Project Management Accounting

Running head: PROJECT MANAGEMENT ACCOUNTING
Project Management Accounting
3/27/2019

PROJECT MANAGEMENT ACCOUNTING 1
Table of Contents
Introduction................................................................................................................................2
Task 1.........................................................................................................................................2
Management Accounting.......................................................................................................2
Essential Requirements of Diverse Types of Management Accounting System...................2
Job Costing System............................................................................................................2
Price Optimising System....................................................................................................3
Cost Accounting System....................................................................................................3
Inventory Management System..........................................................................................4
Methods of Managerial Accounting Reporting......................................................................4
Benefits of Management Accounting.....................................................................................5
Evaluation of how management accounting systems and management accounting reporting
is integrated within organizational processes.........................................................................7
Management accounting reporting integration with ABC Ltd..........................................7
Management accounting system integration with ABC Ltd..............................................7
Task 2.........................................................................................................................................8
Task 3.......................................................................................................................................10
Advantages and Disadvantages of Planning tools used in Budgetary Control....................10
SCORO............................................................................................................................11
Prophix.............................................................................................................................11
Use of Planning Tools and their application for forecasting and preparing Budgets..........12
How planning tools for accounting respond appropriately for solving financial problems to
lead organizations to sustainable success.............................................................................13
Task 4.......................................................................................................................................14
Comparison of how companies are adopting systems of management accounting to
respond to financial problems..............................................................................................14
Financial Indicators..........................................................................................................15
Non-Financial Indicators..................................................................................................16
Analysis of how reacting to financial problems, management accounting can result in
organizations towards sustainable success...........................................................................17
Evaluate How planning tools for accounting respond appropriately for solving financial
problems to lead organizations to sustainable success.........................................................17
Conclusion................................................................................................................................18

PROJECT MANAGEMENT ACCOUNTING 2
References................................................................................................................................19

PROJECT MANAGEMENT ACCOUNTING 3
Introduction
The aim of the report is to critically discuss the management accounting and its methods that
are used as measurement and planning tools for the company in order to evaluate its
performance. The report also discusses the use of numerous tools for planning for budgetary
control. Analysis has been presented regarding the way companies can make use of
management accounting to respond to financial issues.
Task 1
Management Accounting
Management accounting is the technique of classifying, computing, analysing, understanding,
and communicating data or information to the executives in order to attain the goals of the
organization. The key difference between financial accounting and managerial accounting is
that, financial accounting is focused at presenting information to the parties present outside
the company, whereas, managerial accounting is focused at supporting executives in the
organization in making decisions (Debarshi, 2011).
Essential Requirements of Types of Systems of Management Accounting
Job Costing System
It is one of the systems that are used to allocate manufacturing cost to every product by
maintaining the track on expense monitoring. ABC Ltd. can use this system at the time when
the goods are indistinguishable in order to maintain the track of order expenses. Job costing
accounting process is comprised of:
Receiving Enquiry – The key concern of the consumer is material quality.

PROJECT MANAGEMENT ACCOUNTING 4
Estimate price of the job – The job costing is majorly done by the company’s auditor by
considering the preference and taste of the consumer (Blocher, 2006).
Receiving order – The order is placed by the consumer if he/she is assured regarding price
constraint.
Production order – It is positioned for initiating the procedure of production.
Cost recording – Each cost aspect in the procedure of production is logged.
Completion of Job – By completing the production, a report is submitted to the accounts
department for the financial costing of the job. The department then compares the data with
the estimated cost (Drury, 2013).
Price Optimising System
Price optimizing system is majorly utilized to manage the resource prices. This system could
be utilized in deciding the multiple products prices at a time. It supports defining how the
demand will alter at different levels of price (Phillips, 2005). ABC Ltd. can make use of this
system for modifying the prices for consumer divisions by pretending their retorts to diverse
levels of price.
ABC Ltd. will make use of this system because it will support the business in defining
structures of the pricing which is comprised of initial promotional pricing, pricing, and
discount pricing.
Cost Accounting System
This scheme supports the business in estimating the cost of the service or product while
investigation could be made regarding cost control, inventory and organizational profitability.
Two essentials of the effective cost accounting system are presented below:

PROJECT MANAGEMENT ACCOUNTING 5
Participation and cooperation of the managers are needed by diverse departments –
This will confirm proper participation and cooperation in the creating of the cost accounting
system that can support organization in precise allocation of product’s cost (Rajasekaran,
2010).
Simple and Flexible – The developed system of cost accounting must be simple that could
support in the execution. It must encounter the necessities of numerous users and familiarize
accounting to the requirement of the company.
Inventory Management System
Inventory Management System is focused towards the direction and management of the
assets that are non-capitalized and company’s stock. Organizational procedure in ABC Ltd.
could be combined with this kind of system in order to attain an effective and efficient
inventory flow in the organization. Few of the essentials of this process are:
Inventory management can be done physically as well as monetarily– Numerous advantages
like appropriate inventory management and decreasing cost are attained through this (Muller,
2011).
Replenishing and forecasting policies – This support the company in advance management
and cost requirements preparation.
Methods of Managerial Accounting Reporting
Managerial accounting is specifically used for decision making, controlling, and planning.
The accountants are based on financial statements comprises balance sheet, income
statement, and cash flow statement. Besides this, they also make use of different kinds of
reports for evaluating the information of the company comprising, performances, cost reports,
and budgets (Adler, 2013).