Management Accounting and Financial Reports in BAE Systems Plc

Unit 5 - Management
Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Management accounting together with its essential....................................................................1
Management Accounting reports................................................................................................2
Benefits that are related to management accounting system......................................................4
Evaluation for integration of reports with management accounting system...............................5
TASK 2............................................................................................................................................5
Cost analysis trough formulation of income statement .............................................................5
Application of range of management accounting techniques for prepare financial reports.......7
Data Interpretation......................................................................................................................7
TASK 3 ...........................................................................................................................................7
Planning tools..............................................................................................................................7
Application of planning tools so to prepare with forecast budget............................................10
TASK 4..........................................................................................................................................10
Use of management accounting system for responding few of financial problems ................10
Analysing the way in which management accounting lead companies to respond financial
problems....................................................................................................................................13
Application of planning tools to respond financial issue along with attainment of sustainable
success.......................................................................................................................................13
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15
APPENDICES...............................................................................................................................17

INTRODUCTION
Management accounting which is also far-famed as managerial accounting is a process
which deals with analysis and timely recording of financial data and also includes proper
presentation of this information (Management Accounting – Meaning, 2019). It is used by
internal management and other stakeholders for effective planing and decision making. This
assignment is based on BAE Systems Plc which is a manufacturing company having its
specialisation in manufacturing products such as defence electronics, munitions, military
aerospace and naval vessels. This assignment focusses on critical role of management accounting
in solving the financial problems of an organisation (Su and Baird, 2018). For that purpose it
includes types of management accounting and different reporting methods. Techniques for
calculation of cost, advantage and disadvantage of various planning tool in context to budgetary
control along with role that management accounting plays in responding to different problems.
TASK 1
Management accounting together with its essential
Management accounting system is process which involves timely presentation and
recording of financial addition to statistical information that business mangers and top authorities
utilises for proper planing and budgeting, decision making and also includes measurement of
organisation performance. The primary purpose of management of accounting is keeping a
control and check on cost and providing true image of profitability level of organisation.
Different management accounting system
Inventory management accounting - This include overall management of inventory or
stock, this process started from ordering of raw of material and further includes storing of
components and converting it into finished products. Decorous warehousing , processing
together with storage of each material ( raw as well as finished) is the responsibility of inventory
management system. They keep a proportionality among demand and supply related to raw
material and helpful in minimizing the wastage of resources. For preparation of best quality
defence products, BAE Systems Plc is uses the type of system that is inventory management to
keep a check on flow on inventory and ensure timely supply of raw material with minimum
possible cost. BEA Systems is dealing in products like munitions, defence electronics as well as
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land electronics. Essential requirement of the system is to properly track the inventory that enters
or leaves the entity.
Cost accounting system – It is framework or process exploited for estimation
commodity cost which is required by organisations to properly analysis their profitability. It
provides approximate value of closing material or stock, work in progress together with finished
good inventory which is essential and very help in preparation of financial statement (Oldman
and Tomkins, 2018). BAE Systems Plc administrators uses cost accounting system to decided
different range and types of products in which it should deals. This system of management
accounting is essentially required as it provide proper estimation and comparison of cost of
different product thus helpful in selecting product which is most profitable.
Job costing systems - It is a system associated with accounting used for accumulating
and calculating manufacturing cost of an individual unit separately (Akkermans and Van, Steiss,
2019). the system mainly used when an organisation deals in various type of products different
from each other and has a significant effect on cost. This method is essentially required by
manger to keeping a proper record of amount of expanses made on a particular product through
preparing a separate job cost record for every product or item. BAE Systems is also making use
of this accounting as it provide many variety of defence electronics, land welfare systems and
munitions to its customers.
Price – Optimising Systems – This method is used for determining the most preferred
price of a product which will provide best balance between amount of sales and profit. If price
set is too high for a customer it will reduce the quantum of sales and if price set is very low it
will reduce the amount of profit. Thus price of product must be decided or set after proper
analysis of customers respond for different prices of a product. BAE Systems is providing its
products at distinct rates to attract more customers and at the same time to gain sufficient amount
of profit.
Management Accounting reports
Management accounting reports includes all relevant written document maintain and
prepared by an organisation to keep a track of its day to day transaction in form of financial
statement or budget report ( Dewi and et. al., 2018). BAE Systems Plc is also preparing timely
reports and other statements to know its cost effectiveness and actual level of profitability. Few
of the important management accounting reports includes the followings:
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