Management Accounting System and Techniques for Effective Decision Making

Management Accounting

INTRODUCTION
Management accounting system can be defined as the subset of various accounts and reports
that are required by the manager for making long term and short term decisions. The main
motive to implement management accounting decisions is to make effective internal decisions.
This includes financial and non-financial information to make effective reports. Moreover, with
the effective managerial accounting system better decisions are managed by organisation through
undertaking all reports in effective manner. This report is written from the perspective of KEF
limited which is operating their business in manufacturing sector. It is a medium sized
organisation that covers the market of UK (Quinn and Jackson, 2014). These reports highlights
on management accounting system and its importance. Along with this techniques for
management accounting and their merits and de-merits will also be covered. In the last,
management accounting system in order to deal with financial problems will also be covered in
this report.
TASK 1
P1
Management accounting exist as a procedure and a system that is beneficial for making
effective decisions related with internal management of organisation. In the present scenario,
management of KEF Ltd. is focused to formulate effective plans for the future through
generating internal policies and plans for organisation. It results it is easy for management to
sustain for longer period in organisation. Some types of management accounting system is as
follow:
 Cost accounting system- The cost accounting system works as an effective system that is
beneficial to analyse the cost of products and services developed by organisation. In order
to analyse it properly variable as well as fixed cost both are included by cost accounting
system. So the actual cost is identified and evaluated by management.
 Price optimisation system- This system is used by organisation for developing an
effective framework that is used to determine and decide the effective price of the
products and services. It result this is easy for KEF to decide balanced price that is
beneficial for customers and organisation at a similar level (Van der Meer-Kooistra and
Vosselman, 2012).

 Job costing system- Job costing system is one of the most effective method by which
KEF analysis the total cost by considering the prices of each unit on individual basis. As
there are various products are offered by KEF so with job costing system management
analysis the profits from each unit that is developed by management.
 Inventory management system- Inventory is the most essential part for organisation as it
is sold by management in the market. With the development of job costing system it is
easy for management to enhance the work area in possible manner through reducing the
cost of storage and warehouses (Renz, 2016). Moreover, it also helps to track the actual
state of their inventory that is present in the warehouses of organisation.
Importance of management accounting system
 Price setting- It is one of the most important system that is used by market and
production department to contribute effective price system in management. So the
demand of products will be fulfilled in future as well as present time period.
 Budget- This is another method which is used to analyse the importance of
management accounting. With an effective budget it is for management to control the
expenses of organisation.
 Unregulated reporting- Management accounting is the another method which is
used it make effective reports through generating operations, finance etc. are adopted
by management to summaries all essential aspect for organisation.
Difference between financial accounting and management accounting
BASIS MANAGEMENT
ACCOUNTING
FINANCIAL
ACCOUNTING
Meaning Management accounting is
beneficial to analysis relevant
and useful information that
directs the organisation to
make effective plans.
All types of account and
reports such as balance sheet,
profit & loss account and
many more which represent
the existing financial
condition of organisation.
Rules It is implemented by internal
department. So there are less
restrictions.
All the standard format must
be followed by account
department to make financial