Management Accounting and Different Types of Management Accounting System

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explanation of managerial accounting and requirements of different types of management
accounting system. ......................................................................................................................1
P2 Different methods used by organization for prepare management accounting reports..........3
M1 Benefits of management accounting system.........................................................................4
Essential requirements of managerial accounting system...........................................................4
D1 Integration of management accounting reports with its systems...........................................5
TASK 2............................................................................................................................................5
P3 Calculation of absorption and marginal costing.....................................................................5
M2 Accurate applies range of management accounting techniques............................................6
D1 Integration of management accounting reports with its systems...........................................7
TASK 3............................................................................................................................................7
P4 Explanation of advantage and disadvantages of planning tools.............................................7
M3 Importance of different planning tools..................................................................................9
TASK 4............................................................................................................................................9
P5 Use of management accounting system for responding financial problems..........................9
M4 Analysis of how management accounting tools useful in lead organization success.........11
D3 Evaluation of how planning tools respond for solving issue of financial problem..............11
CONCLUSION..............................................................................................................................11
REFRENCES.................................................................................................................................12

INTRODUCTION
Management Accounting this term is formulated by two words management is the procedure
of analysing recording controlling organising and managing each and every business department
strategies on the other side accounting is the process of recording transaction by using
Management Accounting organisations able to represent their accounting information in a
systematic way which help in take effective business decisions as well as representing internal
information to their stakeholders in order to understand the reliability of Management
Accounting, capital joinery limited has been taken this is the small organisation which Run their
business in manufacturing industry this report has been define requirement of various type of
managing accounting system as well as use of various reports which help in formulation of
budget by using cost and Management Accounting technique organisation able to evaluate their
prices of cost on the basis of recognising planning tool business organisation formed policies and
take decision this report also define those tools which useful in overcoming financial problems.
TASK 1
P1 Explanation of managerial accounting and requirements of different types of management
accounting system.
Management accounting: This is the tool of accounting which is help in attaining business
goals by using and applying various tools. Management accounting is systematic procedure
which help in formulating, recording , and presenting transaction in effective way which helpful
in attain business goals. The main purpose of management accounting in take effective business
decision which useful in attaining long term business goals. There are two types of accounting
system , financial as well as management both are different due to their accounting transaction
procedure (Shields, and Shelleman, 2016).
Difference between management and financial accounting
Financial accounting Management accounting
This accounting branch useful in providing
essential information regarding external
users.
Managers use this system for providing
information to internal users.
It record only transactions which is related
with finance cash.
Management accounting is useful in recording
every transaction.
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It is essential for formulate financial
statement which useful in representing
accounting information
It is not required for formulate management
accounting statement.
Different types of management accounting system: Business organization apply various
types of tools which help in running business activities as well as recording transaction and
formulate effective business strategies by using theses systems.
Cost accounting system: This system is help in recording all the essential information
regarding cost. Each and every cost is directly impact on profitability rate of organization. With
the use of cost accounting system management department able to identified cost required for
running business organization. As well as cost required for purchasing of raw material.
Management department use various cost technique and strategies which is useful in identifying
and recognizing cost and profit value which is aeries by selling of products. In the context of
above Capital joinery limited, cost accounting system is used with an aim of managing different
kinds of costs like raw material cost, processing cost and many other. Through, above accounting
system their managers become able to know which activity is leading to higher expenditure
compared to budgeted value. This accounting system is essential for above company due to
following reasons:
Essential requirements: In Capital joinery limited, the finance manager uses such
accounting system at the end of each month or quarter. The rationale behind this is that finance
managers of company need to know cost of each item which is produced like joinery for doors,
windows etc. By help of above accounting system, a detailed overview of cost is gathered by
finance managers. And on the grounds of cost of product they assess efficiency of their
operations and activities. On the basis of use internal source manager collect information which
beneficial for internal users also.
Price optimization system: This is also useful and effective business system. Price are
most essential elements for every organizing. Profit is arises by applying effective business
strategies and using price strategy. There are various strategies which used by organization for
setting their rice volume. By using effective pricing policies Capital joinery Limited able to
attain their profit goals. Under this accounting system, prices are set in accordance of customers'
feedback and demand of item in the market. In the aspect of Capital joinery limited, this
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accounting system is crucial to keep prices of different products at a level on which both
stakeholders (company and customers) can satisfied. It is essential for above company because
of following reasons:
Essential requirements : In above company, there are a large product portfolio of joineries of
door and windows, thus it is essential for sales manager to fluctuate prices of items as per the
need of customers and demand. The sales manager of above company utilizes key information
from internal sources because help of such sources they can assess about company's revenues
and can assess need of prices fluctuation. By using information from external source manager of
Capital Joinery able to formulate their pricing policies which also useful for external users as
well as this help in attain business gain.
Inventory management system: This system is related with managing inventory.
Business organizations able to attain their success by maintain and managing their stock . It is
really essential to record each limit of storage. By using management inventory technique, JIT,
ABC analyse and using LIFO as well as FIFO method organization able to identifying maximum
as well as minimum of their business transaction. Management department of capital joinery
Limited apply this methodology through which they manage their inventory. This accounting
system is essential for above company as:
Essential requirements :The production manager of Capital joinery limited needs such
accounting system to take corrective actions about production of new joineries. It becomes
possible because under stock management system a detailed report is prepared which contains
information about how much quantity of raw material, finished goods and prepared goods are
available in warehouse. This information is utilized by production department to analyse need of
purchasing raw material or producing new joineries etc. Information has been collected for using
inventory system from external sources they on the basis of using vouchers, credit notes, and
debit note organization can find out the information regarding level of stock required by
organization.
Job costing system: This system is user by organization to find out time required for
each and every job as well as they find out cost required for fulfilling requirement of every job.
Organization on the basis of using job costing system able to fulfil requirement of every business
transaction. Capital joinery Limited uses this methodology which useful in tracking each
business transaction. This accounting system is used to assess cost of each item in a separate
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manner because under it cost of each operation is measured with rationale of job cost. It is
essential for above company due to following reasons:
Essential requirements :In the context of above company, their finance department relay on
such accounting system with an aim of analysing cost of each item or joinery. They do so in
accordance of prepared report under this accounting system in which each products' cost is
categorized in separate elements. They collect theses sources from using internal sources of
organization. On the basis of that these information are used to measure as quantitative method.
P2 Different methods used by organization for prepare management accounting reports
Reports are essential through which every information is recorded in particular file
document. These are help in formatting and providing path for creation f budget. On the basis of
report organization able to proved essential business information. Capital joinery limited
formulate following reports which help in attaining their business goals (Maas, Schaltegger, and
Crutzen, 2016).
Performance report: This report has been formulate for identifying performance of each
department generally small business organisation don't have large period is there this is activities
world limited in some departments with the user performance report organisation able to
understand that you off and identify performance of each department which include marketing
financing production as well as capabilities and is case of human exorcist they hired for their
functions this is the submission of all the report management department of sunshine used report
for 4 minutes effectiveness titans on the basis of identify icing performance
Cost report: This report has been used to define it in every element coach price on the
basis of foreman eating this report management apartment able to recognise for particular
business activities rising in various transactions call report cause report cost report. Coach report
useful in identifying kitchen every transition cost to with organisation bell to formally defective
this is policies for controlling and managing court manager road Capital joinery limited use this
policy through with take enable to control there cost.
Budget report: This report is for imitating for providing guidelines regarding for me
letting of budget it is us conclusion of all the report with his prepared by organisations by using
management accounting technique but it report shows future expenses as well as profit and
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