Management Accounting and Its Types : Report

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Define management accounting and its types as well as their necessary requirements........1
P2 Methods used for management accounting reporting............................................................3
M1...............................................................................................................................................5
D1................................................................................................................................................5
TASK 2............................................................................................................................................5
P3 Calculation of costs by using appropriate methods of cost analysis......................................5
M2...............................................................................................................................................9
D2................................................................................................................................................9
TASK 3............................................................................................................................................9
P4 Advantages and disadvantages of different planning tools for budgetary control.................9
M3.............................................................................................................................................11
P5 Usage of management accounting systems to resolve financial problems..........................11
M4.............................................................................................................................................12
D3..............................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is a term which shows the administration of financial systems
and information used by budgetary manager for effective decision making process. In fact it is a
process of making financial reports as well as accounts which provide precise and timely
statistical information needed by supervisors for making short term decisions on daily basis.
Basically major purpose is to produce annual or half yearly fiscal assignments by considering
various necessary accounts for example balance sheet, profit and loss, or factory account.
Unicorn grocery is a small co-operative business which is situated in Charlton-cum-hardy,
Manchester England, which serve fresh, dried and processed food stuffs with drinks (Macintosh
and Quattrone, 2010). It is controlled and managed by existing employees or owner of a
company who is liable for running the organization. This report is classified into three different
segments for highlighting the accounting system of a company and usage of different tools of
reporting. Apart from this, it also throws few lights on methods of calculating cost with the use
of suitable cost analysis process for making impressive income statement. Instead of this, this
report also demonstrates benefits and limitations of appropriate planning tools for budgetary
control. Lastly, assignment is going to assist unicorn organization various suggestions and
techniques for resolving financial issues.
TASK 1
P1 Define management accounting and its types as well as their necessary requirements
Definition: - Management accounting is a term which consist of financial information
utilize by manager while decisional process. Furthermore, it involves methods of making and
offering well-timed fiscal data to business managers which is used by them while preparing long
term and short term decisions (Baldvinsdottir, Mitchell and Nørreklit, 2010). In every business
enterprise there is requirement of effective systems so that directors can use it for acquiring
precise data for fulfilling the demand of customers as well as employees. Moreover, higher
authorities are liable for making any decision due to their power and designation. Therefore, they
are considering various systems for acquiring financial evidences which is used by them while
making plans and policies for whole company. Thus, there are numerous of systems which are
engaged in providing essential data are described as follows :-
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 Inventory management system: - Unicorn grocery is a very small company by having
nearly 70 employees due to which it is easy to manage their inventory system and easily
acquire necessary data about opening or closing stocks. In fact it is very indispensable
for referred company to manage and control warehouses in an appropriate manner
which resulted in a effective functioning of company. Therefore, it is essential for
inventory manager to control wastage of stock by maintaining a balance between
opening and closing commodity (Bodie, 2013). Along with this one of major obstacle
faced by enterprise is a shortage of inventory which must be resolved while considering
relevant evidences. Basically number of tools are used by manager of unicorn grocer for
minimizing their problem for example economic order quantity which is a one of useful
method of controlling extra stock or wastage by managing demand and supply. Job costing system: - According to this method an organization is trying to analyse the
cost of different jobs while manufacturing goods and services. Therefore, determination
of costing of particular occupation is required for controlling wastage for profit
maximization. Every expenditure is made which is going to aggregated and after that
division will be occurred on the basis of per unit. Thus, all the identified information is
used by authorities while setting final price for acquiring maximum returns on
investment (Parker, 2012). Along with this, it has been understood that job costing
system analyse the price as per job performance and functions. Price optimisation system: - This method shows the technique of setting price by
considering relevant facts and figures for earning maximum profits. Major motive of
this enterprise is to increase return on investment by setting affordable price for
capturing attention of millions of consumers. There is an inverse relationship between
supply and demand it means if there is an increase in price then demand will
automatically decrease, but if price decreases then demand of a product get increases.
Thus, it shows that manager of cited company requires to analyse overall production
cost as well as market rate before setting their price (Weißenberger and Angelkort,
2011).
 Cost accounting system: - As per this system expenditure or cost which incurred in a
company while performing their task and activities is recorded for proper measurement
so that managers can control it appropriately. In fact effective monitoring process is
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