Management Accounting and Reporting: Types, Systems, and Techniques

UNIT 5 – MANAGEMENT
ACCOUNTING L-4

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
SCENARIO 1..............................................................................................................................................3
P1 Explaining Management accounting and different types of its systems..............................................3
P2 Explaining different types of Management Accounting Reporting (MAR)........................................6
SCENARIO 2..............................................................................................................................................8
P3 Types of management accounting techniques....................................................................................8
P4. Explaining advantages and disadvantages types of planning tools of budgetary control................15
P5 Explaining How management accounting system adopted by organizations to respond financial
problems................................................................................................................................................18
CONCLUSION.........................................................................................................................................20
REFERENCES..........................................................................................................................................21

INTRODUCTION
Management accounting is crucial component which S a systematic process of assessing,
allocating and managing monetary resources of organizations. It comprises various systems,
reports, techniques, etc to make the functioning of firm more effective. The current case is based
on Capital Joinery Ltd. which makes a wide variety of joinery, made-to-measure doors, windows
etc. The present report will give emphasis on management accounting system along with
benefits & applications in context of organization. Different types of management accounting
reports will be explained in present case study. Calculations of costs using appropriate
techniques of concerned analysis with marginal and absorption costing via preparing income
statements will shown in present case study. Case study will include advantages and
disadvantages of planning tools. It will comprise how organization responds to financial
problems for obtaining sustainability
MAIN BODY
SCENARIO 1
P1 Explaining Management accounting and different types of its systems
Management Accounting (MA) is procedure of utilization financial information for
taking strategic decisions in order to work effectively. Capital Joinery Ltd. (CJL) will be
benefited by having different types of Management Accounting System (MAS) in its business
practices (Abdusalomova, 2019). There are different types of MAS which can help CJL to derive
varying advantages for moving towards success.
Job Costing System
It is one of the management accounting system which helps organization to determine
cost of each task or project. Business comprises different functional areas that ahs its different
cost structuring which is responsible for some part of total profitability of organization. In
addition o this Capital Joinery Ltd. Will be benefited by having systematic job costing in its
business practices. These advantages can be understood by following points.

Advantages
 It helps in analyzing performance of each department of company which can be useful in
determining its efficiency. CJL will be able to derive performance of its functional areas
in turn its working as well operational efficiency can be evaluated to bring modification
in prevailing policies.
 Accuracy, flexibility and Scalability in its way of conducting organizational activities can
be attained. Capital Joinery Ltd can identify profitability of each task through these
characteristics in organization.
 Continuous monitory aids firm to make changes in required areas at in systematic
manner. This is the biggest advantage CJL will get through executing job costing system
in firm.
Cost accounting System
This is internally focused process which is developed to determine cost, inventory as well
profitability of organization. Capital Joinery Ltd will be benefited by having this system into
while making wide variety of joinery. With help of this, company can make comparison between
current and previous data for getting deep insights into enterprise’s effectiveness. Cost
accounting system is widely sued by all types of firm regardless of industry variation and scale
difference (Mahmoudian and et.al.,2021). It play crucial role in determining significant
components that are essential for having smooth functioning.
Benefits
 This provides ability to view data in different ways so that all aspects can be covered to
make evaluation. Capital Joinery ltd can use this particulars system to determine cost of
operational practices.
 Determination of prices become possible by having cost accountings system in business
as it provides all details of all related cost so that better profit margin can be decided.

 Reasons for losses can be identified by CJL through executing this management
accounting system. Controlling cost become possible through elimination of unnecessary
components that are result of losses.
Price Optimization system
It ensures firm is setting appropriate price to meet effectively market forces through
maintaining profitability. This is utilized by organization to assess reaction of customers on
varying prices of products in turn assistance can be derived for fixing prices of products (Latan
and et.al., 2018). In competitive scenario it provides various competitive advantages to firm so
adopting it would eb beneficial for Capital Joinery Limited.
Pros
 Better profitability ensures longer scale of organizational practices as economies of scale
can be derived by having good amount of profit margins. CJL will be benefited by this
characteristic of price optimization system.
 Immediate financial benefits can be attained by this management accounting system as it
will provide Capital Joinery Ltd opportunity to concentrate on different details of
company.
 Prompt decision making in respect to this filed become becomes by having price
optimization in organization.
Inventory Management System
It ensures entire supply chain including inbound, operations, outbound are maintained
effectively. This helps in gaining efficient management process of inventory so that better
productivity can be obtained. Capital Joinery Ltd will get assistance in managing its stock so that
burden of over or under consumption of resources can be avoided. The firm will receive
following benefits through this particular system:

 Reduction of expenditure becomes possible by making production as well other related
processes more effective and efficient.
 Significant relationship with suppliers and vendor can be built by Capital Joiner Ltd. In
addition to this, more insights into essential information can be obtained by firm through
this management accounting system. It is most important systems of MAS. Which need
to be y more consideration for having efficient functioning.
P2 Explaining different types of Management Accounting Reporting (MAR)
MAR helps organization to give focus on each aspects of operational activity so that
company can derive relevant information for attaining sustainability. Capital Joiner Ltd. Can
obtain required information which can enhances its productivity and profitability. MAR can be
prepared in following different forms:
Account Receivable Aging Report
Large or small organization makes sales in both cash and credit form to increase its
revenue. It becomes essential for concerned firm to give focus on certain factors that can increase
its liquidity. Capital Joiner Ltd would be benefited by having this specific report in its
management in order to get details regarding actual cash received and account receivables. This
particular report helps in identifying client’s remaining balances that need to be received with
limited time period. It also aids in finding efficiency of payment collection from debtors. The
steps can be taken by CJL to avoid bad debt and written off situations are prompt payment
making policies, immediate cash paying related offers like discount, etc. Capital Joiner Ltd can
improve its current credit policy to have smooth functioning.
Performance Report
At the end of the term every scale of firm pay attention on reviewing performance of
company as a whole. In addition to this, each employees potential can be identified by
formulating this specific report in firm. Capital Joiner Ltd can use this to encourage its
employees for sharing their full potential in order to achieve company’s growth. Variations can
also be found through comparing two periods performance report which will provide assistance
to CJL to get insights regarding low efficient areas that are the results of adverse outcome. In
addition to this, performance report will enable Capital Joiner Ltd to assess its current position