Management Accounting Concepts and Techniques in Decision Making

Management Accounting Concepts and
Techniques in Decision Making

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................2
TASK1.............................................................................................................................................3
P1 Interpretation of Management accounting system................................................................3
P2 Methods used for management accounting reporting............................................................4
M1 Advantages of using management accounting system..........................................................1
D1 Impact of integration of managerial accounting system and reports..................................1
TASK 2............................................................................................................................................1
P3 Income statement using managerial accounting techniques...................................................1
D2 Interpretation of data by financial report...............................................................................4
TASK 3............................................................................................................................................4
P4 Interpretation of advantage and disadvantages of managerial planning tools...............4
M3 Uses of planning tools for budgeting and forecasting process..............................................6
TASK4.............................................................................................................................................6
P5 Explanation of how managerial accounting tool uses to overcome financial problem..........6
M4 Analyses how, in responding to financial problems, management accounting can lead
organisations to sustainable success............................................................................................8
D3 Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organisations to sustainable success................................................................8
CONCLUSION................................................................................................................................8
REFRENCES...................................................................................................................................9

INTRODUCTION
Management accounting is provision of information collect from recording, analyzing,
evaluating transaction of daily business activites it is used for development of business. It also
known as managerial accounting. In other words management accounting is a systematic process
of decision making with the uses of accounting data. Business organization use policies,
techniques and various systems to formulate, planning and controlling managerial functional
activites. In order to understand the concept of management accounting Crèmes limited has been
taken. This organization provides ice creams, doughnuts, waffles food products and provides
service to their customers it is medium size organization, which is now suffers from financial
problem, to solve their problem this report has been prepared which contains all the essential
information regarding use of system, tools of management accounting to overcome issues of the
organization.
TASK1
P1 Interpretation of Management accounting system
Management accounting: It is a combination of two words management and accounting.
Management refers to the process of planning, organizing, coordinating, directing and
controlling business activites and accounting is a framework through which manager collect
information of daily transaction. Management accounting is systematic framework of presenting
accounting data in an efficient way which will assists manager for creation of policies. It is not a
special function of accounting it comprise as any form of accounting through which organization
conduct their activites more efficiently. Following are the system manager can use:
Job Costing System: This system is used in managerial accounting procedure in order to
determine cost of each activity of business. This method comprise of 6phases which start with
organization take inquiry related to the needs of customers and ending up with providing
products and services to customer. Job costing system is used for identifying enquiries, related to
the job activity (Resta, Gaiardelli, Pinto and Dotti, 2016).
Price Optimising System: It is implemented within the organization to understand the effect of
demand and supply factor of price discrimination Price optimization system will be used to
determine prices of product through which company can gain profits and established their

position in market. Manager will use price penetration, discounting pricing strategies, and cost
pricing in order to take decision regarding their price.
Cost Accounting system: It includes all the procedure through which organization can calculate
cost of processing, cost incurred during purchasing installing and uses of equipment for
manufacturing process it includes, marginal, job costing, process costing, standard costing
method which will help in identifying cost and risk for the organization.
Inventory Management System: It is one of the most useful system for business organizations.
Manager use this system to determine cost of inventor, it will help in maintain stock in an
efficient way . Managers use EOQ, ABC anaysis.JIT system it will help in determining numbers
and quality acquire at minimum, maximum level of stock
P2 Methods used for management accounting reporting.
Management accounting reports are formulated for providing facilities to manager to collect
information and decision related to future project. Following are the reports Creams Limited
can used for their organization
Budgeting report: This report is prepared on the basis of collection of information from
operating, financial, production purchases and master budget. Budget report is the summery
which explain to future inflow and outflow of business organization. Manager of Creams limited
will use this report for identifying their incomes and expenses and profitability rate of projects.
This report helps in analysing risk and also by formulating this report (Resta, Gaiardelli, Pinto
and Dotti, 2016).
Account receivable report: met is most essential managerial accounting report for
organizations. This report is formulated to determine the numbers of default debtors present in
organization. This report also help in identifying cause3s of slow growth rate of company and
debtors unable to pay their debt liabilities. By using summery data of account receivable report
manager of Creams limited will be make polices regarding their debtors so that they can able to
pay their liability amount to the company within short period of time and it will also help in
taking decision regarding attractive debtor policy so that debtors get attracted towards the offers
and it will help in increasing cash sales for to organization. This report is useful for enhancing
cash inflow of to organization