Unit 5 – Management Accounting

Management
Accounting
1

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1 Definition of management accounting and interpretation of their relevant system...............3
P2 Reporting system of managerial accounting:.........................................................................4
M1 Evolution of advantages of managerial accounting system..................................................5
D1 Integration of accouting systems of management and their report.......................................6
TASK2.............................................................................................................................................6
P3Statment of income by managerial accounting techniques.....................................................6
M2 Uses of management accosting reports for financing report:..............................................11
D2 Interpretation of financial activites through report..............................................................11
Task 3.............................................................................................................................................11
P4 Description of various planning control tools....................................................................11
2

M3 Uses of budgetary planning tools for forecasting business activities.................................13
TASK 4..........................................................................................................................................14
P5 Needs of managerial accounting tools for financial problem...............................................14
M4 Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success:.........................................................................................16
D3 Evaluating manner in planning tools for accounting respond to solve financial
problems/issues to lead entity to sustainable successes:............................................................16
CONCLUSION..............................................................................................................................17
REFRENCES.................................................................................................................................18
INTRODUCTION
The term accounting of management is provision of accounting data and suggestion or advice for
enterprises to use it for business enterprises and future development of the business. In other
words, it is a process of systematically use financial information collects from analysing
(Cooper, Ezzamel and Qu, 2017), recording, accounting information. In order to understand this
concept Creams limited has been selected. This organization runs their business activites from
United Kingdom. It is medium size enterprises which provides ice cream, doughnuts, waffles and
other foods and drinks product at small level of market environment of UK. In this report
meaning of the term management accounting has been defined and various system implement by
mangers for taking essential decision clearly mention. This report also included the uses of
various managerial accounting technique for analysis causes of financial problem and solving
issues related to these problems. Business organization use management accounting to increase
their rate of profitability and efficiency this report describes it in a detailed manner.
TASK1
P1 Definition of management accounting and interpretation of their relevant system
Management accounting technique used to formulate policies and help in decision making
procedure following are the systems have been used in the management accounting policy. To
provides benefits to the Creams limited:
Job Costing system: This system has been developed for identifying cost of each product
manufacturing in organization. It will help in identifying the whole procedure and expenses
3

incurred in each step of production making. Manager of Creams limited will be used this system
of management accounting in order to analysis their cost value of each procedure (Jamil and
et.al., 2015).
Price Optimisation system: It is the most useful framework for business organizations. By using
price management system, managers can identify which pricing strategies is beneficial for their
organization. It includes various types of pricing strategies; thus system also help in gearing
profits by maximize value of selling price.
Inventory management system: This system has been developed to verify and check stock
storage of the organization. It includes various types of inventory mechanism technique through
which managers can check, evaluate their inventory level and formulated polices to control and
manage their raw material, finished goods inventories. Manager of Cream limited will uses EOQ,
ABC analysis, JIT technique to control their inventory through within they can control extra cost
of managing the stock.
Cost managerial system: Management accounting system includes various techniques to
controlling of cost. Job costing, process, standard and marginal costing is part of this system. All
these systems help in evaluation of cost of organization. Manager of the Creams limited will
used this technique in order identify their cost, it will help in decision making and profit
increasing (Lisi, 2015).
P2 Reporting system of managerial accounting:
Report is formulated to define detailed summery of an event activites. Normally reports are
prepared for writing all the essential steps and advises suggestion and decision taken in meeting.
Management accounting reporting are prepressing for taken as proof of the business activites
following are the types of management accounting reports business organization uses:
Budgeting report: These are the detailed summery of all the activites of business organization.
It is prepared on the basis of data collected from various budgets of the company. Budget report
is providing all the essential information regarding cash flow, sales, expenses production,
marketing etc. With the uses of this budgeting report mangers can identify their future revenues.
Manager of Crèmes limited used to implement this report for verifying their budget and to
analysing their future income of the enterprises.
Account receivable report: It is a framework which is used to analysis the present situation of
business organizations debtor account. Main reason this report is to identify causes of problem
4