Unit 5 – Management Accounting

Unit -5 Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Understanding of Management accounting systems...................................................................1
Various methods of management accounting reports.................................................................2
TASK 2............................................................................................................................................4
Range of management accounting techniques............................................................................4
TASK 3............................................................................................................................................9
Use of planning tools in MA.......................................................................................................9
TASK 4..........................................................................................................................................12
Organisation use MA to respond financial problems................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting plays a important role in every business entity today and
therefore decision makers in the business must understand how to develop and use good
management accounting information. Good management accounting consist of responsibility to
arrange a broad area of critical management accounting information (Kim, 2020). This report
based on the Pearl Charted accountants are one of UK's best charted accountancy firms that
provides services to their customers like freelancers, small to medium size business entities.
Along with supports in business growth strategies, accounting tax and many others. The firm
provides service of new client Connect Catering Service which is a family owned and operate
catering service that depend on the Oxfordshire. In this report consist of various types of
management accounting systems and reports to analysis the performance of business. Along with
use different budgets to forecast future situation that helps in decision making and analysis
financial problems that sort out by management accounting techniques.
TASK 1
Understanding of Management accounting systems
Management Accounting: It is defined as technique which is used by the different types
of organization for analysing the cost of business. Along with it helps to determine operational
cost for the preparation of financial statements at the end of financial year. Manager of Connect
catering service use this technique on routine basis and provide guidance to top level executives.
Mainly management accounting use by entity for external analysis and supports its stakeholders
in decision making procedure.
Management accounting system: It is a accumulation of internal system of an entity
that presents actual performance of business entity. These systems guides internal stakeholders to
analysis their profitability and increase performance. Such as Connect Catering service use MA
system for track record of each department and make effective decisions (Mahajan and
Deobagkar, 2020).
Inventory management system: This method mainly related with the observing and
tracking stock information for conducting different operations is known as inventory
management system. Such as, Connect Catering use this system to track manufacturing
procedure and observe that how much raw material used by the company at different steps of
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making Pizzas. Along with it helps to keep detailed information of stock for operational
activities. For this use these types of activity:
 AVCO: This method apply by company when all the stock analysed on average cost basis
and sale out accordingly.
 LIFO: This method directs managers to used those goods firstly that are coming in last
for operational activities.
 FIFO: As per the method organisation can use those goods that are coming first in the
company for manufacturing foods.
Manage of company select FIFO methods to manage stock properly and reduce wastages.
Price optimisation system: It is most important system that apply by the every type of
business entity to set effective price of their products. It helps to attract large number of clients
and generate more profitability. For this purpose, Connect Catering apply this system to
determine the price of each products and set preferable rates for customers. The essential
requirement of system to figure out the right price of each product (Kumalawati and Muhammad,
2020).
Cost accounting system: It is a framework which is concentrated on estimation of cost
of different items produced by the entity. Connect Catering service manager use right cost for
manufacturing food and deduct extra expenditure. As a result it helps to generate profitability in
effective manner. The essential requirement of this system that estimating and analysing future
expenditure to perform in effective manner.
Job costing system: Different types of entities operate various activities to bring out
operations and job costing system record all of them. The management of Connect Catering are
using this system to roll up and provide manufacturing cost to different units that are produced
by it. The essential requirement of the system to discriminate expenditure that based on the
different jobs and performed as per the situations.
Various methods of management accounting reports
Management Accounting Report: It is mechanism that is used in the process of
planning, regulating, decision making, and measuring the performance (Farooq and De Villiers,
2019). Management accounting report uses the budget reports is to analyse the employee
performance and their department performance and cost control. Management accounting mainly
focus on the segments in the business. They provide the managers with the accurate and financial
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