an d make planning to get improvement. Effective
KPI leading to focus at business processes and functions which make easy to expand business
activities. In Alpha finance manager focuses on business performance by providing training to
employees and give ranking to get the well performance (McLellan, 2014).
Benchmarking: This is a process to identify best practices and procedures in relation to
product and services are created and delivered. The main object of benchmarking is to
understand and evaluate the current position of a business or enterprise. In Alpha finance
managers use this technique to get best practices and and identify areas in context to make
improvements in performance (McManus, 2013).
Comparison between Alpha finance and Brightstar finance limited
Basis Alpha finance Brightstar finance limited
Problem Alpha is facing financing problems
because of ineffective and poor
management at operation activities.
Its expenses are more than revenues
is also a reason of financial
problems.
It does not have sufficient money to
pay liabilities as result profits
Brightstar is facing risk management
problems that reduces its profit
margin and increase cash outflow.
It is facing money measurement
problems that reduced capital of this
enterprise.
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reduced.
Approach Every company needs to reduced or
overcome its problems. For
overcoming Alpha should apply Key
performance indicator that will help
to evaluate performance and also
will comparison with other company
in order to get improvements.
To minimize the problems Brightstar
should apply benchmarking that will
help to provide best practises and
process of performance in order to
prepare reports which relates to risk
management. It also need to get
improvement in working capital to
reduce the competition with other
corporations.
M4 Management accounting can lead enterprise to sustainable success
Management accounting systems and applications helps in the overcoming from financial
problems. The term management accounting is a broad term which consists many tools and
techniques like cost accounting system, inventory management system etc. For example if an
organisation suffering from the issue of matching demand between available stock and required
stock. In this situation inventory management system can help them in solve that issue. Same as
in Alpha financial market consultancy company applies a range of management accounting
techniques to solve their financial issues that overall result in the organisational success
(Morden, 2016).
D3 Planning tools for accounting respond and solve financial problems
Planning tools are generally useful in many purposes like measurement of performance,
overcoming from financial issues etc. Eventually, planning tools includes fixed budget, flexible
budget, contingency tool and many more. Each of tool has some significance in the context of
solving the financial issues. This is possible because different planning tools have all the relevant
required information which may become basis of problem solving. The Alpha financial
marketing consultancy company overcomes from their financial issues with the help of various
planning tools. They implements many planning tools like contingency planning tool, forecasting
tool, flexible budget etc. These all plays a significant role in the solving of financial problem
17

and if company gets success in the solving of financial issues then they will automatically
achieve the sustainable success (Neubauer, Mayr, Feldbauer-Durstmüller, and Duller, 2012).
CONCLUSION
From the above discussed report it has been concluded that management accounting
essential for increasing the efficiency of business as provides guidance to managers in managing
day to day transactions of business which are later being analysed and interpreted using this
framework. Different types of management accounting systems like cost accounting, profit
optimisation, Job costing and inventory are adopted by the organisation for various purposes.
Accounting reports are part of management that helps in providing information related to
performance of business entity. Managers prepares them for analysing and making effective
decisions. Afterwards report covers cost analysis using techniques like marginal and absorption
costing which shows the company's profitability. The advantages and disadvantages associated
with planning tools like contingency, forecasting and flexible are also discussed. As organisation
has to face deal with financial problems techniques such as KPI and benchmarking are used to
identify such issues along comparison that shows how organisation management accounting
systems to resolve financial issues.
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