Management Accounting and Reporting

Management
Accounting

Table of Contents
INTRODUCTION......................................................................................................................5
MAIN BODY.............................................................................................................................5
TASK1.......................................................................................................................................5
P1 Explain management accounting and give the essential requirements of different types
of management accounting systems.......................................................................................5
P2 Explain different methods used for management accounting reporting...........................7
TASK2.......................................................................................................................................9
P3 Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs......................................................................9
TASK3.......................................................................................................................................9
P4 Explain the advantages and disadvantages of different types of planning tools used for
budgetary control...................................................................................................................9
TASK4.......................................................................................................................................9
P5 Compare how organizations are adapting management accounting systems to respond
to financial problems..............................................................................................................9
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................10
Books and journals...............................................................................................................10

INTRODUCTION
Management accounting refers to the function in a business organisation which is
related to managing various accounting information and helps all the stakeholders of the
organisation to effectively identify the financial position of various accounts in the business
(Otley, 2016). When taking the following report into context innocent drinks which is a
company producing smoothies and juices usually sold at various retail sector is taken into
consideration. The report discusses about the requirements of management accounting for a
business and different types of management accounting systems. Various methods used for
reporting of management accounting is also discussed in this report along with appropriate
techniques for cost and Alices. A number of advantages and disadvantages of different
budgetary control tools are also discussed in the report along with comparison between
various management accounting systems which are adopted by an organisation to solve their
accounting problems.
MAIN BODY
TASK1
P1 Explain management accounting and give the essential requirements of different types of
management accounting systems
Management accounting is a process in an organisation which relates to valuation of
various accounts and determination of them in a financial term in order to understand
financial position of company and various information about its management of finance.
When taking organisation into context management accounting is in accounting which
provides the organisation with the particular process in which identification of the position of
company can be done in order to achieve its goals and objectives.
As per the Institute of management accounting management accounting is a field of
management in which management of finance and cost of accounts for an organisation is
taking place in order to take various decisions and increase the performance of business. The
following system is associated with the current financial position of the company and
analysis of financial accounting system which provides a standard in order to determine
position of company in competitive environment (Langfield-Smith, Thorne and Hilton,
2018). Management accounting is also affectively used in order to control and monitor

various cost of different products and services which are offered by an organisation and
different activities which can involve all the process of business.
When taking innocent drinks into context there are number of benefits which are
brought by management function mentioned below:
Profit maximisation: Management accounting can be effectively used by an
organisation to maximise their profits as the management of cost of an organisation is directly
related to different activities which are going on in the business. When taking the help of
management accounting and organisation can easily identify their cost and reduce them in
order to make sure that they are earning profit within the market.
Efficiency booster: management accounting is an effective tool which is used by
employs in order to increase the efficiency of business and various resources which are used
by the organisation. Management accounting also effectively helps in managing different
accounts and identifying all the cost which are involved and directly related to various
performances of individuals in an organisation (Hopper and Bui, 2016). It effectively helps in
increasing the efficiency of human resource while they’re working on a job as there are tools
present in management accounting which helps in measuring their productivity as well.
Arious systems which are used in management accounting:
Price optimisation: Prize optimisation is an effective tool in management accounting
which is used by businesses in order to identify the response of their customers as per the
services which is provided by organisation to them. It is necessary to understand and
calculate the satisfaction of consumers and the value they are receiving for the price they paid
(Cooper, Ezzamel and Qu, 2017). It is necessary for innocent drinks in order to deter mine
what can be the actual cost of their products to customers and how much are they ready to
expend for their products and services. The major objective for pride optimisation system is
to increase profits of a business. They use a number of different strategies as well as
structures for the products and services offered by them in competitive environment.
Inventory management system: Inventory management system is an important part
of accounting system in which major focus is paid upon managing various inventory is in
organisation including unfinished goods, work in progress, finished goods and so on. There
are a number of methods such as FIFO, LIFO which are used in inventory management
system. This helps in organisation of different inventory is in the business effectively.
Cost accounting system: cost accounting system relates to that part of accounting in
which all cost of the businesses identified and listed down in order to determine the cost
which is used for production of products and services in business. It is necessary for every