Management Accounting Systems and Techniques

MANAGEMENT
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Management accounting systems...........................................................................................1
P2: Methods used form management accounting reports............................................................3
M1 Benefits of management accounting system.........................................................................4
D1 Integration of management accounting system and reporting in organisational processes...4
CONCLUSION................................................................................................................................4
TASK 2............................................................................................................................................5
P3 Calculate costs using appropriate techniques of cost analysis................................................5
......................................................................................................................................................6
M2 Application of management accounting techniques and produce appropriate financial
reporting documents ....................................................................................................................7
TASK 3............................................................................................................................................7
P4 Explain the advantages and disadvantages of different types of planning tools ...................7
M3 Analyse the use of different planning tools and their application ........................................9
TASK 4..........................................................................................................................................10
P5 Compare how organisations are adapting management accounting systems ......................10
M4 How, in responding to financial problems, management accounting can lead organisations
....................................................................................................................................................12
D3 Evaluation of planning tools that is used to solve financial problems.................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is the activity where identification, analysation, interpretation
and communication function are to be performed by manager to achieve organisational goal.
Financial information are also provided under this process to top managements so that they can
take managerial decision easily (Armitage, Webb and Glynn, 2016). The company which is
selected for this report is Aston Martin. It is a British independent manufacturer of luxury sports
cars as well as grand trousers. It was established in 1913 by Lionel Marting as well as Robert
Bamford. Various topics such as understanding of management accounting system,application of
range of management accounting techniques and use of planning tools used under accounting
management are covered under this assignment. Apart from the above topics, compare ways in
which organisation could use management accounting to respond to financial problems are also
explain in detail in the project.
PART 1
P1 Management accounting systems
Management accounting is a technique used by experts to measure and evaluate the
process to make proper control over the management of the organisation. Information and
reports related to invoices, cash flow statement, balance sheet etc. are shared by finance
department with the managers of the company which helps in decision making process. Proper
recording of transactions with the help of using supporting document is to be maintained by
managers of Aston Martin. It helps to take accurate decision to increase operational efficiency of
organisation. Deep analysation is to be performed by top management of company for taking
long term investment decision and also to evaluate the risk involved in the particular investment
(Bennett and James, 2017).
Principles of management accounting
 Integration: This principle presents that required information of administration is
integrated that can be effectively utilised at the maximum at the end of same time and
accounting services is supplied at lower cost.
 Absorption of overhead cost: These costs are absorbed by the accountant on
predetermined basis in which combined indirect materials, labour as well as expenditure.
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Therefore, through this method of absorption should carry out the expected outcomes in
effective way.
 Utilization of resources: It is required to available resources must be utilised in effective
manner. The main purpose behind of such resources are available in huge manner and
scarcity by the year. Thus, MA system should be assure about effective usage of available
resources.
Role of Management Accounting: The main role of MA supports to manager in
business in context of decision making procedure. It is defined as a systematic procedure in
which recognising, interpreting and communicating information to managers to supports their set
objectives and aims in certain period of time.
Various systems related to management accounting are also describe in detail as
underneath:
Cost accounting system: It is a system mostly used by a manufacturing company to
estimate the product costing for profitability analysis, and to control cost. Proper valuation of
inventory along with their flow and estimation of different cost is also be consider under this
system. Various costing like fixed cost, variable cost, semi variable cost, etc. are to be calculated
for a product by managers of Aston Martin to track the cost of product. Record of cost of
inventory is also maintained so it saves many cost in the organisation (Collis and Hussey, 2017).
Essential requirements: Proper allocation and apportionment of cost is to be made in
the system as it become beneficial to identify idle time, idle cost so that managers can easily
ascertain the product cost at different level.
Inventory management system: It is used to track goods to minimize inventory waste,
and it also helps to analyse trend of stock. Aston Martin use various methods like LIFO, FIFO,
weighted average etc. to manage inventory. Though there are different ways through which cost
of managing inventory can be minimized.
Essential requirement: It is beneficial to use this system in the company because it
reduces chances of stock loss. management of inventory can easily become possible (Cooper,
Ezzamel and Qu, 2017).
Price optimisation system: It defines the way customers will respond to different prices
for product. By providing best prices for each product Aston Martin attract large number of
consumers. In this way the organisation achieve their target by providing satisfaction to the
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