Management Accounting - Sample Assignment

Management
Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK 1...........................................................................................................................................4
P1 Management accounting and requirement of its systems......................................................4
P2:Different types of management accounting reports...............................................................6
TASK 2............................................................................................................................................7
P3: Techniques used to analyse cost with marginal and absorption costs..................................7
TASK 3 .........................................................................................................................................11
P4. The advantages and disadvantages for different types of planning tools used for budgetary
control:......................................................................................................................................11
P5. Comparison on how companies are adapting management accounting systems to respond
to financial problems:................................................................................................................13
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
Management accounting could be described as the process of identifying, analysing,
interpreting and communication of financial information and data that aids management to plan,
evaluate and handle a firm (Management accounting, 2018). It includes preparation of various
reports and accounts that assist managers in making short and long term financial decisions and
to present it to people inside as well as outside firm. The report is based on the case study of Oak
cash and carry that belongs to retail industry and provide offers wide variety of products to
retailers, local business, caterers, offices and other customers. The project will discuss the
concept of management accounting, its various systems and different reports that could be
prepared by firm. Further it includes cost determination by using various cost analysis
techniques. Moreover, various planning tools with their merits and demerits are to be discussed
to over come the financial problems that a firm faces. Lastly a comparison between two leading
companies will be provided.
TASK 1
P1 Management accounting and requirement of its systems
Definition of Management Accounting : According to National Association of
Accountants management accounting could be described as “analytical framework for
identifying,measuring, collecting, examining and presentation of financial information so as to
take appropriate decisions for ensuring optimum use of and accountability for its resources.”
Management accounting involves making use of various methods, techniques, planning tools and
systems that assist managers in formulating policies, plan and handling its varies operations
effectively (Carlsson-Wall, Kraus and Lind, 2015). By providing means to track down its
internal costs incurred on various processes it further acts a tool for taking authentic and relevant
decisions in regard to manufacturing, operations and business investments. Management
accounting in general mixed with financial accounting although both differs with each other in
mentioned below ways:
Difference between management accounting and financial accounting:
Basis of
comparison
Management accounting Financial accounting

Meaning Management accounting provides
information and data that is been
utilized by the people within the
company such as managers for
decision making purpose. It is as this
accounting includes information
related to specific products, cost
centres etc.
Financial accounting majorly give
information that is primary used by
those from outside organization such as
stakeholders. It includes data and
statistics related to entire company and
its various operations.
Mandatory Management accounting is optional
to be implemented by any firm.
Financial management is obligatory by
law for every enterprise to applied in its
company as per set standards.
Thus for a small scale firm like Oak cash and carry it becomes critically important to
implement an effective management accounting that will aid company to monitor its transactions
related to various departments. Further implementation and integration of management
accounting with company will also assist managers to determine efficiency of costs of its various
business activities, budgets, financial performance and then accordingly allocate its limitedly
available resources in various segments comprising production, sales and investments.
Various Management Accounting Systems
Management accounting involves certain internal systems that enables an enterprise to
determine, measure and analyse effectiveness as well as efficacy of its various functions.
Mentioned below are various management accounting systems that are been consider by Oak
cash and carry :
Cost accounting System: It is also called as product costing system that involves
framework for ascertaining cost of goods for determining its profitability, product valuation and
administrating expenses (Granlund, 2011). It counts in one of the most prominent management
accounting system that when applied by Oak cash and carry will aid in track down those
products that are generating high profits for the company and ones that are not much in demand.
Besides, this it will enables managers of Oak cash and carry to compute value of its raw
materials, work in progress and finished goods. This, it make it easy for managers to prepare
authentic financial statements that helps top management in formulating realistic and effective
financial strategies. Thus, as company is related to retail sector this system will help managers to