Integration of Management Accounting System and Reporting in Eastern Engineering Co. Ltd.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Critical evaluation integration of management accounting reporting................................3
Benefits of management accounting systems......................................................................4
Application of management accounting within the business.............................................5
Principles of management accounting...................................................................................6
Different techniques and methods of management accounting reporting.......................6
Task 2...............................................................................................................................................9
Task 3.............................................................................................................................................11
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................1

INTRODUCTION
Management accounting basically uses the financial statement for preparing the
report on the basis of which they managers can easily take decision. If a company
wants to make a plan and analyse the business performance than they have to adopt
this technique also. So, in this context, this report will critically evaluate the integration
of management accounting system and reporting in the Eastern Engineering Co. ltd.
The report further will evaluate the benefits of management accounting systems and
their application in the Eastern Engineering company. The report will also include the
principles of management accounting and the importance of integration of management
accounting within the business. The report will also cover the different techniques and
method of management accounting by using it the company can make decision in less
time. The report will further calculate the income statement under the absorption costing
and marginal costing for the month of January and February. The report will also state
the reason behind the difference between the absorption costing and marginal costing.
The report also defines how the application of management accounting systems help
them in overcoming the financial issues.
MAIN BODY
Critical evaluation integration of management accounting reporting
Management accounting helps the company in maintaining coordination among
the departments by integrating the task among each other. For example, in order to
prepare the budgets each department need to coordinate with each other so that actual
data can be collected. Eastern engineering company by using the management
accounting tools and techniques such as job costing, batch costing, process costing etc.
ascertain the cost between the process, batch and job. This will further help the
company in identifying the unit and department which causes loss to the business. With
the use of activity-based costing the managers of Eastern engineering company can
allocate the cost on the basis of the activity occur to produce products. With the help of
this the unprofitable and low performance activity are easily get identified as well as the
company can also remove it. By integrating the management accounting, managers can
help the company in planning the finances with the help of which they work for the

growth of the business. By capital budgeting company can find out best sources of
funds such as equity, debt etc. as well as with the help of investment appraisal such as
NPV, IRR etc. the company can investment the funds in high return proposals (Pelz,
2019).
By using the budgetary control method, marginal costing method and standard
costing method of the management accounting the company can analyse the variance
between the actual cost and planned cost. After that the company can also adopt best
strategy which help them in removing the gaps if any arises in the actual and planned
budgets. The another step the company can do while integration of management
accounting systems is using technologies which removes the error of human and
increase the time of the processing of work. With the help of cash flow and fund flow
analysis the Eastern Engineering company can identify the sources from where the
cash is coming and where is going from the business. Not only that MA implementation
helps the company in creating cash budgets with the help of which they can maintain
minimum opening and closing cash balance. However, such integration may also bring
conflicts among the departments if the company unable to communicate properly with
them. So, it is important for the company that before implementing MA they must
minimize the communication gap if any and keep motivated their staffs (Pedroso and
Gomes, 2020).
Benefits of management accounting systems
Management Accounting systems helps the companies in such ways which indicate
that if company really wants to increase their performance and productivity than they
must go with MA system and implement MAS in the building. The benefits it provided to
the company involve:
 By using the forecasting technique, the company can analyse and visualise the
past, present and future trends and identify the answers related to important
questions such as whether company should invest in equipment’s or not? etc.
 Management Accounting systems also helps the company in making the decision
regarding whether to buy same products from the supplier and sell it in the
market or to make all the products in the organization only.