Management Accounting: Systems, Reports, and Planning Tools

Unit 5 – Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part 1...........................................................................................................................................3
Part 3...........................................................................................................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
In the finance, there are ranges of accounting methods which are being implemented by
business entities in their operations. The term Management accounting (MA) can be
demonstrated as a sort of accounting technique under which internal reports are produced by
containing monetary and non monetary information (Johnstone, 2020). This accounting is widely
used by business entities which are involved in manufacturing activities. The report is based on a
medium-sized company which is Creams limited. The company sells bakery products including
creams, waffles etc. The report is separated in two tasks in which first task contain information
about explanation of MA, its systems. Along with second tasks includes information about
various planning tools and role of MA to solve monetary issues.
MAIN BODY
Part 1
Analysis of MA and its systems.
MA- As above explained that, it is a form of accounting under that detailed information about
monetary and non monetary aspects is included in a systematic manner so that internal reports
can be produced by accountants. This is used by companies' managers for taking suitable internal
decisions. In the context of above creams limited, they implements this accounting by help of
below mentioned systems such as:
 Cost accounting system- It is a type of accounting system that make projection of all
kinds of expenses including cost of material, operations and many more. This is not
limited till the estimation of expenses but also it computes and compares actual cost with
budgeted cost (Hutaibat and Alhatabat, 2020). In Creams limited, their finance
department enables this accounting system that helps them in better understanding of
overheads of each individual activity.
Essential requirement- This system is essential for above company in order to identify different
types of cost which occurs in process of providing products to customers.
 Inventory management system- This accounting system is linked with assessing total cost
of inventory including starting to end cost of managing different kinds of stock. It is
aligned with preparation of stock report which includes information about different stock

levels. In the Creams limited, they use key information by this accounting systems
regards to available quantity of finished and sold bakery products.
Essential requirement- It is necessary for companies which are involved in manufacturing
operations. This is so because it provides information about quantity of stored material in the
warehouses which becomes basis for purchasing of new stock level (Zandi, Khalid and Islam,
2019).
 Price optimization system- It can be defined as an accounting system that contributes to
sells department in order to set prices at a level on which companies cannot bear any
kinds of loss. The reason behind this is that it sets prices of products and services in
accordance of recent market trends, customers' feedback. In Creams limited, they set
prices of their bakery products as per market trends and customers' need.
Essential requirement- This accounting system is necessary for companies to collecting and
analysing external factors which leads to better decision making for price setting of different
products.
 Job costing system- The meaning of this accounting system can be understood by
breaking term “Job costing” in two aspects. Basically, under it cost of job that is involved
in operating different activities of a company is computed. In addition, it plays a key role
in order to determining cost of each individual output. In the Creams limited, they
implement this accounting system in order to find out cost of different kinds of tasks and
activities separately.
Essential requirement- It is essential for companies with an aim of computing cost of different
kinds of operations and activities.
Different kinds of MA reports.
MA report- It is defined as a type of written document that covers information about monetary
and non monetary aspects. The information covered in these reports is being used as a
framework for better decision making. In creams limited, they apply different kinds of reports
and some of them are as follows:
 Performance report- This is defined as a form of report that includes information about
performance of each aspect of an organization. It mainly focuses on those aspects
which are related to performance of financial and non financial elements. This report is