Management Accounting System and Cost Evaluation Techniques

Management
Accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Discussing the essential requirement of management accounting system and difference
between financial and accounting management..........................................................................3
Analysing the different methods used in management accounting reports.................................5
TASK 2............................................................................................................................................6
Evaluating different cost using techniques..................................................................................6
Task 3.........................................................................................................................................15
Task 4.........................................................................................................................................19
Conclusion.....................................................................................................................................20
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting refers to the managing financial transaction and other important
things need to control effectively in order to develop the efficiency in the company. This
basically helps in taking better decisions for the operational management by the manager to
develop the better decisions and will lead to many benefits. In this report the company that is
used is ABC Ltd, is medium sized enterprises in the manufacturing sector. In this it is being
discussed about the different types of management accounting system that used in company and
many reports that used in maintaining the records of the organisation. Analysing the different
cost used different planning tools and apart from that comparing the following financial problem
faced by the company.
TASK 1
Discussing the essential requirement of management accounting system and difference between
financial and accounting management
Management accounting termed as the process of managerial functions that is performed
by the manager and through that it formulate the effective decisions for the welfare of company.
In the context of ABC, this useful in making useful strategies regarding the maintenance and
allocation of resources in right place.
Principles of Management accounting- To follow or conduct any process in the
company needs the proper understanding of principles and rules. In the context of ABC, this
helps in making policies in the company to make the important decisions. Some of the
followings are as follows-
 Designing and compiling- Management accounting helps in taking important decisions
related to the data and designing and compiling of the modification of the system. In the
context of ABC, this helps in managing the proper reports, accounts and statements. Accounting of inflation- This is important to consider the real value earned unless
capital that is properly contributed by the owner. In the context of ABC, this will help in
fulfilling the major goal and objectives.
Difference between Financial accounting and Management accounting
Basis Management accounting Financial accounting

Meaning This concern with the
maintaining and controlling of
all information to the manager
to facilitates in better
decisions.
This is recording of all
necessary information to give
information to shareholder.
Purpose This type is used by internal
team such as Managers.
This is used by the shareholder
and other investor of the
company.
Uses This helps in taking decisions
regarding control of overall
operations.
This used to analyse the
performance of the company
that is useful for investors and
shareholders.
Types of management accounting system
The term management accounting system provides the information to the managers
regarding assessment of different operational activities to the organisation. In the context of ABC
Ltd, able to take important financial decisions for the fulfilling the operational activities of the
business. Types of management accounting system are as follows-
Cost accounting system
This system is also known as the product costing and helps the management to estimate
the proper price of the product to manufacture them properly. To measuring estimate price of the
product to analyse the profit margin on the particular product. In the context of ABC, this will
lead in prosper measuring of cost of production of the product and also help in controlling them
as well.
Inventory management system
This system helps in keeping the check on inventory and goods to monitor their functions
regularly. As, this system is very important to regulate the decisions related to the purchase of
new industrial goods or raw material. This gives essential information to the company regarding
the when to purchase and how to purchase in order to decide the adequate quantity. In the