Management Accounting Systems and Reports

Management
Accounting

INTRODUCTION
Management Accounting refers to the use of financial data and information in an
organization in such a manner so that the managers are able to take the right decisions which can
lead towards an increase in the overall profitability (Armitage, Webb and Glynn, 2016). When
the management makes use of its provisions it can ensure that right plans are made for the future
time period. The managers should focus on making use of its techniques so that they are able to
analyse and interpret the financial data and information to draw conclusions and
recommendations. This can be very helpful for them to bring the required efficiency and
effectiveness in the level of operations. For this report, Creams Ltd. has been chosen. It is a
medium-sized firm which deals in the production of ice-creams, doughnuts and waffles. In this
report, focus will be made on demonstration of understanding of management accounting
systems, application of a range of its techniques. Additionally, explaining the use of planning
tools and comparison of ways in which organizations can make use of management accounting
to respond to financial problems will be discussed as a part of this assignment.
TASK 1
P1: Management Accounting Systems and their essential requirements
Management Accounting has different types of systems. They are explained as follows-
Cost Accounting System- This system is used widely within the organizations because
its techniques are quite useful for the purpose of calculation of costs (Aureli and et.al., 2019). If
the managers of the organization are able to make use of this system in the right manner then it
will help them a lot in reducing the excessive costs and overheads in the different departments
resulting in maximization of profits. For the managers of Creams Ltd., this system is quite useful
in making of the right decisions effectively and efficiently.
Essential requirements-
 This system should be able to identify the different types of departments within the
organization like Finance, HR, Marketing, Sales etc. Thus in this way rectifying
techniques can be used so that these costs are reduced.
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 With the use of this system different types of overheads can be identified as well as
segregated. This ensures that the companies are able to properly allocate them according
to the particular expenses made by these departments.
Advantages-
 By making the use of this system, an organization can ensure that costs are controlled in a
proper manner. Therefore for the managers of Creams Ltd. this is an advantage.
 When this system is used, an organization is able to use the techniques so that costs can
be reduced. This is beneficial for Creams Ltd.
Inventory Management System- With the use of this system the stock management can
be facilitated by the companies effectively and efficiently (Botes and Sharma, 2017). In this way
they can make sure that they bring the efficiency and effectiveness in their management of
inventory. In this way the managers of Creams Ltd. have an advantage in making use of this
system. This is so because by making the use of this system the managers can make sure that
they are able to track the inflows and outflows of stock without problems and issues.
Essential requirements-
 This system should be able to make use of the methods like LIFO, FIFO, Weighted
Average Cost etc. This will help the organizations in tracking the inflows and outflows of
stock.
 Inventory Management System should ensure that by making use of right techniques
efficiency and effectiveness can be brought in the management of the stock level.
Advantages-
 By using this system, proper maintenance of records of items in the stock can be
maintained. This can help Creams Ltd.
 When this system is used it can lead towards reduction in the cost of maintenance of
inventory. For Creams Ltd., it is very much beneficial.
Job Costing System- With the use of this system the companies can make sure that by
using it they can be able to find out the cost of their different job orders (Ghasemi and et.al.,
2016). By using it, the management of Creams Ltd. can identify the inflows and outflows of the
job orders and reduce the costs of its job orders.
Essential requirements-
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