Management Accounting

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management Accounting Systems........................................................................................1
P2: Management Accounting Reporting......................................................................................3
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
TASK 3............................................................................................................................................8
P4: Advantages and Disadvantages of planning tools.................................................................8
TASK 4..........................................................................................................................................10
P5: Comparison of organizations in the use of management accounting systems to solve
financial problems......................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management Accounting refers to different financial techniques which are used through
the analysis and interpretation of the available financial data to ensure that the right decisions are
taken during the future time period (Al-Mawali and et.al., 2018). When the managers use it they
can make sure that the overall profitability level can be enhanced in an effective manner. For the
managers, it is crucial that they make its use for deriving conclusions and recommendations
which will be very useful for them in the future time period. This assignment will put its focus
on Innocent Drinks. It is a company which provides smoothies and juices to its different
customers. In this report, analysis will be made on explanation of management accounting and its
systems, methods used for reporting, calculation of various costs. Additionally, focus will be
made on planning tools for budgetary control and comparison of organizations in the use of
management accounting systems to solve financial problems.
TASK 1
P1: Management Accounting Systems
Management Accounting is a tool which can be used by the managers to ensure that they
are able to exercise better planning and control within the organization (Management
Accounting, 2020). Its various systems are explained as follows-
Cost Accounting System- Cost Accounting System is an accounting method which is
used to determine the costs of an organization such as Fixed Cost, Semi-Variable Cost and
Variable Cost (Amir, Rehman and Khan, 2020). Its use can be made to ensure that various costs
can be determined in a highly effective manner. Further, it estimates the overheads and
segregates them according to the departments. In this way proper apportionment of overheads
can be ensured. Innocent Drinks can make the use of this system to estimate the costs and reduce
them which will help it a lot to enhance its profits. They can use the various techniques for doing
so.
Essential requirements-
 In this system there must be the use of appropriate techniques for the purpose of
determination of different types of costs so that they can be segregated according to the
departments. This will help the managers of Innocent Drinks to find out their
departmental costs.
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 This method should allow the managers to be able to identify the scope of improvement
in the processes so that the costs can be reduced. In this way the managers of Innocent
Drinks will be able to maximize the level of profits.
Inventory Management System- Inventory Management System is a technique which is
used in accounting which helps in the proper evaluation and estimation of the stock level
(Borker, 2016). In it there are different types of techniques such as LIFO, FIFO, Weighted
Average Cost etc. They can be used to identify the inwards and outwards movement of the items.
The managers of Innocent Drinks can make use of it to properly manage their stock level and
also to find out the problems with the stock management. Thereafter, they can also use rectifying
techniques to rectify them in an effective manner.
Essential requirements-
 This system has to ensure that the tracking of movement of goods within an organization
can be done effectively and efficiently. This will help the management of Innocent
Drinks to be able to properly manage the stock items.
 This method needs to ensure that problems and issues related with the stock management
are resolved. In this way help can be provided to the managers of Innocent Drinks to
remove deficiencies and variations.
Job Costing System- Job Costing System is a method in which there is an estimation of
different job orders of the company (Endenich and et.al., 2016). It is particularly useful for those
firms which are indulged in manufacturing. Innocent Drinks can use it by ensuring that it is able
to estimate the job costs and use techniques to reduce them which will help in raising its level of
profits in an effective manner.
Essential requirements-
 This method has to ensure that the various job orders are properly managed in an
organization. This will help the management of Innocent Drinks.
 In this technique there has to be an estimation of job costs so that the right approaches
can be adopted to reduce them. In this way the required help can be provided to the
managers of Innocent Drinks.
Price Optimization System- Price Optimization System is a technique in which methods related
to forecasting are used to estimate the prices (Johnstone, 2018). It is helpful in setting of right
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