Unit 5 Management Accounting

Unit 5 Management Accounting

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUTION..............................................................................................................................1
SCENARIO 1..................................................................................................................................1
Understanding management accounting and its systems.............................................................1
Different methods for management accounting reporting...........................................................3
SCENARIO 2..................................................................................................................................4
Types of management accounting techniques.............................................................................4
Explaining the different planning tools used by the company for budgetary control.................8
Comparing how organisations are adapting the management accounting systems for
responding to the financial problems.........................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUTION
The management accounting (MA) refers to the process through which relevant reports
pertaining to the business operations is being prepared which assists the internal managerial team
for undertaking the business decisions. This information can be helpful in short term as well as
long term. This report is on the Capital Joinery Ltd and provides an information about the MA
and the different types MA systems and reporting which is being used in an organization. Along-
side, the application of MA techniques for carrying out the cost analysis and implication of plan-
ning tools for establishing the budgetary control.It also covers the identifying the tools through
which financial problems business is facing can be determining and a comparative analysis of the
MA systems being utilized by the companies for overcoming its financial issues and attain sus-
tainable success.
SCENARIO 1
Understanding management accounting and its systems
According to the Institute of Management Accountants, which describes the management
accountant as the profession which incorporates the functions like planning, performance
management, offering expertise services and implementing the strategy for the assisting the
management in achieve its goals.
Principles of management accounting
Accuracy: This means that the financial information available should be accurate in order to take
informed and right decision by the CJL.
UpToDate: The data should be updated from time to time for increasing its relevance for
undertaking decisions by the user of these information of CL.
Reliability:Every information should be reliable and this can be proved by the source document
or evidence. This is very vital for CJL for ensuring reliability.
Truth worthy:the data should be obtained from the reliable and trusted sources in order to avoid
any error or inaccurate information which is important for an organization like CJL.
Future planning: The financial information provided is helpful in undertaking various business
decisions which is significant for CJL and also helps in taking decisions for future.
Types of management accounting system
Inventory management system
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This system is being used by the management for the purpose of managing the inventory
of the business. This system helps in keeping track of the movement of the inventory from one
process of production to another. The process continues till the good is delivered to the client on
the specified time and quantity (Atieh and et.al., 2016). This MA system is mostly crucial for
Capital Joinery Ltd which is having an extensive and complex supply chain which makes it
difficult for the company to handle it keep record of it on a manual basis. Thus, this system is
essential in order to efficiently handling the stock level of the products.
Benefits:
 It helps in keeping track of the stocks and helps in reducing the error.
 It additionally assists in determining the reorder point and quantity required to avoid the
situation of over and under stocking.
 This system can be utilized in making estimation about the future demand and trends.
Application:
It is useful for all types of business entities and can be implemented by Capital Joinery
Ltd. for effectively managing its stock.
Cost management system
Under this MA system, the various types of costs are being monitored which can be
defined as the expected cost which will be incurred in order to produce the required quantity of
products (Kostyukova and et.al., 2018). It is useful for the business entity in identifying and
understanding the cost of various product which is important for setting the price of the
product.This is essential for Capital Joinery Ltd because it help in managing the cost in a better
way in order to maximise the profits.
Benefits:
 This approach supports in computing the profit or loss associated with the product and
the productiveness of the production procedures being used.
 It helps in exercising control over the product cost so that wastage and unnecessary ex-
pense can be avoided.
 Also, it provides information about the productive and non-productive activities.
Application:
Application of it will support Capital Joinery Ltd. in determining the cost of each product
which will help in fixing price of it.
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