Unit 5 – Management Accounting

Management
accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explanation of management accounting along with essential requirements of its systems...1
P2 Description of different methods which are used to report information of management
accounting....................................................................................................................................2
M1 Evaluation of benefits of all the systems which are used for in organisations.....................3
D1 Integration of management accounting reports and systems within organisational context
in critical manner.........................................................................................................................4
TASK 2............................................................................................................................................4
P3 Calculation of costs with the help of different costing techniques such as absorption and
marginal costing...........................................................................................................................4
M2 Application of range of management accounting techniques to generate financial reporting
documents..................................................................................................................................10
D2 Interpretation of data............................................................................................................11
TASK 3..........................................................................................................................................11
P4 Explanation of budgetary control along with advantages and disadvantages of different
planning tools which are used in it............................................................................................11
M3 Analysis of various planning tool’s use in preparing and forecasting budgets...................12
TASK 4..........................................................................................................................................13
P5 Comparison of different organisations on the basis of use of management accounting
systems to respond financial problems......................................................................................13
M4 Assessment of the way in which companies are using management accounting to respond
financial problems and the way in which it can lead entities o sustainable success..................14
D3 Evaluation of use of planning tools for responding financial problems..............................15
CONCLUSION..............................................................................................................................15

REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting is one of the key factors which are focused by all the entities to
make sure that detailed internal records are formulated which can help to analyse the market
position of business. If the enterprises are not able to generate it then it may leave impact upon
mind set of insider parties such as employees, managers and stakeholders as they assess and
evaluate internal records to analyse actual position of company. It shows that for all the
companies it is very important that they should conduct it every year so that interest of
stakeholders could be improved (Abernethy and Wallis, 2018). Present report is based upon
Creams Ltd which is a medium sized company of UK. Currently it is selling different types of
sweets in the market which includes waffles, ice creams, doughnuts etc. Various topics that are
covered in this assignment are analysis of management accounting, its systems, their essential
requirements, reports to record its information, costing techniques such as marginal and
absorption costing etc. Additionally, planning tools along with their advantages and
disadvantages, comparison of companies on the basis of use of management accounting systems
to respond financial challenges etc. are also covered in this project.
TASK 1
P1 Explanation of management accounting along with essential requirements of its systems
Management accounting is the process of controlling, evaluating and analysing all the
steps which are taken by the managers for betterment of business so that progress of company
could be analysed. In Creams Ltd it is used by managers for the purpose of analysing actual
performance of business. While conducting it different types of systems are used which are
described below:
Price optimisation system: This management accounting system is used by all the
organisations so that they can set appropriate price for all the products and attract large number
of customers. In Creams Ltd it is used to analyse responses of clients on the prices that are set of
ice creams, doughnuts and waffles. It is essentially required for the entity as it helps the
managers to set best suitable price for the items that are sold by it which is beneficial to meet
business goals such as higher revenues and profits (Alawattage and Wickramasinghe, 2018).
Cost accounting system: Under this accounting systems managers keep detailed
information of all the costs that have taken place while operating business. In Creams Ltd it is
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