Management Accounting and Different Types of Management Accounting Systems

Management Accounting
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................1
TASK 1.................................................................................................................................................1
P1 Explain management accounting and different types of management accounting systems.......1
P2 Explaining different methods of management accounting reporting..........................................3
TASK 2.................................................................................................................................................5
P3 Calculation of costs using appropriate techniques of cost analysis to prepare income
statements.........................................................................................................................................5
TASK 3.................................................................................................................................................8
P4 Explaining advantages and disadvantages of different types of budgetary planning tools.........8
TASK 4...............................................................................................................................................10
P5 Comparing various methods of management accounting systems to respond financial
problems.........................................................................................................................................10
CONCLUSION..................................................................................................................................12
REFERENCES...................................................................................................................................13
TABLE OF FIGURES
Figure 1 Types of management accounting system..............................................................................2
Figure 2 Job order costing....................................................................................................................3
Figure 3 Inventory Management system..............................................................................................4
Figure 4 Types of managerial accounting reports................................................................................6
Figure 5 Decision-making under standard costing.............................................................................12
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INTRODUCTION
Considering current complex industrial world, managerial accounting becomes an integral
important component of corporate management that present precise economic information to the
business managers for competitive decisions. Administrative team use various kinds of reports to
make decisions to increase efficiency, productivity, efficient cash flow management, cost control
and other decisions. In the technological led world, there are different systems which are use by the
company to derive financial & statistical information such as inventory reports, manufacturing cost
and others. Systems are useful to maintain automatic or computerized record of daily functions and
assure data safety and security. ThirdWay Interiors is a UK-based company that aims to create
innovative workplace for the clients. The central focus of the current research is to identify the need
of different systems of managerial accounting that firm use to generate reports for performance
management. Managers not only need to examine existing performance but use it to create plans for
future using justifiable budgeting method. Thus, it will carry out critical examination of different
methods of budget creation. Moreover, marginal and absorption techniques will be differentiated
and used for computation of cost.
TASK 1
P1 Explain management accounting and different types of management accounting systems
To: General Manager, ThirdWay Interior
From: Management Accounting Officer
Date: 12th February 2018
Subject: Management a/c systems
Introduction
MA is mainly concerned with reports creation that provides meaningful statistics to the
business managers to formulate policies, put control and maximize effectiveness. This section
primarily aims to highlight main systems that can be use by ThirdWay Interior to derive success.
Management accounting system
The concept of management accounting came during 19th century, initially, it was started as a
way to control business cost and mostly used by the top-firms such as producers of consumer
product, steel & its components, tobacco, foodstuff and others. MA is entrusted upon key functions
such as planning, controlling, execution and others. For such managerial activities, administrative
team require financial information about business performance such as sales revenue, cost,
inventory, payables and receivables and others. MA system are of great significance to obtain
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required data set as all the information are kept in a computerized database and using filtration,
customized report can be collected. It helps to keep data safe and away from unauthorized access
and replace manual recording system.
Types of MA system
Considering current times, following are some popular MA system for ThirdWay Interior:
Figure 1 Types of management accounting system
Brief explanation of management accounting systems
Cost accounting system: This system is particularly used in order to determine total cost that
had taken place during the production activities with a clear breakdown structure into material,
labor and overheads.
Job costing system:
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