Unit 5 – Management Accounting

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Analysing the essential requirement and its types of management accounting ....................3
P2. Determining the methods of management accounting reporting...........................................5
TASK 2 ...........................................................................................................................................5
P3. Calculating the cost techniques of cost analysis using income statement.............................5
TASK 3............................................................................................................................................5
P4. Assessing the advantages and disadvantages of types of planning tool................................5
TASK 4............................................................................................................................................7
P5. Comparing the management accounting and financial management....................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting concern with all activities and functions that focuses on goals by
identifying, measuring, analysing and interpretation of information and helps in communicating
to manager (Abdusalomova, 2019). This is process of preparing reports about the business
operation and useful in taking short term and long term decision and helps in forecasting the
future events.
In this report the company given is Catering Services Ltd. Which is looking to expand the
market in the range of home made pizzas to superstores. In this report the types of management
accounting system is being discussed and analysing the essential requirement of them that is
important for the organisation. Calculating the cost technique for cost analysis and preparing the
income statement using marginal and absorption cost. Apart from that determining the
advantages and disadvantages of different types of planning tools for budgetary control and
comparing the how organisation are adapting management accounting to resolve the financial
problems.
TASK 1
P1. Analysing the essential requirement and its types of management accounting
Management accounting involves presentation of all important financial information that
presents the internal process that is being used by management to take necessary business
decision (Ameen, Ahmed and Abd Hafez, 2018). It is important in many functional operations
as it helps in improving the overall management practices and its quality. In the selected
company, this useful in providing information related to the cost and sales revenue of goods
which is generated by organisation. This gives major help in taking essential decision-making in
the chosen organisation and facilitates them in analysing the profitability, forecasting and stock
valuation.
Management accounting system are internal process that helps the organisation to
properly evaluate the performance and that will help in organising all activities effectively.
Following are the management accounting system are as follows-
 Inventory management system- In this type of system is dealing with the supervision
and regulation of management of stock and assets of the organisation. It uses the every
inventory item such as barcode, labels or asset tags and it provide the provides central

databases and useful in analysing the data, reports and forecasting the future demand. In
the selected organisation, the essential requirement of this system is that it facilitates in
taking management decision in the relation of cost requirement and planning. Some
benefits like reduction in cost and appropriate inventory-management could be achieved
from this system.
 Cost accounting system- This system is very useful in estimating the cost of product and
analysing the probability of the management (Bedford and Speklé, 2018). Proper
identification of cost in business will help in taking further steps and decision in the
company in the relation of cost control and it has two types such as job order costing and
process costing. As cost is key component that need to be control and planned properly
and always try to maximise it in order to achieve it effectively. In the context of
company, the essential requirement of this system is that improves the cooperation and
participation of executive that is required by many departments. This helps in taking
proper decision regarding the ascertainment of cost of product and supports in
development of flexible and easy to understand and execute.
 Price optimising system- This is used to take proper control of the prices of all available
resources and that will have to be managed effectively. It used in deciding the prices of
multiple products at particular time. This system helps in determining the demand that
fluctuate different price levels. This supports the company in taking effective decision
regarding pricing and discount pricing. For the chosen organisation, the essential
requirement is that it help the company in determining the pricing structure for
promotional strategies and other activities (Drury, 2018). This system is also important
in many factors such as category goals and competitors pricing strategies that before
establishing the price of any product that manufactured in the company.
 Job costing system- This system helps in assigning manufacturing cost to each particular
product to monitor and track the expenses and it is also useful in taking decision
regarding multiple products at a time. It supports the organisation in determining the
demand that fluctuate at different price levels. For the selected organisation, the essential
requirement is that company uses this to track that products are identical and keep them
track of order expenses. Apart from that it is useful in determining the accuracy of
organisation' estimating system and able to control the price to achieve the good amount