Management Accounting and Reporting Methods

MANAGEMENT ACCOUNTING
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Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Management accounting and essential requirements of different management accounting
system.....................................................................................................................................3
P2 Different methods used for management accounting reporting........................................5
TASK 2............................................................................................................................................7
P3 Formulation of income statement by using appropriate techniques of cost......................7
TASK 3..........................................................................................................................................12
P4 Explain the advantages and disadvantages of different types of planning tools.............12
TASK 4..........................................................................................................................................15
P5 Compare of organisation to adopt management accounting system...............................15
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18
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INTRODUCTION
The term management accounting is a process of formulating reports related with
business operations which helps manager to make financial decisions. The prime focus of
management accounting is to transfer all financial information among all departments of
organisation for accomplishment of business goals within decided budget. Management
accounting utilise various tools, financial reports, analyse of monetary funds to generate
decisions that increase organisation growth. Innocent drink is selected as an organisation for this
report (Abbasi, Zamani and Valmohammadi, 2014). Moreover, the report will focus on
management accounting and different methods related with management accounting and
reporting. Cost calculation for formulate of an income statement is also included in the upcoming
report. In the last, advantages and disadvantages of different planning tools used for budgetary
control will be understood by this report to perform company operations in a cost control
method.
TASK 1
P1 Management accounting and essential requirements of different management accounting
system
Management accounting is explained as a practice of measuring, interpreting, identifying
and analysing financial information to the manager for accomplish of organisational goals and
objectives in an organised manner. In simple terms, management accounting is to assist and
explain all financial aspects to internal managers for formulation of accurate decisions. Innocent
drink utilise managerial accounting because it aids to match organisation financial value and
modify it according to need of internal user.
Management accounting system- This is used by the business to provide critical and
essential information to the management for utilising operational decision-making (Ahmad,
2017). Innocent drink performs manufacturing operations and it use the management accounting
systems that increase in costing as well as managing of company process. It governs organisation
utilise systems for gather all information related with specific project. Types of management
accounting system are mention as follow:
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Price optimisation system- It is used by organisation for deciding right or accurate prices of
their services and products. With formulation of an appropriate price optimisation system,
Innocent drink financial division improve their profits by offering products at a right price.
Essential requirements
 Price optimisation system is utilised by organisation so they are able to identify sweet
spot of pricing to increase their profits. Also, price optimisation develops and handles
cost of products through deciding them according to calculations (Alsharari and Youssef,
2017).
 Another important factor related with price optimisation is to improve company financial
terms by calculating them by use of effective methods.
Job Costing system- It is primarily used by the organisation which performs their work in the
manufacturing industry or they produce goods. Therefore, manager of Innocent drink use the
system for managing all order and their delivery in minimum period. It also results that work is
done on the basis of production and number of orders.
Essential requirements
 Job costing ensure that job is done on the basis of decided standard so all work is done in
an efficient and effective manner. This also results manager also ensure that all orders are
managed and placed by job in a proper manner.
 On the other side, job costing is to ensure that all orders are completed according to
decided time. This results buyer needs are fulfilled in less time that satisfy needs and
wants of consumer by placing job in minimum time.
Inventory management system- According to inventory management system, managers is able
to ensure that all tasks are completed with less use of minimum resources. Innocent drink ensures
their work is managed with low wastage of resources (Charifzadeh and Taschner, 2017).
Moreover, inventory management is required by organisation to manage overall inventory of
organisation.
Essential requirements
 All orders are tracked or monitored by organisation through use of inventory
management system. It ensures task is completed according to right number of
requirements with right number of resources.
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