Management Accounting Systems and Tools for Financial Problem Solving

Management
Accounting

SUMMARY
In the following report, a detailed deliberation regarding the management accounting
concepts and merits and demerits of tools that are in use for management accounting systems is
done. During the course of this project report, it has been analysed that with the growing
business trend and increasing competency of the firms in every industry, application of
management accounting principles is extremely important to furnish useful information helpful
in decision-making and strategic policy formulation regarding business operations.

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1 Management accounting system and paramount requirements of multiple types of
management accounting systems...........................................................................................4
P2 Tools used for management accounting & reporting.......................................................5
TASK 2............................................................................................................................................6
P3 Calculation of total costs using different techniques of allocation of cost to prepare income
statement.................................................................................................................................6
TASK 3............................................................................................................................................8
P4 Merits and demerits of various types of planning tools used for budgetary control.........8
TASK 4..........................................................................................................................................10
P5 Comparison of how different companies are using management accounting systems to
counter financial problems...................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is the concept of analysis and reporting income and
expenditures which an organisation earns and expends while operating in macro-environment.
The main objective of this report is to develop an understanding about the concepts of
management accounting (Kaplan and Atkinson, 2015). For this purpose, two companies are
consulted in this report which are Cooke Optics Ltd (Camera lens manufacturer) and Bulldog
Tools Ltd. (Gardening tools manufacturer). In this report, the concepts of management
accounting, necessary requirements of various types of management accounting systems,
different costing techniques, tools of budgetary control and adaption of management accounting
in countering financial problems are discussed.
TASK 1
P1 Management accounting system and paramount requirements of multiple types of
management accounting systems.
Management accounting is the process of application of professional skill and expertise in
using financial information in a way to assist the management in policy formulation and decision
making. Management accounting has the objective of using financial information and data for
taking a better and accurate decision related to the key operational areas of the organisation.
There exist many kinds of management accounting systems that are essential for any
organisation. Some of them are:
Cost accounting systems:
Cost accounting system is a tool which is used by the management to find the
approximate cost of its products for making decisions related to stock valuation, profit-analysis
and cost control (Obigbemi, 2013). Allocation of cost under cost accounting is either done on the
basis of activity-based costing or traditional methods of costing. Cost accounting helps the
management to determine the exact reason behind any unusual change in the profit which may
be due to a change in the cost of producing the goods.
Inventory management:
Inventory management is defined as the method of controlling the ordering, storage and
consumption of materials which are used by the organisation in the production of its goods.
Inventory management aims at providing the right stock, at the right time, at the right place