Unit 5 Management Accounting System

Learning Outcome Assessment
Criteria
In this assessment you will have the
opportunity to present evidence tha
you are able to:
LO 1: Demonstrate an understanding of
management accounting systems
P1 P1 Explain management accounting a
the essential requirements of differen
of management accounting systems
P2 P2 Explain different methods used fo
management accounting reporting.
LO 2: Apply a range of management
accounting techniques
P3 P3: Calculate costs using appropriate
techniques of cost analysis to prepare
income statement using marginal and
absorption costs.
LO3: Explain the use of planning tools used
in management accounting
P4 P4: Explain the advantages and
disadvantages of different types of pl
tools used for budgetary control.
LO4: Compare ways in which organisations
could use management accounting to respond
to financial problems
P5 P5: Compare how organisations are
adapting management accounting sy
respond to financial problems.
Please see that you include the Turn-it-in
report. This work will not be accepted
without the Turn it in report.
Report attached: Yes
No
If no Reason:
1

Unit 5
MANAGEMENT ACCOUNTING
1

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO1:Demonstrate an understanding of managemnet accounting system
P1. Explaining management accounting along with essential requirement of its types.............1
P2. Explaining Different methods of Management Accounting Reporting................................4
LO2:Apply a range of management accounting techniques............................................................8
P3. Preparation of Income statement using different accounting techniques.............................8
LO3:Explain the use of planning tools used in management accounting......................................11
P4. Explaining advantages and disadvantages of different planning tools used in budgetary
control.......................................................................................................................................11
LO4:Compare ways in which organisations could use managemment accounting to respond to
financial problems..........................................................................................................................15
P5. Adaption of management accounting system in responding financial problems...............15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................18
2

3

INTRODUCTION
Management Accounting, has become an essential requirement to be implemented within
the organisation as it aids to the organisational success and development. Different management
accounting systems like budgetary control, pricing techniques, costing techniques, etc. provides
organisation relevant information that facilitates decision making process which in turn helps in
attaining business goals and objectives. Present reports talk about management accounting within
organisation and its uses. Small business that is opted for explaining features of this system in a
more appropriate manner is Bacovia Supermarket. Company is based in Wales, United
Kingdom. Reports to the General manager of Bacovia Supermarket has been prepared providing
knowledge about types of management accounting system and its different reports. Further,
income statement has also been prepared using two different techniques along with their
differences. Different planning tools like budgetary control by which organisation can prepare
and monitor budgets for various functions has been explained along with its advantages and
disadvantages. At last, how management accounting and its planning tools helps business in
attaining sustainable success is also explained in respect to the chosen organisation.
In this, report will shed light on different types of management accounting system and
reporting that can be used for managing operations prominently. Further, report also entails the
manner through which absorption and marginal costing system can be used for taking decision
about cost as well as profit. In this, report will provide deeper insight about the tools that can be
used by the business unit for planning purpose and responding financial problems.
4

LO1: Demonstrate an understanding of management accounting system
P1. Explaining management accounting along with essential requirement of its types
Management accounting system is a management tool that helps management by providing
relevant information regarding various business operations and activities (Armstrong, P., 2014).
It is recommended for Bacovia Supermarket to use this system along with its different types,
this will enable in identifying the actual performance of the company along with the loopholes
due to which business is unable to attain its ultimate goals and objectives. Below is the
explanation of management accounting system and its types:
Application of MA systems
Managers and owners of small business organisation uses management accounting
system within their organisation in order to identify, accumulate, analyse, prepare, interpret and
communicate relevant information used within the business entity. This system helps in
tracking allocation of different costs such as variable and fixed costs to different products and
services of the company (Bertz and Quinn, 2014). Main purpose of management accounting is
to provide relevant information to internal users which enables them in taking future economic
decisions. Different provisions are prepared by management for different non-financial and
financial decisions is respect to the business. This is also used in preparing different
organisational strategies. Following are the types of management accounting system:
5