Different Types of Management Accounting and Methods for Management Accounting Reports

UNIT- 5 MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explaining different types of management Accounting and their benefits and drawbacks. . .1
P2 Explaining different methods used for management accounting reports...............................3
TASK 2............................................................................................................................................5
P- 3 Calculation of the costs........................................................................................................5
Statement of Marginal costing.....................................................................................................5
Statement of Absorption costing..................................................................................................6
Reconciliation statement..............................................................................................................6
Fixed and variable cost................................................................................................................6
Margin of safety...........................................................................................................................7
Break-even point analysis............................................................................................................7
Break-even graph.........................................................................................................................8
Variance analysis report...............................................................................................................8
TASK 3............................................................................................................................................9
P- 4 Advantages and disadvantages of the different planning tools used for budgetary control.9
M-3.............................................................................................................................................11
P5 Use of management accounting system to respond financial problems...............................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting refers to the process in which the financial reports of the
business are being communicated to the internal management, and they are used in the process of
decision-making. The report shall be reflecting the concept of management accounting, its
systems and the methods used for management accounting reporting. It shall be demonstrating
the statements as per the absorption and marginal costing and the calculation of the break-even
point. Apart from that the report highlights the various planning tools that are used by the
business to forecast and budget the activities that are related to the future time period. And lastly
the report will be discussing how the management accounting systems are used in responding to
the various financial problems of the business and comparison with the competitor regarding its
application.
MAIN BODY
TASK 1
P1 Explaining different types of management Accounting and their benefits and drawbacks
Management Accounting (MA) is process of examining, interpreting and communicating
information to manager that helps him to take strategic decision within company (What is
management accounting?, 2021). Connect Catering Service (CCS) will get various advantages
from usage of different types of accounting system. It includes job costing, inventory
management, cost accounting system and price optimization.
Cost Accounting System (CAS)
It is process which assist an organization to evaluate cost of products, profits, inventor
value and monitoring expenditures. CSS will be in position to analyse expenses regarding its raw
material before production process (Drobyazko and et.al., 2019). In addition to this, cost
accounting system provide assistance to company in gathering all information regarding cost
incurred in operation of firm.
Advantages Disadvantages
 It permits organization to get into
process that reduces cost of firm.
 Decisions are taken on the basis of past
records which does not provide
accurate guidelines to firm
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 CAS will help CSS to fix roles and
responsibilities which leads to
effectiveness.
 Previous data is utilized for succeeding
year thus information is not useful for
future reference
 Frauds can be prevented from this type
of management accounting system.
 CAS do not get success in studying
areas like operation research, time, etc.
Price Optimization system (POS)
POS is analysis of customers reaction against of changing product's price levels. It is
utilized by organization to determine the best price for the commodity that can fulfil its
objectives of profit & sales maximization, cost reduction, etc. CSS will get various kinds of
benefits by utilization of this price optimization system.
Benefits Drawbacks
 It is easy to implement in turn
efficiency optimization is received
 Sometimes become non optimal in case
of irregular update in procedure
 This provides flexibility in
communication process
 Price optimization consider only small
problems and avoids competitive issues
 POS leads to quality performance
which enhancer productivity of firm
 It becomes quite difficult to adapt in
new changing circumstances of markets
 Market transparency is achieved
through this particular methodology
 CSS may find it complex while using it
(Ameen and et.al., 2018)
 CSS can save time by attaining
economic scale of operation.
 Another challenge that can face by
Connect Catering service is security
Job Costing System (JCS)
It is considered with aggregation of cost related to particular service or job. Organization
widely use it to get details of information regarding all expenses under particular head so that
price can be estimated accurately (Kesumawati and et.al., 2019). CCS will be able to obtain data
of expenditure occurred in applying direct & indirect material and overhead of company's
operation. All scale of firm utilizes to attain various merits that make procedure of functioning
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