Management Accounting and Reporting: Essentials, Techniques, and Tools

Management
Accounting

Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
P1 Management accounting & management accounting system essentials...........................3
P2 Types of Management accounting reporting.....................................................................4
Task 2...............................................................................................................................................5
P3 Cost calculation using different costing techniques..........................................................5
Task 3...............................................................................................................................................7
P4 Advantages & disadvantages types of planning tools used in budgetary control.............7
Task 4...............................................................................................................................................9
P5 Comparison between organisations while responding to financial problems...................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Introduction
Management accounting is a unique tool which has been using by management of a
company to assist in decision making which is made by top level management. It is considered
as provision for related financial & non-financial decision making data to related managerial
personnel. It is somehow different from financial management as management accounting is
more concerned about decision making where as financial management is related to financial
position of an organisation. Management accounting is referred to identification, accumulation,
measurement, preparation, analysis and interpretation as well as communication of certain
information which assists managers for fulfilment of organisational objectives. In this respect,
management accounting techniques are being discussed in reference to Prime Furniture which is
one of most developing company which is based in East London, UK.
Task 1
P1 Management accounting & management accounting system essentials
 Cost-accounting system: It is a concept which suggests assessment of cost related elements
in order to aid in decision making for long term growth and sustainability of an organisation
(Alawattage and Wickramasinghe, 2018). It is considered as one of effective technique
which helps in identification of cost structure of an entity so that cost could be minimised
and profits could be maximised in such reference. Cost plays significant role in organisation
development as it is important to reduce higher incurring cost so that it will be easier to
attain ultimate profitability by an organisation.
Benefits: It helps in disclosing organisational profitable and non-profitable activities
which is being involved in business operations. It also guides in future policy strategies
so that cost effectiveness could be given adequate emphasis.
 Inventory management system: It refers to a process in which products are tracked through
entire supply chain which starts from purchasing of raw items, production goods and
ultimate sale to customers (Álvarez and et. al., 2021). This approach is used to manage
inventory system in an organisation with help of effective approaches. It is important for
business organisation to track & control flow of goods which are being part of its supply
chain in order to promote healthy supply chain system.

Benefits: It is effective approach towards cost-reduction and monitoring of stock balance
so that excess stock and stock out situations could be regulated.
 Job costing system: It is a technique which is used in accumulation of cost related
information which is associated with specified service job or production centre. It is referred
to basic cost value which is applied to individual projects or jobs in an organisation.
Through this method, it becomes easier to identify cost structure of each activity in an
organisation so that efficiency could be achieved for long lasting period.
Benefits: This approach is helpful in identification of accurate profits which is attained
from each operation in an organisation. Also it monitors cost of items through production
procedures. This technique also identifies performance of employees in regard to each
business operations so that loopholes could be identified and effective techniques could
be utilized to eliminate such loophole (Amirshenava and Osanloo, 2018).
 Price optimization system: It is most effective technique which is used in order to identify
reason of fluctuations in prices due to changing demands of customers. It is used to
influence pricing for different customer units in order to identify the way customers will
respond to changing price levels in a market (Coyte, 2019). It is very beneficial technique
for an organisation in order to attain profitability and productivity in an organisation. There
are also various benefits of price optimisation system which can be analysed as below.
Benefits: It benefits an organisation to achieve ultimate financial advantage through price
optimisation in reference to its products and service so that maximum profits could be
attained for long lasting period.
P2 Types of Management accounting reporting
 Budget Report: It describes comparison of actual results of business operations to
forecasted data in order to identify key areas of improvement so that corrective actions
could be taken for further modification in such areas. Budget is basically formulated in
order to regulate cost structure of an organisation of that maximum profitability can be
achieved (Duggan, 2018). It is one of most used technique in order to control financial
results of an organisation based operations. There are several benefits of budgeting such
as it helps in reviewing future based profitability, planning for such profitability and
performance evaluation so that efficiency could be achieved for ultimate success of an