Management Accounting: Explaining Requirements and Methods

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ASSIGNMENT TITLE: MANAGEMENT ACCOUNTING
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
P1: Explaining management accounting and demonstrating the requirements of various types of
management system.........................................................................................................................3
P2: Different methods for preparing management accounting report.............................................5
Task 2...............................................................................................................................................7
P3: Calculation of costs...................................................................................................................7
Task 3.............................................................................................................................................11
P4: Advantages and limitations of the ‘planning tools’ with respect to the scenario under
consideration..................................................................................................................................11
Task 4.............................................................................................................................................13
P5: Comparison of the accounting system implemented in companies to tackle the financial
problems........................................................................................................................................13
Conclusion and Recommendation.................................................................................................13
Reference list.................................................................................................................................15
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Introduction
Management accounting refer to the method in which organisation store financial data for
systematic planning of business and it also helps management body of an organisation to take
financial and non-financial decision relating to the firm. The process measures, identify,
interpret and communicate information throughout the business environment to achieve goals of
organisation. Alternatively, the role accounting plays to supply information, which will assist
management in planning economical structure, controlling cost, decision making, and to increase
profitability of business is termed as Management accounting. The user of accounting
information who will be benefited from management accounting can be divided into two groups.
The groups are internal manager and external parties. Internal managers group are divided into
two part again one who makes short-run planning and another who make decisions to formulate
policies. External parties refer to shareholders, investors, associate partners and others. Here in
the study a manufacturing organisation Big Bear (Food Company) has been selected to interpret
management accounting system of the company which will give clear concept of fundamental of
Management accounting.
Overview of company
Big bear Limited supply foods, it is situated at Leicester, London and owned brands of different
company such as XXX mints, Sugar Puffs and others. The company was established in 2011 by
Raisio Group and specialised the brands which is unknown or have household names. The
company operate small-size business by producing different food products.
Task 1
P1: Explaining management accounting and demonstrating the requirements of various
types of management system
Management accounting focuses areas of accounting which help management in financial
planning and they prepared principles by interpreting financial data available in business sectors.
Management accounting gives information to management body which will assist them to take
decisions and fulfil objectives of business (Kaplan and Atkinson, 2015, p.47). The basic
objective of management accounting are discussed below-
● formulate policy related to financial management
● plan for future events to cooperate with internal and external changes of business
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● monitoring performance to use resources efficiently and control daily activities of firm
● comparing between alternative scenarios of business to assess growth and implement new
methods to improve quality of product
● solving financial problems and achieving business targets
● Considering behavioural factors that can affect business activities
An accounting system always provide various ways to collect, arrange and communicate
information related to financial activities of firm to organise different elements of firm
systematically (Zimmerman and Yahya-Zadeh, 2011, p.258). Management accounting is
different from actual accounting system, it basically focused on collecting information about
product or cost of specific operation at detail level which will help higher authority to take
decision especially financial decision. The work of management accounting involves around
identifying different types of resolution management will need to carry on business activities
(Ward, 2012, p.36). The decisions which are concerned with management accounting are of two
types, output decision and input decision. Output decision relates with quantity, quality and price
of goods or product supplied by company and Input decision deals with production elements
such as labour, raw materials, capital investments and equipments.
Both the decision discussed above are interconnected thus, for management accounting
managerial planning is necessary which involves seven stages. These stages are also appropriate
for small enterprises as selected above Big Bear (Food Company) for efficient management
accounting system in their manufacturing company. Management accounting has responsibility,
which includes:
● Planning: By planning, the accounting manager gets ready for application of the
structured process as per the raised budget of the overall business.
● Implementation: After planning the activities the factors essential for implementation
are performed on the workforce is done as an activity as per the raised situation.
● Controlling: The workforce of the concerned firm is controlled in order to stabilize the
increasing budget of the firm.
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