Management Accounting and Reporting Methods

Principles & Practice of
Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
P1. Management Accounting and its systems:.......................................................................3
M1 Benefits of management Accounting systems:................................................................5
P2. Different methods of management accounting reporting:................................................6
TASK 2............................................................................................................................................7
P3. Calculation of costs on the basis of marginal and absorption costing method:...............7
M2. Effectively apply a variety of MA techniques and generate correct financial reports: 14
P4. Explanation of advantages and disadvantages of different types of planning tools of
budgetary control:.................................................................................................................15
P5 Adaption of management according to respond financial problem................................17
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

INTRODUCTION
Managing business and its numerous kind of operations is difficult as well as essential
task. Management is primary personnel that manage business and for this purpose they require
meaningful and relevant information (Anderson and Sedatole, 2013). Management accounting
key tool which can assist them in managing business. It involve conversion of raw-details and
data into useful information and facts for supporting managerial decisions. It involves systems
and frameworks which provide assistance to managers in adaption of entire system of
management accounting. This covers core areas of accounting and management, which provide a
more detailed information about organisation.
This study-assessment consists of multiple aspects and concepts of management
accounting along with different core systems and key requirements in context of Alpha Limited.
Corporation is a medium sized manufacturing enterprise with just 50 members and medium
turnover of around £ 500000 per year. Study discuss about major reporting methods and other
technique of management accounting. Further it provide explanation about planning tool and
effective comparison of corporations as to how these are adapting systems to efficaciously
responding to different financial problems.
TASK
P1. Management Accounting and its systems:
Management or managerial accounting referring to as collection of structured tasks that
systematically lead to comprehensive monitoring and evaluation of operational costs linked to
various business procedures that assist a company and business in rendering value judgements
and choices related to manufacturing, company's core practices and marketplace development &
financing (Hilton and Platt, 2013). Entities requires managerial accounting as well as its various
factors to evaluate planned budgets for performance, the expenses of key activities and then
effective distribution of funds and capital. For the growth of company, thus, the role and
operation of managerial staff and accounting officers is very crucial here. The corporation uses
different management accounting systems to acquire the requisite financial data from each
division of the organization. These are crucial part of the management accounting procedure, this
system allows the company to document important financial data from its operating operations
on a regular basis. Without the use of such system firms, budget management, risk assessment

including investment policy decisions have never been made. Here is the detailed discussion
about MA systems in relation to Alpha limited, as follows:
Management Accounting Systems:
A management accounting systems defined as a functional mechanism that helps to
produce critical information which subsequently helps formulate policies and actions. MA entails
various structures that are utilized by personnel management according to company and
organizational structure specifications (Schaltegger and Csutora, 2012). Alpha is using more than
accounting system as to support management's decisions and boost fiscal performance, as
follows:
Inventory management system: This system involve comprehensive and sequential
information of all kind of inventories and stocks. This is a framework that uses software and
other techniques or tools to manage entity's inventory and stock items. Business uses different
techniques such as LIFO, FIFO approaches to determine the business's inventory related
requirements. For the object of managing stock losses within the enterprise, the supervisor and
managing staff uses this system Inventory management system is valuable to reach optimum
resource efficiency, it helps to improve work capacity, save time and operational expenses,
deliver products to consumers at their prescribed time.
FIFO: Herein this approach very first purchased inventories are assumed to be processed or
sold first for valuing stock/inventories.
LIFO: While here it is normally assumed that most recently purchased items are sold or
processes first for valuing inventories.
Average Cost method: In it simply value of all the inventories are averaged for valuation of
inventories.
Cost Accounting System: Business use that system to assess actual cost of producing goods and
then determine the entity's level of productivity. Costing of jobs and operations is the part of the
cost accounting system. Cost accounting system is quite essential part of management
accounting, manager utilizes such system to make policies that define risks and create policies
for risk analysis, control costs, minimize material wastage. The program also assists in the
process of performance assessment. Company uses this system to assess cost effectiveness of any
key process. In Alpha like manufacturing enterprise this systems enable to determine cost of
each manufactured and processed item as well as to efficaciously control different costs.

Price optimization system
Price optimization system is the system that uses the mathematical analysis for
determining the price of a product the customers will be willing to pay. It is also used in
determine prices which meet the maximum operating profit for the company (Talley, 2017).
There are many software used by the companies to handle the complex required calculations for
price and cost. Such programs are mathematical program that enables a company to know about
the level of demand incur at different price levels. The data used in price optimization can
includes operating cost, historic prices and sales volume reports, survey data, and inventories.
Job costing system:
This system classify different processes in specific tasks and list all the costs related such
jobs as to assess the cost of job. This system is used to assigning cost to each product of the
company and then calculate and measuring cost of each order company receive free their
customer. Company use this system when their products are identical. Company make products
according to the demand of their customers. This system of managerial accounting helps in
identifying market demand of customers and useful in making and implementing decision of the
company. In Alpha limited this system is used to recognise jobs which are critical for
organisation's performance.
M1 Benefits of management Accounting systems:
System Benefit
Inventories Management System This system is advantageous for Alpha limited
in controlling numerous inventories costs and
identify the root-cause of increasing
inventories costs.
Cost Accounting System In Aplha, managers can use this system to
minimise overall production and operating
cost. It also help in regulating different costs
and optimising operational costs.
Price-optimisation System Price-optimisation is beneficial for enterprise
to control and limit prices. This assist
managers in formulating pricing strategies and

policies.
Job costing System This system mainly beneficial in effective
classification of jobs and optimising job costs
and enhance efficiencies of job processes.
P2. Different methods of management accounting reporting:
Managers use several reports from management systems to devise business-level plans,
take decisions and assess their workplace efficiency. Management accounting reporting is
structured task that provides some crucial reports which assist management in taking business
and financial decisions. Entity Aplha plc is also using different reporting tools or approaches that
assist managing staff in effective analysis and evaluation. Here below is a discussion about
multiple reporting methods, as follows:
Inventory report: This report is prepared to keep the organization's inventory level
Inventory report is actually a summery of corporation's average inventory level. It help to asses
the actual re-order stock level, minimum & maximum stock-level. This report segregates all the
inventories and allocate costs. This report all use different techniques like LIFO,FIFO as
discussed above to assess the actual stock level. In Alpha, inventory managers prepare this report
to assess the need of of stock and raw-materials as well as to minimise different costs associated
with stock like storage costs, normal and abnormal inventory costs.
Performance report: This is most essential method of managerial accounting report.
Performance report are made to identify the overall performance of organisation,which included
labour performance employees and employers performance also. Manager use this report for the
purpose of making incentive policies. Company gave rewards and recommendation to their
employees after reviewing their performance. This report is help in identifying low skilled
workforce within the organisation. In Alpha, this report is used to asses the workers/employee
performance as to determine their wages, compensations and allocate works.
Accounts-receivable Report: This report involves list of all the trade debts, accounts
receivables and bills receivables details. This is major report which determines enterprise's actual
collection period. By analysis of this report managers can determine whether debtors are capable
to repay their debts and assess any probability of deb-debts. Alpha's managers apply information