Management Accounting System and Techniques: A Comprehensive Guide

Management
Accounting

INTRODUCTION
Management accounting refers to the provision used for making informed decision-
making using accounting information in order to fulfil the objectives of the organisation. They
decide the better way of doing the business and aid to the management for better performance to
execute the functions (Alsharari and Al-Shboul, 2019). In this report the organisation is UCK
furniture that produces one product that is desk and is trading two division of table and Drawer.
In this report, it is being discussed about the types of management accounting system and its
essential requirement for the organisation has been discussed. Different methods used for
accounting system and its application has been analysed for the firm and its benefits. Evaluating
the different types of cost and its techniques to prepare the financial statements such as marginal
cost and absorption costing to evaluating the different system. It is being determines the types of
budgetary tools and its advantages and disadvantages and comparing the accounting problems
faced by different organisation.
TASK 1
P1. Determining the management accounting system and their essential requirement and types of
management accounting system
Management accounting- This refers to the tool that is identified the managerial
accounting and financial statements which help them in providing best method to take the
decisions. In the context of UCK furniture, this system helps in understanding overall financial
positions to carefully carry out the activities and monetary function in the organisation.
Management principles- These are very basic principles which need to be follow and
adhere in order to enhance the organisational efficiency. To increase the overall performance of
the selected company, following principles are as follows-
 Credibility- This refers to the taking appropriate method to take the responsible decision
and shareholder and it is more likely to put the capital into the firm. For the UCK
furniture, this helps in improving the credibility of the organisation in the eyes of investor
and creditors (Ameen, Ahmed and Abd Hafez, 2018).
 Relevance- As, proper information is very important key to handle and monitor the
overall functions of the organisation and that leads to certain benefits to take informed

decisions. For the selected organisation, this relevance information principles helps in
taking effective decisions and avail all benefits.
Difference between financial accounting and management accounting
Basis Management accounting Financial accounting
Meaning This concern with dealing with
many financial activities such
as planning, organising all
financial information in the
organisation.
This termed as taking all
necessary financial
information which help the
company in taking informed
decision of the company.
Purpose The purpose of this
management accounting to
handle and regulate internal
process.
This useful in taking effective
decisions regarding the
external environment of the
company.
Uses This helps in taking effective
decision regarding the overall
business process which help in
determining the success of the
firm.
This is very useful for
externals such as investor,
shareholder and competitors.
Management system- This concern with improving the internal process that will lead to
improving the overall operational and financial activities to enhance the effectiveness. Some of
the system are as follows-
 Cost-accounting system- This kind of accounting system controls the all kind of cost
and expenses which is related to the different types of organisational functions. It
basically deals with handling all process of raw material that is used in the production
stages and turns it into finished goods and services (Azudin and Mansor, 2018). In the
context of UCK furniture, the essential requirement of this system is to controlling and
monitoring all kinds of cost which is optimized the cost information. This is also helping
the management in fixing the adequate cost to fulfil the ease in processes.

 Inventory management- This includes all aspects such as regulating and fixing the
purchases from the suppliers and customers. This basically depends on the different types
of products that concern with sell through channel. This controls end-to-end production
process that managing the business processes and forecasting the demands and other
accounting system (Fleischman and McLean, 2020). This promote and provide essential
requirement to the selected organisation in taking important decisions regarding the
production process and integrating all useful information which is beneficial for the
company. This gives the support to the management in taking essential improvement and
take effective analysis of the inventory management and gives the useful decisions for the
company.
 Price optimising system- This system useful in analysing and focusing the key areas
such as margin sales and monitoring the number of conversion which is useful in the
management process. This is important factor which is very important to consider by the
company and that influences the purchasing power of customers. It plays the necessary
role in monitoring and regulating the pricing decisions that decides the success and
failure of the firm. For the UCK Furniture, the essential requirement is to handle and
regulating the expansion of business and promote the effectiveness regarding the pricing
decision which is taken by organisation.
Management accounting
systems
Uses Application
Cost accounting system This helps in providing the
estimating cost and leads to
proper control of all expenses
in the management process.
UCK Furniture need to access
this system to successfully
implement the activities and
functions.
Price optimising system This gives proper control on
the pricing policies which is
decided by organisation. This
facilitates in evaluating the
maximising of profit for the
management (Gibassier and
UCK Furniture is also using
this to regulates the whole
process of pricing strategies to
enhance the profit of all types
of management.

Alcouffe, 2018).
Inventory-management
system
This helps in monitoring and
regulating the process of raw
material that is converted to
the finishes goods.
In UCK Furniture, this system
will help in handling all
inventory system and that
gives benefits to the
organisation at greater level.
P2. Explaining types of management accounting methods
In organisation, reports are playing important part in recording the essential transaction
which help in taking decisions regarding the many operational activities such as regional sales
and profitability activities (Gunarathne, Lee and Hitigala Kaluarachchilage, 2021). This is
important for all managers to execute and formulate necessary business decisions which will
help in taking necessary business decisions which will lead to growth and success of an
organisation. In the context of selected organisation, this report will help in undertaking the
strategical and analytical functions and provide necessary informations. Followings reports area
as follows-
 Job costing reports- This reports useful in analysing the right way to conduct the
activities of job so that they provide meaningful output to the organisation. This define
the problem during the job and completed after and need to find the error in accesory. In
the context of UCK Furniture, they help in comparing the actual budget cost and helps
the manager in taking appropriate decisions regarding job schedule. It is benefits to the
company to make extra effort in achieving the objectives and goals.
 Performance report- Business report is very important way of handling the valuable for
the organisation and provide help in analysing the forecasting revenue and expenses for
the management. This facilitates in assisting to the top managers who were required to
evaluating the performance of the employees and gives the adequate decision regarding
them. In the context of selected organisation, this report help in giving proper help in
achieving the organisational objectives of the company and measuring the report
parameters of the employees performance.