Principles and Practice of Management

Principles and Practice
of Management

Table of Contents
INTRODUCTION...........................................................................................................................5
LO1..................................................................................................................................................5
P1 Explanation of management accounting along with different types of management
accounting systems......................................................................................................................5
P2 Different methods for management accounting reporting.....................................................7
LO2..................................................................................................................................................9
P3 Calculating costs under different management accounting techniques.................................9
LO3 ...............................................................................................................................................14
P4) Explain the advantages and disadvantages of the different types of planning tools which
are used for budgetary control...................................................................................................14
P5) Compare the organizations which are adopting the management accounting systems and
respond to the financial problems ............................................................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Management accounting is an effective process of evaluating, planning for making
financial data, budget and reports (Jermias, Gani and Juliana, 2018). This present study is based
on Alpha Ltd which is a medium size manufacturing company as it has approximate 50
employees and generate revenue of about £500,000 per year. It is famous for producing
qualitative and delicious pizzas. It has made an effective growth and now making plan to
intensify its franchising business. This report is going to show different system of management
accounting which helps manager in making effective decision and maintaining a balance
between demands and supply. It will also show different management accounting reports which
also helps manager in controlling activities for reducing cost and accomplishing goals within set
budget. Further, this study will discuss importance of balance score card by making differences
in 2 companies and also will analyse the way of solving financial issues with these tools.
LO1
P1 Explanation of management accounting along with different types of management accounting
systems
Management accounting is known as cost accounting in other words which is an effective
procedure of analysing business operational cost and operations in order to make internal
financial report. The main aim of management accounting system and keep track of all
information's and data is to reduce cost and making an effective decision. In an organization,
there are several decisions are being made by focusing on cost as each activity is being run with
the help of cost and amount (Eldenburg and et.al., 2019). It represents accounting informations
and business activities of internal management for regulators and stakeholders. For working as a
trainee management accountant in a medium size company, it is important to have knowledge of
management accounting and its all types. It is a critical process of analysing, measuring and
communicating economic data in order to make an effective informed decisions by the users of
data as per the American accounting association. There is some differences between
management accounting and financial accounting. There are different types of management
accounting systems which are being shown below:
Cost accounting system: It is a framework that can be applied by Alpha Ltd for
analysing approximate the cost of its products with the main aim of valuation of inventory, cost

control as well as profitability analysis. This costing system allocation is being done by 2
methods and dependency such as: activity based and traditional costing system. The main aim of
this system is to analyse and identify costs of production cost of the company by weighing input
cost of each production step. It offers several analytical tools such as: marginal costing, standard
costing, inventory control that are being applied by management for discharging reproductively
efficiency (Schaltegger and Burritt, 2017). In general business manager of the company depends
upon the accounting informations because each activity of the company like marketing, HR is
being performed and explained via cost.
Inventory management: It is all related to raw materials and inventory for controlling
the ordering usage and storage of components which are being used in the production process.
This inventory management system has a combination of some steps such as application of
barcode scanners, mobile devices and desktop software. In other words it can be said that it is a
system of controlling as well as overseeing quantities of final products for sale. The main aim of
using this system is to minimize overstock and under stock situation and reducing cost. For
making this system successful, it is important for the manager to track total quantities across the
stocking location or warehouses, they can have insight and make themselves able to take an
effective decision related to inventory. Inventory and raw materials is the key of the success of
the company that have direct impacts on products sells. There are several functions required to
be followed for this successful system such as: creating purchase orders, relocating that and
disposing of inventory. After all these primary functions, they also need to make sales orders,
picking, packaging and shipping of products. Some benefits of inventory management is to
improve the bottom line of the company, increasing accuracy and authenticity of inventory,
reducing costs and improving company workflow.
Job costing system: There are different departments and batches of products which
require to have manufacturing costs for performing production activity and this system is used
for allocating that cost to each item. In some situations cost are being refunded to customers and
for making its effective, company requires to submit that cost informations to customers. This
system is also being used in determining accuracy of the estimating system of the company. This
information can further also be used for assigning inventorial costs in order to processed
products. Successful implementation of this system requires to have enough informations related
to direct materials, overhead and labor.