Management Accounting: Types, Reports, and Benefits

Running head: MANAGEMENT ACCOUNTING
Management Accounting
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1MANAGEMENT ACCOUNTING
Table of Contents
Task 1: Introduction to Management Accounting.....................................................................3
Explanation of management accounting:...............................................................................3
Explanation of essential requirements of different types of management accounting
systems:..................................................................................................................................3
Explaining the different types of management accounting reports:...........................................5
Benefits of the management accounting system and its application on Tuffen Mark Ltd:....7
Critical evaluation of how management accounting system and management reporting is
integrated into Tuffen Mark Ltd organization procedure:...................................................10
Task 2: Management accounting techniques...........................................................................12
Standard cost per ventilation system using absorption costing and marginal costing:........12
Income statement of the budgeted results using absorption costing and marginal costing: 12
Cost analysis and CVP analysis:..........................................................................................13
Financial reports for a range of business activities:.............................................................14
Task 3 Planning Tools used in Management Accounting:.......................................................15
Planning Tools Used for Budgetary Control........................................................................15
Application of Different Planning Tools..............................................................................16
Evaluation of how planning tools for accounting respond appropriate to solving of
financial problems to result an organization to sustainable success:...................................18
Comparison of how different organizations are adapting management accounting system to
respond to the financial problems:.......................................................................................19

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Analysis of how responding to financial problems, management accounting can result in
organizations sustainable success:.......................................................................................21
References:...............................................................................................................................22

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Task 1: Introduction to Management Accounting
Explanation of management accounting:
Management accounting process refers to the preparation of management reports and
accounts that offer accurate and in time financial and numerical information that is required
by the managers to undertake the daily and short term business decisions. Not like the
financial accounting that produces the annual report largely for the outside stakeholders, the
management accounting produces monthly and weekly reports for the company’s internal
audience namely the department managers and the chief executive officer (Kaplan and
Atkinson 2015). The reports typically reflect the sum of cash available, sales revenue
produced, the quantity of orders in hand, situations of accounts payable and accounts
receivables, outstanding debts and inventories including the trending charts and other
statistics. The management accounting system is such that it applies the professional
knowledge and skills in the preparation of the accounting information in a manner so that the
tool helps the management in formulating the policies in planning and controlling the
operations of undertakings.
Explanation of essential requirements of different types of management accounting
systems:
There are several kinds of management accounting systems which includes the
inventory management, cost accounting system, price optimization and job costing system
that has numerous accounting objectives, functions and elements (Langfield-Smith et al.
2017). Nevertheless, all the basic elements of the accounting system create the standardized
context as the aim of the data is to analyse, identify and communicate the information.
Cost Accounting System: The cost accounting or system of costing represents the
framework that is applied by the company to estimate the cos of its products for valuing the

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inventory, analysis of profit and controlling of cost (Otley 2016). In the system of cost
accounting, the cost allocation process is performed based on either the activity based costing
system or traditional costing system. The system of cost accounting is the kind of accounting
system that aims to capture the cost of production by weighing the inputs of every production
step along with the fixed cost such as depreciation on capital equipment’s. The essentials of
cost accounting system is stated below;
a. Participation and Cooperation of executives needed by numerous departments:
This would ensure that the suitable participation and cooperation is in place to build
the process of cost account system as this would help the management in correctly
determining the cost of products.
b. Flexible and simple: The cost accounting system that is developed must be flexible
and easy to understand and perform (Saeidi et al. 2018). It also satisfies the
requirements of numerous users and adapt to the requirement of business.
Job Costing System: Job costing helps in assigning the manufacturing costs to each product
while simultaneously keeping track of the expenditure (Fullerton, Kennedy and Widener
2014). Tuffen Mark Ltd can use the Job Costing system when the product is similar to keep
track of the order expenditure. The essentials of job costing system includes the following;
a. Receiving enquiry of the customers regarding the quality of the material, price of
material and time taken to complete the order.
b. Estimation of the job price should be carried out by management accountant bearing
in mind the customer taste and preferences.
Price optimising system: The price optimization system is used to implement control on the
resource prices. The price optimization system helps in deciding the prices of the multiple
products on time (Cooper, Ezzamel and Qu 2017). The system helps in determining how the

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demand would fluctuate at the different level of price. Tuffen Mark Ltd can make use of the
price optimising system by tailoring the prices of customer segments by simulating their
responses to the different level of price. Tuffen Mark Ltd can use the price optimising system
as it is helpful for the organization in building the price structure for promotional pricing and
discount pricing.
Inventory management system: The inventory management system is associated with the
supervision and management of stock as well as non-capitalized assets of the enterprise
(Tappura et al. 2015). The organization procedure at Tuffen Mark Ltd can be integrated with
this form of system to attain the effective inventory flow inside the organization. The two
essentials of inventory management system are as follows;
a. Forecasting and replenishing strategies: This strategy would help in advancing the
management and planning of cost requirement inside the organization.
b. Physical and monetary management of inventory: Numerous benefits such as
reduction in cost and appropriate inventory management can be attained with this
system.
Explaining the different types of management accounting reports:
There are numerous types of management accounting reports that can help the
management in preparing the appropriate reports at Tuffen Mark Ltd that would count on the
company’s forecast of making critical business decisions. The below stated is the reports that
can be prepared by the management of Tuffen Mark Ltd;
a. Budgeting reports: The management of Tuffen Mark Ltd can prepare the budgetary
report as it would help in setting out the plan for analysing the performance of the
company at the time of making assessment regarding the department performance and
cost controls (Kihn and Ihantola 2015). The budget reports can be useful for Tuffen