Management Accounting Systems and Benefits

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
REPORT..........................................................................................................................................1
Management accounting systems and its benefits ......................................................................1
Integration of management accounting systems and reports in organisational process..............5
Income Statements of two companies under the marginal and abortion Costing .......................5
Planning Tools used in management accounting.........................................................................6
Different management accounting tools used for solving the financial problems. .....................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10
APPENDICES...............................................................................................................................11
Appendix A................................................................................................................................11
Appendix B................................................................................................................................12

INTRODUCTION
Management accounting is a technique used by the organisation for effective
management of the organisational activities. Management accounting can be defined as the
process involving the collection, identification and interpreting the financial information for
taking decisions that will help organisation to grow and achieve success. Present report is based
on Walker Furniture which is manufacturing sector. This based on the report over management
accounting systems and the benefits, management accounting reporting and the integration of
these systems and reports within the organisational process (Chiarini and Vagnoni, 2015). It will
also involve management accounting systems and the planning tools used in responding to
financial problems. The report will also involve comparison between organisations adopting the
management accounting systems for resolving the financial issues. The overall report will
enhance the understanding of management accounting and various concepts for the benefit of
organisation.
REPORT
Management accounting
MA is defined as an accounting process including the various accounts in the
organisation that helps it to ascertain the various data which is used by them for improving the
performance and efficiency of company. This includes all the activities that are associated with
formulating the reports and sheets that provide the managers with more accurate and reliable
informations to take decisions. Objective of MA is of dealing effectively with the accounting
information in statistical and economic analysis for making the most efficient utilisation of the
organisational resources (Ittner, 2014). MA is used mainly by the internal management for
performance improvements unlike the financial accounting that prepares report mainly for the
external users for decision-making. This essential for the business enterprise to utilise all the
information for effective utilisation of the resources.
Management accounting is defined as process of analysing cost and operations of
business for preparing the internal financial reports, records and the accounts that help the
manager in process of decision making for achieving the business goals.
Roles of management accounting
Functions of management accounting includes
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Margin analysis – To determine amount of profits and the cash flows that a business will be
generating from the specific products, product line, stores or customers.
Constraints analysis – This refers to identifying the bottlenecks in an enterprise and their impact
over ability of business in earning its profits and revenues.
Break even analysis – This involves calculating the break even from contribution and unit
volume mix. This helps in determines price levels for its products or services.
Inventory valuation – It is concerned with measuring the direct cost, cost of goods sold, and the
inventory items.
Forecasting – It is one of the major function of MA in which forecasts about the future income
and expenditures of company. This is done after analysing the previous trends and market
conditions.
Capital budgeting – It refers to identifying requirement of fixed assets and costs involved. This
involves allocation of costs to best option available.
Management accounting systems and its benefits
Management accounting systems
This refers to the different systems that are used in management accounting for effective
structuring and managing the business operations. Walker furniture is using these management
accounting techniques for having smooth and organised flow of manufacturing and other
business operations. There are many management accounting systems which are stated below
Cost Accounting System
It is the main accounting systems that involves the process and methods of recording the
costing informations and transactions. Costing systems helps management in having proper
record of all the cost informations that are incurred by organisations. This method records all the
cost associated with the product both marginal and fixed cost in the manufacturing of furnitures
by Walker furnitures. It provides the concepts and techniques that are utilised in the production
process that help them in reducing their cost of production and increasing the productivity and
efficiency with the available resources (Armitage, Webb and Glynn, 2016). This is an essential
systems that is used for increasing the profitability of business controlling its costs.
Benefits
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