Management Accounting: Types, Methods, and Strategies

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Management Accounting system and its types............................................................................3
Critical evaluation of integrating management accounting and reporting in an organization.....5
Methods used in management accounting reporting...................................................................5
LO2..................................................................................................................................................9
Calculating cost using appropriate techniques............................................................................9
LO3................................................................................................................................................10
Different types of planning tools for budgetary control............................................................10
Different types of pricing strategies that can be used to tackle financial problems..................12
LO4................................................................................................................................................13
Comparing the ways in which organization could use management accounting to respond to
financial problems.....................................................................................................................13
CONCLUSION..............................................................................................................................16
REFERENCES................................................................................................................................1
APPENDIX-1..................................................................................................................................2

INTRODUCTION
Management accounting (MA) is the branch of accounting which involves gathering and
analysing relevant information and involves preparing timely reports that assists the manager in
taking managerial decision. In this, reports are prepared periodically and often include details of
the company's details. Reports are prepared for internal use by the management. It assists the
managers and supervisors in monitoring the performance of the organization and the reports are
prepared on weekly, monthly or quarterly basis as per the requirement and can be prepared as
requested by the manager. In this report, Katie Walker Furniture is taken as an organization,
which is in manufacturing sector. This report covers, introduction to MA and the different
methods used for MA reporting. It also includes different types of MA techniques, different
tools that are used in budgetary control and also a comparison is drawn between two companies
in respond to different financial problems.
LO1
Management Accounting system and its types
As per IMA, management accountant is a profession in which professionals requires
executing and apply different professional skills and knowledge in order to take meaningful
decisions managerial, planning and performance management and helps in implementing control
to assist management in formulating and implementing strategic management strategy
(Management accounting. 2020).
In simple words, management accounting is the system that is used by the internal
management team to analyse the data both financial and non financial in order to take decisions
at the right time.
Different Types of management accounting system
MA system is the system deployed by the management that helps in preparing reports in
the that can be used by the management in taking decisions. There are different types of MA
system that can be used by the organization, some of them are stated below.
Cost accounting system: It is a system that helps in determining the estimated cost of their
product which is used for the profitability analysis and cost control. It assists manufacturers in
keeping track on the production activities (Yang, Yu and Wang, 2016). In simple words, it is
used by the manufacturing organization in tracking the organization's inventory through various
production. It starts by tracking the raw material as and when it goes through the production

process and then turned into finished product. For example, as the material moves from one stage
to another, the cost accounting system tracks and updates on the computer system The essential
of this system is that it must suits the size and nature of the organization.
Benefits:
 Periodical determination of profit and loss.
 Helps in executing control over material and supplies.
 Helps in classification and division of cost.
 Provides guidance for future production policies.
Inventory management system: It's a management tools that assists an organization in keeping
track of its inventory across the supply chain. It optimizes entire system from placing the order to
the supplier to the order delivery to the final customer. It includes the process of ordering, storing
and handling the inventory. It is important for every business irrespective of size. It is systematic
process which maintains and monitor the stocked products, raw material, finished and unfinished
products. The essential of this system is that it provides relevant information to maximize the
productivity.
Benefits:
 Helps in minimizing the inventory cost and increasing the sales and profits.
 Helps in integrating entire business.
 Maintain customer satisfaction.
 Reduces the risk of being out of stock.
Job costing system: This system involves gathering the information with respect to the cost
attached with a product and service. It is useful for businesses that provides products and
services of different cost which is based on the customer specification. It takes into account
direct material and labour cost and indirect costs. It is essential in order to provide complete
details about the contract to the customers.
Benefits:
 It helps in evaluating profitability of each job separately.
 It can be used for estimating the cost of job similar to the previous one.
 Helps in detecting defective work with specific job.
 It provides details about the different cost associated with the job such as cost of
material and labour and overhead expenses of each job.