Management Accounting

Management
Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PART-1............................................................................................................................................3
Management accounting and its essential requirements of different types of management
accounting system........................................................................................................................3
Different method that are used for management accounting reporting.......................................4
Benefits of management accounting system and their application..............................................5
PART 2............................................................................................................................................6
Application of MA techniques.....................................................................................................6
PART-3..........................................................................................................................................10
Advantages and disadvantages of different types of planning tool used for budgetary control10
Advantages and disadvantages of planning budgetary control..................................................11
Use and application of various budgetary planning tool in innocent drink...............................12
Comparison between the way company are adapting to management accounts system to cope
up with financial problem..........................................................................................................12
Analysis of the way management accounting system can lead to sustainable success.............13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is a process that includes preparation of various financial
reports that effective helps manager to take accurate short and long term decision so that
company can sustain its business for longer period of time. Thus, it provides support in business
operation by guiding manager in planning, controlling and monitoring performances so that firm
can earn more profit margins. This report is about Innocent drink that makes smoothies and
juices to be sold in coffee shop, supermarket and various others outlets. Therefore this report
covered information related to method and essential requirements of different types of
management accounting system. It also discussed about different range of management
accounting techniques and planning tool that are used in management accounting. At last it has
discussed about the way different organisations adapt to management accounting systems to
responds to financial problems.
PART-1
Management accounting and its essential requirements of different types of management
accounting system
There are various decision which needs to be taken by manager so that company can
earned sufficient profit margin such as it needs to set prices at products should be sold, amount
of bonus, incentive need to be paid to employees for their hard work and determination.
Therefore, in another term timely preparation of various financial accounts or statistics
information of business operation that assist manager of innocent drink to take correct decision
so that it can gained competitive advantages (Yigitbasioglu, 2017). Financial manager make use
of statistic information to control, monitors, plans and reduce overall cost or set effective pricing
of products so that maximum benefits can be gained by enterprise. There are various essential
requirements of different types of management accounting system that can be illustrated as
follows:
Cost accounting system: It is framework used by finance manager to decide actual value or
cost of products, services profitability analysis. Traditional and activity based are two costing
system that are used in allocation of cost to various products of firm. It calculates actual cost of
products by adding fixed (building, machine) and variable cost (input raw material) thus add
specific amount of profit to it for rendering services to end user. Thus, manager by comparing
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actual cost incurred with outcome is able to measure financial performance of business during
particular year.
Job costing system: It is types of system that includes three key elements such as direct
material, overhead and labour that are used in manufacturing or delivering services of Innocent
drink to customers (Wanderley and et.al., 2017). Therefore, the information is about
accumulated cost that have been incurred in delivering of products to end users so manager can
take accurate decision at prices which it have to sell products or services to earn maximum profit
margin and sales volume.
Inventory management: It is other essential requirements for accounting management that
oversee existing inventory, future required, storage capacity of firm etc. The main aim of
inventory management is to minimise under stock and overstock of products for smooth
operation of business. Manager of innocent drink can performed several functions by use of
inventory management system such as creation of purchase orders, disposable of inventory and
reallocation of resources.
Different method that are used for management accounting reporting
Management account is highly dependent upon financial information such as cash flow
statements, balance sheet and profit and loss in order to take correct decision for benefits of firm.
Cost, budget and performance are some other reports that are used by accounting manager of
innocent drink to plan, control and measure performance of enterprise in competitive
environment. Such as:
Cost report: There are various material, efforts that are used in manufacturing or delivering of
products so they needed to be add in cost to find actual prices at which they should be sold to
customers. So, this report content information related to all additional cost that have been
incurred by company such as overhead, labour and other consideration that affect prices of
products (Dierynck and Labro, 2018). Therefore manager of innocent firm can easily compare
between actual price and selling cost thereby take crucial steps to control prices, delivered
maximum value to customers for effective growth and success of firm.
Budget report: Every company prepare a budget regarding specific amount of money need to
be invest in specific area so that overall objectives can be achieved. Budget report of innocent
drink will represent overall sources of income and expense during specific year. Thus, on the
basis of estimated budget financial manager arrange sufficient fund so that it can carry out
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