Management Accounting: Systems, Techniques, and Integration

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
Management accounting is the process that evaluates financial data to get information
that will help the top management to take short term as well as long term decision-making and
goal setting of organization. The MA systems allows to monitor and control the different
business processes. Present report will provide about different systems of management
accounting, reporting methods and cost accounting techniques used for computing cost.
REPORT
Management Accounting
Management accounting provides useful and only relevant information to the
management, so they can make fast and more efficient decision. It also considers the time value
of money so the future of any project can be estimated. It will help to make optimum utilization
of resources analysing cost per unit and reducing the wastage by proper forecasting.
Management can make better control in the organization because all the activities are pre
defined.
Management Accounting Principles
Accounting for inflation and forward-looking approach - In management accounting, when a
new project is prepared it always considers time value of money with inflation rate. It means the
projects are made with due consideration to inflation rate so chance for failure became less.
Management accounting uses the financial to find out information that helps the future goals and
preparation.
Absorption overhead cost- Overhead cost are absorbed on any predetermined basis. So the rate
for the absorption is fixed and the overhead cost can be allocated accordingly. Overhead cost are
indirect raw material, indirect labour, indirect expenses (Kudryashova and et.al., 2020). This rate
is calculated to find out the over and under absorbed condition of the production.
Utilization of resources- Some resources are limited and some are expensive in nature,
management accounting helps in the better allocation of resources with the help of cost
accounting techniques so the better use can be assured.
Controllable and uncontrollable cost- There are two types of cost one is controllable and
uncontrollable, the classification are to be made by this the controllable cost can be find out and
reduce them because these are the controllable cost that should be controlled.
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Role of management accounting and management accounting systems
Inventory Management System
IMS is important MA system that enables the company to keep record for every
movement of inventory within and outside the organisation that has not been sold. It allows the
management to keep complete control over stocks from raw material, company assets and
finished products. IMS stores information for future period to make forecasts for the production
activities to place the purchase order.
Requirements
 IMS is required for tracking all the stock movement to and from production house to
warehouse and sales.
 The reports generated by IMS allows management to make budgets for stock purchase
orders.
 It reduces the excessive storage costs for inventory and also keeps safety stock.
Cost Accounting System
It refers to the tool that helps to determine actual cost associated with manufacturing of
products or providing services. The actual costs are computed after covering all the variable and
fixed expenses within supply chain (Abdusalomova, 2020). The CAS is used for internal
management of the company to calculate the prices of products or services. It enables the
company to measure the profit margins that company will enable the company to grow.
Requirements
 It is required by the company to calculate actual cost of the products and services.
 It enables the company to compute both variable and fixed expenses for allocation of
resources.
 Cost accounting helps the company to determine adequate profit margin on products.
Job Costing System
JCS is referred as process that accumulates information about costs and expenses that are
associated wit particular products or services. The information is required by company to derive
information of all costs involved in producing a particular job under contracts in which costs or
products are reimbursed back. JCS has been used by organisation where production of a item
involves more than one step.
Required
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