Tools and Techniques of Management Accounting - Assignment

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explaining and assessing the requirements of different types of management accounting
system..........................................................................................................................................1
P2 Stating the different types of methods which are used for management accounting reporting
.....................................................................................................................................................4
TASK 2............................................................................................................................................5
P3 Preparing an income statement through marginal and absorption costing method................5
TASK 3............................................................................................................................................8
P4 Explaining the advantages and disadvantages of different types of planning tools which are
used for budgetary control...........................................................................................................8
TASK 4..........................................................................................................................................10
P5 Comparing the system which business unit should adopt for responding financial problems
...................................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
Working Note 1.........................................................................................................................16
Working Note 2.........................................................................................................................16
Working Note 3.........................................................................................................................16

INTRODUCTION
Management accounting is the field of finance which in turn provides managers with
highly accurate report for decision making. In this, manager of the firm places emphasis on
recording data with the motive to generate suitable report regarding financial performance.
Management accounting and reporting is highly significant which in turn provides assistance to
the firm in making highly effectual day to day business decisions. Hence, system of management
accounting is highly concerned with the identification, measurement and analysis of data which
in turn aid in growth and profitability aspect of firm. The present report is based on Unicorn
retail store which is one of the leading organizations of UK operating in small segment. In this,
report will develop understanding about the various tools related to management accounting
system. Besides this, it will also shed light on the tools and techniques that help in resolving
financial issues or problems. Further, report will provide deeper insight about the various costing
methods such as marginal and absorption.
TASK 1
P1 Explaining and assessing the requirements of different types of management accounting
system
To,
Higher Management,
Unicorn, UK
Date: 1st August 2017
Management accounting is highly concerned with the evaluation of internal business
performance. Hence, to aid in the managerial decision making accountants prepare reports
regarding the financial performance of each department and thereby present it to higher
authorities. In this, accountant presents quantitative expression on periodical basis and gives
indication to the manager about the areas that require improvement (Keillor, Hult and Babakus,
2015). In this way, management accounting system enables firm to take strategic action within
the specified time frame. This in turn helps Unicorn in reducing the cost and enhancing profit
level significantly. Hence, manager places high level of focus on preparing and providing timely

monetary as well as non–monetary information to the concerned authority.
Significance of management accounting
 Make or buy analysis: Management accounting system is highly significant which in turn
helps in making suitable decision. By using management accounting tools and techniques
business entity of Unicorn can decide whether they should manufacture product in-house
or buy from outside. In this way, by making in-depth evaluation of each aspect firm can
take suitable decision and becomes able to earn high profit margin.
 Future planning: Preparation of the report is one of main objectives of manager behind
undertaking the system of management accounting. Moreover, several reports which are
developed by Unicorn on the basis of management accounting system helps in making
suitable and competent plan for the near future. Moreover, management accounting
furnishes information regarding the extent to which specific department fails to meet the
standard criteria (Mehta and et.al., 2015). Hence, by considering the report of variance
analysis Unicorn would become able to draft suitable budget for the near future. In
addition to this, by considering the level of deviation firm can identify the training
requirements of personnel.
 Further, management accounting techniques also helps Unicorn in making evaluation of
the viability or attractiveness of project. In this way, management accounting system
offers opportunity to the firm to employ money in suitable investment proposal which
directly aid in the profit margin of firm.
 By using the techniques of management accounting such as ratios firm can make
evaluation of its own performance in against to competitors. In this way, by making
assessment of financial aspects Unicorn can identify where it stands in the present times.
Along with this, by comparing performance over the years business unit can take
strategic action or measure within the suitable time for improvement purpose (Yeniyurt
and et.al., 2015). Hence, by keeping all such aspects in mind it can be presented that
management accounting system helps company in achieving success in the strategic
business environment.
There are several types of management accounting system that can be undertaken by
Unicorn for tracking and evaluating the performance as follows:
Management accounting is that tool which is undertaken by mangers in making decisions