Types of Management Accounting Systems and Reporting Methods

Management
Accounting

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explanation of different types of systems of management accounting along with their
essential requirements..................................................................................................................3
P2 Explanation of various methods that are used for reporting of management accounting......6
M1 Importance of MAS...............................................................................................................7
D1 Integration between MAS and MA reports............................................................................9
TASK 2............................................................................................................................................9
P3 Calculation of costs using cost analysis techniques and formulating of income statement
under absorption and marginal costing........................................................................................9
M2 Techniques to prepare income statements...........................................................................12
TASK 3..........................................................................................................................................13
P4 Explanation of budgetary control along with description of planning tools and advantages
and disadvantages of all of them...............................................................................................13
M3 Role of planning tools.........................................................................................................16
TASK 4..........................................................................................................................................16
P5 Comparison of organisations on the basis of use of management accounting to respond
financial issues...........................................................................................................................16
M4 MA to respond financial problems......................................................................................18
D3 Role of planning tools to solve financial issues...................................................................18
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................20

INTRODUCTION
MA is a broader term that all executives ought to recognize to improve the organization in which
they operate. It is a strategy that allows internal stakeholders to assess whether or not the entity
operates correctly. By help of this, all information on business performance is captured. It is
important for all organizations to make sure they pay importance to it to meet all defined targets
and objectives (Barr-Pulliam, 2019). Basically, this accounting is completely different from
financial accounting but its importance is similar as this accounting. As by help of this
accounting they can take crucial decisions on the grounds of produced internal reports. The key
objective of this report is to explain the principle of management accounting and its application
in the organization. The project is focused on Cream Limited, one of the UK's medium-sized
enterprises. The business markets different nutrition items on the market. Some are waffles, ice
creams, and bagpipes. The assignment covers a number of topics, such as management
accounting, information processes and documentation and the usage of multiple cost control
methods in formulating the organization's income statement. In addition, this report includes
different forms of planning methods utilized in organizational monitoring and evaluation of
entities focused on management accounting.
MAIN BODY
TASK 1
P1 Explanation of different types of systems of management accounting along with their
essential requirements.
Across all the organizations, the administrators use a specific method to evaluate how successful
or negative the attempts they create to boost company results are done. It is called management
accounting that lets all internal shareholders assess the company's results. The Board of Directors
is assisted in Cream Limited management accounting to evaluate the true growth of the
company. With this aid, workers are often deciding if they are rising or not in the future through
the company in which they operate. While planning to achieve all the company's long-term
priorities, managers need great importance in ensuring they utilize them in order to track and
regulate the company's efficiency (Jiambalvo, 2019). In the management accounting there are a
range of accounting systems and each of them play a key role in the context of different

departments of companies. Eventually, each department of company has an integration of MA
systems. Companies who implies below mentioned accounting systems they lead to higher
sustainable success. It becomes possible because each department coordinates their activities in
accordance of different accounting systems.
Most businesses use multiple forms of management control systems to ensure consistent
performance of scheduled operations. It is important for managers to use various types of
programs in order to perform all operations properly. Cream Limited's management gives
attention to different forms of them, such as costs reporting, price optimisation, inventory control
and job procurement. Managers evaluate the overall output of companies using all of their
internal records. In Cream Limited, all of them are listed in detail below:
Inventory management system- Managers of most businesses use it to retain accurate
knowledge on all the materials that they use to make goods marketed to consumers. In creams
limited, they produce all the products that customers need are made by holding all the products
according to their preference (Maalouf and El-Fadel, 2019). This accounting system is too
crucial for those companies who are involved in manufacturing operations. It is so because by
help of this accounting system, they become able to know that how much quantity of material
they have in their stores. Due to this, companies take suitable actions in order to determine
whether they need to purchase new material or not. The process lets managers insure that they
have all the things they need to produce ice-cream, waffles, doughnuts etc. There are several
forms of inventory control schemes that the company can use in the handling of products. Some
of them are listed as follows:
 AVCO (Average Cost Method): All items are used or rendered through this system of
inventory control on the basis of average cost.
 FIFO (First in First Out): All companies use previously taken stocks for operational
tasks during FIFO procedures.
 LIFO (Last in First Out): Newly purchased goods are used for the manufacture of
products according to this inventory control system process.
FIFO is used in Creams Limited by the above-mentioned forms in inventory management
systems so that administrators can efficiently utilize all of their products before they expire.

Essential requirements- For the company it is really necessary as it deals in organized
handling of the products and the correct conduct of all activities. This also implies that all
products are managed by the manufacturer in order to satisfy consumer requirements
Job order costing system: This is one of the key systems used in all businesses that operate on
different forms of operation (Bai, 2019). This is primarily designed to gather information
separately from other activities. Creams Limited uses it to specifically record consumer
expectations so as to satisfy the customers 'desire. The company is enabled to meet its lengthy-
term goals, such as higher consumer loyalty. It guides supervisors to insure that they can carry
out their operations according to customer preferences. In the context of above company, they
determine cost of each produced item by help of this accounting system. It becomes possible
because under this cost of each job involved in various activities is computed. On the basis of
this, it becomes easier for finance departments to determine cost of each item which is produced
under their operations.
Essential requirements -Creams Limited provides an extremely important job order costing
system as it can be used to efficiently fulfil the consumers 'needs. In fact, achieving market goals
such as better income and highly satisfied customers will also gain.
Price optimisation system: The primary objective of this management accounting method is the
determination of the correct price on all products produced by a business. Creams Limited
Managers use it to determine whether they are able to attract a large number of buyers at the
price level on all their goods (Soler Porta, 2019). The company is helpful to identify buyers
'reactions to the rates they want to pay on anything they offer. Eventually, in the absence of this
accounting system it may become difficult for companies’ managers to attract more number of
customers. This is so because if prices of products will be higher than customers will not like to
buy products. Hence, by help of this accounting system, it becomes easier for above company’s
sales department to set price at a level on which they can generate higher revenues.
Essential requirements -Creams Limited requires it so the managers can boost their profits
by providing the correct price on all the products offered by it. This will also allow the
organization to determine whether it can meet all of its goals by finding the best prices on
the products it offers.