Unit 5 – Management Accounting

UNIT-5 MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Part 1................................................................................................................................................3
Principles of management accounting.........................................................................................3
Role of management accounting and MA systems......................................................................4
Use of management accounting techniques for business growth................................................5
Evaluation of integration of management accounting within Kanes Food ltd............................6
Benefits of the management accounting functions to the Kanes Food ltd..................................6
Recommendation.........................................................................................................................7
Part 2................................................................................................................................................7
Comparison of different of different planning tools....................................................................7
Advantage and disadvantage of planning tool used in management accounting........................8
Effectiveness of management accounting for solving and preventing financial problems.......10
Different ways by which management accounting responding to financial problem can lead
organization to sustainable success...........................................................................................11
Recommendation.......................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting (MA) is a way through which the company can prepare precise
report and records which provide them expected and budgeted data. This further help the
company in making decision for the sake of the internal and external stakeholders (Pelz, 2019).
So, in this context the report will discuss the different principles and management accounting
systems operate in the Kanes Food Ltd. Kanes Food Ltd. was a British privately held food
manufacture company having 1716 employees in the company. The company offers the food
item for the age type customers such as ready to eat salads, fresh stir fry vegetable, fresh noodles,
Sause, salad dressing etc. The report will also cover the benefits the company are enjoying with
the incorporation of management accounting systems in the organization. The report will also
evaluate the integration of management accounting within the organization along with the
income statement using variable costing. The report will also define the role of management
accounting and MA systems.
MAIN BODY
Part 1
Principles of management accounting
With the help of effective management accounting principles company can easily improve their
overall decision-making process. It helps the Kanes food ltd. in taking the long-term decisions
and also help in analysing their financial statement (Rikhardsson and Yigitbasioglu, 2018). The
principles include:
 Influence: Sound communication is one of the principles of MA which helps the
company in identifying the critical information regarding the business process and it
encourages integrated thought process.
 Relevance: It is significant for the company that they must prepare budgets and reports
on the basis of relevant information and resources. And thus, MA provides best and
materialistic information to company for making decisions. It includes past, present,
future dependent, internal, external, financial and non-financial information (Novas,
Alves and Sousa, 2017).

 Value: MA help the company in linking the business process to its core business model
with the help of which they can adopt new opportunities, concentrate on risk factors and
minimize their expenses. For this the company can involve situational analysis to review
organization decision.
 Credibility: This provides the responsibility and scrutiny of looking out the whole task to
the authorized personnel. Management accounting experts with their knowledge and
commitments help the company in decision-making and growing business to the next
level.
Role of management accounting and MA systems
MA systems plays crucial role for managers of the company in order to achieve the business
goals and objective by making appropriate and best decision. For making any decision the
company always need data and thus MAS helps the Kanes Food ltd. in taking decisions. This
includes:
 Identifying data: It helps the manager of the company in identifying the relevant data
from the financial statement of the company. MAS also crucial for identifying the
information from the external sources such as government policy, rules, tax rate regime
for the purpose of decision making.
 Analysing data: After identifying and collecting data, MAS analyse such data with the
help of tools of management accounting such as ratio analysis, variance analysis, break-
even analysis, cash flow & fund flow analysis, budgets etc.
 Interpretating data: With the help of such analysis the company can easily interpretate
the performance of the company. MAS helps the manager of the company in indicating
that whether the performance of the company are good or not (Novas, Alves and Sousa,
2017).
 Preparing performance report: For identifying the gaps if any arises between the actual
figures and the expected figures, MAS plays significant role by providing performance
report tool.
 Communicating information: After all the analysis and performance report preparation
such information related to the performance of the company and any gaps are get
communicated with the all the staff members of the company in order to improve them.