Management Accounting System Report

Unit 5
Management Accounting

Table of Contents
Introduction........................................................................................................... 3
P1: Explaining Management Accounting and Providing Essential Requirements
of Different types of Management Accounting System.......................................4
P2: Explaining Different Methods Used for Management Accounting Reporting.5
Task 2.................................................................................................................... 9
P3: Calculation of Costs Using Appropriate Techniques of Cost Analysis for
Preparing an Income Statement Using Marginal and Absorption Costs..............9
Task 3.................................................................................................................. 11
P4: Explaining the Advantages and Disadvantages of Different Types of
Planning Tools Used for Budgetary Control......................................................11
Task 4.................................................................................................................. 13
P5: Comparing How Organisations are Adapting Management Accounting
Systems to Respond to Financial Problems......................................................13
Conclusion........................................................................................................... 15
References........................................................................................................... 16
REPORT
From: MAO

To: GM
Subject: To write a report to GM covering management
accounting and management accounting system
together with different costing techniques and reporting
to enable the organization implement them.
Introduction
In general that report is widely used across the world market which is known as financial
accounting. In any annual report of a certain company we can get financial statements of that
company, financial statements includes different five methods of performance those are
income statement, balance sheet, cash flow statement, changes in stockholder’s equity and
equity statement. Financial accounting is prepared for publishing in the public market, apart
from market publication there is an internal side. Managerial Accounting plays an important
role for internal stakeholders. Managerial accounting is the base ground of all financial
statements which determines the production volume and revenue of the entire company.
There are some advantages and disadvantages of different methods of management
accounting systems. Management can follow any of several tools for calculation of net profit
in the aspect of management accounting.

P1
Management Accounting:The aim of management accounting is to provide necessary
information and to help managers for taking day to day decisions. Basically management
accounting is prepared solely for internal purposes. The crucial difference between financial
accounting and management accounting is financial accounting is prepared for outside of the
organisation such as for shareholders, public and tax authority on the other hand managerial
accounting is prepared for internal organisation such as managers and employees. Financial
accounting follows formal procedures where managerial accounting doesn’t need to go
through the all steps of financial accounting; it only fulfils the some essential criteria.
Management accounting is too mandatory for operation managers; they are helpless without
management accounting. Operational managers take day to day decision from management
accounting. For example management accounting provides the information of how many
units need to be produced, what is the current margin, margin ratio, we can find out break-
even point by using the tools of managerial accounting (Britton and Waterston, 2013). After
producing in which level our production cost will compensate the total revenue and in which
stage variable cost is lowest. It is the process of identifying, measuring, analysing and
communicating all the essential information of organisation transaction. In this definition
identifying is generally known as journal, measuring is known to all as ledger, analysing
means to preparing trial balances and communicating indicates showing the outcomes in the
income statement and balance sheet. Management accounting accumulates the revenue, cash
flow, production unit, variable cost per unit and fixed cost of total production process.
Management accounting is too concerned about raw materials, sales revenue, production cost,
labour cost, manufacturing cost and other overhead cost (Christensen, Cottrell and Budd,
2016).
Management Accounting System: The goal of management accounting system is to provide
the best tools for the managers and to attain best performance for organisation. The system of
management accounting gives the path for solving day to day manufacturing related problems
and run the business activities easily. There is break down of management accounting such as
margin analysis, constraint analysis, capital budgeting, trend analysis and forecasting, product
valuation and costing and so on. Managers have some necessary responsibilities, among them
most important responsibilities are planning, directing and controlling. These are the role of
management accounting, planning, organising, controlling and decision taking. Managerial
accounting is viewed as internal accounting most of the times. Management accounting
system gathers different financial data from the operations like sales information; raw
materials data and inventory related data then analyse these sorts of data for preparing output
which help to make decision for better performances (Acikerisim.deu.edu.tr, 2017).
Managers who are responsible for managing the function of management accounting look
after the existing data of organisation and then start to analyse the previous shortcomings.
They give priorities on comparison between cost budget and actual budget. They prepare
different types of report and include several methodologies in those reports. Sales report,