Management Accounting: Systems, Methods, and Planning Tools

Management Accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Explaining what is management accounting and essential requirements of some
management accounting systems.................................................................................................1
P2. Explanation of distinct types of methods that are used by managers in management
accounting reporting....................................................................................................................3
Task 2...............................................................................................................................................4
P3- Income statement using marginal and absorption costing-...................................................4
Task 3...............................................................................................................................................6
P4 Explain different types of advantage and disadvantage in planning tools-............................6
P5 How organization are adapting management accounting systems-........................................8
CONCLUSION-............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management accounting is considered as a great way to prepare administration reports
addition to records which provides precise, measurable data and opportune budgetary to directors
of company. It presents various charts, statistics, etc at regular intervals through which key
decisions for betterment of entity are taken and strategies for avoiding future losses are
implemented. With this, accountants focus to provide better customer services and controlling
product prices through employing devices of cost controlling. For present management
accounting project, chosen organisation is Modern Ltd that is specialised in manufacturing and
selling two commodities that are Product X along with Product Y.
The report demonstrates essential understanding related to management accounting systems.
It further applies range of techniques of management accounting and explains use of certain
number of planning tools in business. At last, it comprises comparison between entities about use
of management accounting so to respond effectively for financial problems.
TASK 1
P1. Explaining what is management accounting and essential requirements of some management
accounting systems
Definition of management accounting
As per Christ and Burritt (2018), management accounting is defined as a modern concept
that is widely used in business concerns as a technique of accounting. It is presenting accounting
information effectively for helping decision makers for framing policies and daily operations of
company. In Modern Ltd, management accounting guides in making optimum use of techniques
in recognising, measuring, analysing, devising and interpreting information for planning,
evaluation along with controlling resources.
Management accounting system
There are multiple mechanisms which provides critical information for operational
decision making of business. All these mechanisms are defined as management accounting
system. In relevance to Modern Ltd, management accounting systems aids in costing together
with managing manufacturing and selling processes. Key systems and their essential
requirements in Modern Ltd are below:
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Cost accounting system: With this mechanisms, organisational managers estimate
product costs so to analyse profits, control costs along with perform valuation of inventory. In
Modern Ltd, cost accounting system determines real costs that are related with manufacturing
commodities and providing services through focusing on all expenses involved in processes.
Essential requirements that state use of the system in the venture is that it ensures effective
accounting for overheads, materials, etc and guide to ascertain costs of offerings.
Inventory management system: Through the system, it becomes possible to track goods
available with company throughout supply chain. In Modern Ltd, adoption of inventory
management system governs the ways in which stock of products are managed for business. Its
essential requirement is that it optimise entire mapping of complete journey of commodity,
spanning from order delivery to target customer.
Price optimisation system: It is a mathematical program which calculates the way in
which demand varies at variant levels of price. In association to Modern Ltd, application of price
optimisation system is done to tailor product pricing for segments of customer with the help of
simulating aspects related to respondence of target audience for changes in prices with scenarios
of driven data. Essential requirement in Modern Ltd of the system is to select preferred
optimisation technique, monitoring outcomes along with upgrading data inputs for improving
pricing accuracy.
Functions related to management accounting
Major function related to management accounting in an organisation is to provide
assistance to managers about performing effectively (Rikhardsson and Yigitbasioglu, 2018). In
Modern Ltd, functions on which management accounting works are to provide information,
assist in planning, act as communication medium, facilitate control and coordinating entire
practices of the venture. Functions and their importance of integration at Airdri Ltd are as
explained:
Forecasting and planning: It is all about predicting future and making strategies to carry
out practices in upcoming world. In Airdri Ltd, it is important to integrate with management
accounting so that all rational decision about future of company are taken promptly.
Organising: It refers to arranging resources for carrying out activities in desired manner.
It is important integrate it with Airdri Ltd so that all of its hand dryers are manufactured with
desired quality and within predetermined time frame.
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