Management Accounting INTRODUCTION 1 MAIN BODY1 Activity 1 1 PART A1 PART B6 Activity 2 8 PART A8 REFERENCES 17 INTRODUCTION Management Accounting INTRODUCTION

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Activity 1.........................................................................................................................................1
PART A.......................................................................................................................................1
PART B........................................................................................................................................6
Activity 2.........................................................................................................................................8
PART A.......................................................................................................................................8
PART B......................................................................................................................................12
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Management accounting is the process which includes the various practices which help
the business to improve their performances in order to achieve business goals & objectives. With
the help of management accounting, manager analyse the business cost for preparing various
financial reports which further helps in decision making process. It build for the internal purpose
and not regulated by the low (Ajewole, 2016) . Main objective of this accounting is that, it will
helps in decision making process and it is not mandatory to prepare any report. Bentley Motors
Limited selected for the better understanding of this report. It is British manufacturing company
which produce luxury cars & SUVs. It is founded in 1919 in Cricklewood and it is the subsidiary
of Volkswagen Group since 1998.
This report includes the various topics such as management accounting and essential
requirements of management accounting system. Accounting reports and various financial
problems which required to solved with the help of various tools & techniques. In addition, it
includes the accounting reports, advantage & disadvantage of various planning tools for the
budgetary control. Along with this, how management accounting systems help the organization
to solve their financial problems in order to achieve their business goals & objectives.
MAIN BODY
Activity 1
PART A
Management accounting: It is also called managerial accounting, where manager handle
all the operational activities which help the manager to enhance their internal activities.
Managers use the financial information for developing effective strategy and it will further helps
in decision making process. It is based on the previous trends which helps in identifying future
aspects (Azim and Ara, 2015). Management accounting follow by the manager of Bentley
Motors Limited which is beneficial for the organization to identify their actual position of the
business.
Management accounting system: It includes the various methods which requited by the
manager in order to increase their operational efficiency as well as it increase the individual
performance. These systems helps the manager to increase efficiency as well as effectiveness in
the organization. With the help of management accounting, internal as well as external users are
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able to build strategy which further used at the time of taking any decision. There are various
management accounting system which followed by the manager of Bentley Motors Limited in
their organization and it will be discussed below:
Inventory management system: This system helps in tracking inventory level of the
entire supply chain which provide the overall idea regarding further orders. It includes every
things from manufacturing to delivery of products. With the help of this system, manager can
easily track or can see the every movements in the operations. Manager of Bentley Motors
Limited used this system for the better effectiveness or efficiency in the organization because
they have to maintain optimum stock for the production. With the help of this manager identify
the requirement because shortage will affect the production and profitability. Along with this,
excess inventory can cause the wastage of raw material which increase the cost and it
automatically reduce the profit margin.
Cost accounting system: It is also called costing system, which is used by the
organization in order to estimate the each unit cost. With the help of this, manager analyse the
cost benefit for the business, inventory valuation or profitability analysis and control the cost
over the production period. This costing system evaluate the carious cost which are related to the
production such as fixed and variable. In Bentley Motors Limited, manager use this method to
analyse their per unit cost which helps the organization to develop various strategy which
beneficial for the decision making process. Manager identify each activities which represent
valuable or non valuable and after this they reduce the non valuable activities which helps in
reducing cost and try to control it for longer duration (Cheng and others, 2014). It essentially
required by the manager to identify cost and reduce it for the maximisation of profit margin.
There are different types of cost which included in the cost accounting system and it will
mentioned below:
 Fixed cost: It include those expenses which is fixed for the specific time period such as
monthly rent of warehouse. Weather production happen or not but they have to pay fixed
charges. Another example is worker's salary, premium of insurance, maintenance etc.
 Variable cost: It contain those expenditures which changed as per the production unit
increase. It includes the labour as well as material expenses and it's price will changed.
 Overheads cost: In the manufacturing business, various overheads cost are included such
as taxes, insurance etc.
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Price optimisation system: It is an mathematical analysis which helps the manager to
identify customers need & desire. It helps in measuring their buying behaviour which affect the
organization to set different price range which meet with organizational objectives. Under this
method, manager identify the price which maximise the profit margin of the business. Manager
of Bentley Motors Limited use this pricing system to measure customer's reaction toward
different price range. This system helps in providing competitive advantage because it is well
known brand in the market. They set higher price for their cars because they know that, it has
huge demand in the market as well as among the consumers.
Functions of Management accounting:
Management accounting is a process of summarising, analysing and controlling the data
and information in order to maintaining performance of the organization to achieve its
objectives. Management accounting is a tool that is used by the management of the organization
to operate its internal operations and functions. The main functions that a management
accountant has to perform are planning, organizing, monitoring and controlling.
Bentley Motors Limited which is involved in manufacturing of luxury cars, has adapted
the management accounting process within the organization. The management accountant of the
company has responsibility to plan the operational and functional agenda with the available
information for both long term and short term period (Drozd, Drozd and Zaiets, 2014). They are
supposed to suggest an effectively organized structure for activities and workforce in order to
maintain balance in performance.
Managerial accountant co-ordinate all the activities with the help of different techniques.
A monitoring over all the aspects related to the operations is expected from them. Management
accounting is responsible for analysing the activities and outcomes and find out the variances and
the reasons behind the variances. They are supposed to suggest the effective solutions for the
problems that are decreasing the performance of the company in order to achieve its goals.
Benefits of management accounting systems:
Systems Benefits
Inventory management
system
 It helps in minimising the cost or maximise the
production through reducing wastage in the operational
process.
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