Management Accounting Systems and Tools

MANAGEMENT ACCOUNTING

TABLE OF CONTENTS
P1 Explain management accounting systems and essential requirements of different management
accounting systems......................................................................................................................................3
P2 Different methods used for management accounting reporting..............................................................5
P5 Explaining how management accounting tools help in resolving financial problems.............................7
REFERENCES..............................................................................................................................................10

P1 Explain management accounting systems and essential requirements of
different management accounting systems
Management accounting is the one of the common branch of accounting which is widely
used by the business firms to control cost of production in the business. Varied approaches are
available in the mentioned discipline that can be used to curb cost elevation in the business.
Through management accounting close eye is kept on the costing of the product and on time
strict actions are taken to control it. By doing so profit is increased in the business. Varied sort of
management accounting systems are given below.
 Cost accounting systems: It is the system used by the corporate that manufacture only
one specific product or there is no specific portfolio of the products. Under this system
accounting for varied stage of production of specific product is done. Time to time
manager obtains report and on that basis it makes decisions about unit’s number that need
to be produced at the workplace. Through managers come to know areas where cost is
high and urgent actions are needed to control circumstances (Pavlatos and Kostakis,
2015). Thus, it can be assumed that cost accounting system have due importance for the
firm. Marginal and absorption costing methods are used by the managers to compute
overall cost of the products. In marginal cost only variable expenses are taken into
account. On other hand, in absorption costing both fixed and variable expenses are taken
into account to compute cost of product. Job costing system: Job costing is the system under which for more than one product
accounting is done. Under this system for each product calculation of cost is done
individually For example a company manufacture plastic and chairs then in that case
accounting for both will be done differently so that cost of each can be estimated in
proper manner. Entire record is kept separately for the product line in Excite
entertainment. Thus, managers get better overview of overall cost structure. Job costing
system is widely used by the business firms. Like cost accounting system in this one also
time to time varied reports are prepared which greatly assist managers in making day to
day business decisions. Thus, it can be state that job costing system have due importance
for the business firms.