Types of Management Accounting Systems and Reports

UNIT 5 – MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explaining different types of management accounting system.............................................3
P2 Explaining different methods used for management accounting reports...............................5
Task 2...............................................................................................................................................7
P3. ...............................................................................................................................................7
TASK 3..........................................................................................................................................11
P4 Describing advantages and disadvantages of different types of planning tools for budgetary
control ......................................................................................................................................11
P5. Analysing use of management accounting system for solving financial problems............13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting (MA) refers to the stipulation of financial data and proposal to
the company for achieving higher profitability and development. It is significant in the current
scenarios as it helps management accountant to take strategic decisions for efficient functioning
of the organization. The present report focuses on MA concepts and techniques for decision-
making. Additionally, the report will elaborate different types of management accounting
systems along with its advantages and disadvantages. The current report also gives detail of
different types of reports of MA. Additionally, it represents income statement using absorption
and marginal costing. The report also show segregation between fixed and variable cost along
with computation of margin of safety & break even point. The particular report also describes
different types of planning tool for budgetary control. Further, this study represents how
management accounting is utilized for solving financial problems.
MAIN BODY
TASK 1
P1 Explaining different types of management accounting system
Management accounting system use several methods to gather financial information for
the preparation reports for company (Management accounting and its importance. 2019). In
addition to this, these reports aid management to take strategic decision for smooth functioning
of the business. With respect to this, there are basically four types of management accounting
system which area as follows:
Job costing system
It is the system that collects the information regarding the cost associated with particular
production and service. Additionally, management accountant can aid Connect Catering Services
(CCS) to identify its organization's profits and loss (Agustina, 2020). With respect to this, the
system may be beneficial for CCS to evaluate costing related to particular job in present and also
for the future. In addition to this, it provides assistance in determining variance between the
actual and estimated cost of particular job. There are various merits and demerits that CCS will
get through this are as follows
Advantages Disadvantages

 Profitability for each job can
particularly identify
 No standardization of job so there is
requirement of close supervision.
 Aid business to calculate standard cost
of each job
 For maintaining detailed information
clarical work is needed
 Evaluation of unprofitable jobs  It is too expensive
 Computation of variance (Hutaibat, and
Alhatabat, 2020).
 Comparison of job becomes
meaningless in case of inflation
 Efficiency of variance  No corrective action in case of
estimated profits
 Helps in providing quotation for a
production
 Overheads can not be control
Inventory Management system
It is the combination of technology and procedures that monitor stocks of the products. In
addition to this, it will enable Connect Catering Services to maintain centralized records of assets
of the organization so that better productivity can be achieved.
Advantages Disadvantages
 It provides improved cash flow  It is the complex process
 Better productivity can be achieved  It is high-priced
 Reduction in storage cost  Controlled removal of organization risk
 Enhanced transparency  It does not identify the production
problems of the company
 Improved relationship with
stakeholders
 Declination in labour cost