Analysis of Management Accounting Systems and Their Applications

This essay provides a comprehensive overview of management accounting, defining it as the application of financial and other information expertise to aid in decision-making and strategy implementation. It outlines various types of management accounting systems, including cost accounting and inventory management, and details reporting methods such as job cost, inventory management, and performance reports. The essay highlights the benefits of these systems, such as reducing expenses, improving cash flows, and enhancing financial returns, with specific applications in production, inventory management, and sales departments, referencing UCK furniture as an example. Furthermore, it evaluates the integration of management accounting systems with management accounting practices, emphasizing their role in generating reports for performance evaluation and improving cash flows. The essay concludes by noting UCK furniture's adoption of these systems to ensure effective operations and enhance product quality.

Management accounting

Definition of management accounting
Management accounting is defined as applying
skills and expertise in financial and other
information which helps in decision-making and
helps in formulating the policies and implementing
strategies.

Types of management accounting systems
 Cost accounting systems
 Inventory management system

Contd...
 Job costing system
 Price-optimizing systems

Methods used for management accounting
reporting
• Job cost reports
 Inventory management reports

Contd....
 Operating budget reports
 Account Receivable Aging Reports
 Performance reports

 Benefits of Management accounting
systems and their applications
 Reduce expenses
 Improve cash flows

Contd...
 Business decisions
 Enhances financial returns

Applications of management accounting
systems
 Management accounting system is mainly useful for
production department. Production department of
UCK furniture analyse the actual costs and compare
them with the budgeted costs.
 Production department uses the management
accounting system to increase the profitability of the
business.

Contd...
It is also useful for the inventory management
department.

Contd...
Management accounting system also
applies to the sales department. Sales
department helps the manager to ensure
the sales records of the furniture and also
helps in coping up the sudden rise in
demand in the market.

Evaluating of integration of MAS and
management accounting
 Management accounting system helps in generating
reports which in turn used by the management
accountant to plan and evaluate the performance
based on the reports.

Contd...
 Management accounting further helps in improving
cash flows in the business which can be done by
adopting management accounting systems in an
organisation.
 UCK furniture adopted management accounting
systems to ensure effective and efficient working in
the organisation and by enhancing the quality of
products and services it offers to its customers.

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