Unit 5 - Management Accounting

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UNIT 5 MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................4LO 1.................................................................................................................................................5P1. Explanation on management accounting and its essential requirement for different typesof management accounting system.........................................................................................5P2. Explaining different methods of management accounting reporting...............................7M1. Evaluating benefits of management accounting systems and its application within anorganisational context.............................................................................................................8D1. Critically evaluating how management accounting system and management accountingreporting is integrated within organisational process.............................................................9LO 2...............................................................................................................................................10P3. Calculating cost by using appropriate techniques of cost analysis for preparing an Income..............................................................................................................................................10Statement using Marginal and absorption costs...................................................................10M2. Applying a range of management accounting techniques and producing appropriatefinancial................................................................................................................................13reporting documents.............................................................................................................13D2. Producing financial reports that accurately apply and interpret data for a range of business..............................................................................................................................................13activities................................................................................................................................13LO 3...............................................................................................................................................14P4. Advantages & disadvantages of different types of planning tools used for budgetarycontrol...................................................................................................................................14M3. Different planning tools and their implications for preparing and forecasting budgets.18D3. Evaluating how planning tool for accounting respond to solve financial problems to lead..............................................................................................................................................18organisational sustainable success........................................................................................18LO 4...............................................................................................................................................19P5. Comparing how organisations are adopting management accounting systems forresponding financial problems.............................................................................................19
M4. Analysing how management accounting helps in responding to financial problemsleading organisation to sustainable success..........................................................................21REFERENCES..............................................................................................................................24
INTRODUCTIONManagement accounting is the process which used by managers in order to find theprovision which relates to accounting information so that effective decision will get develop forbetter organisational operations. This is an accounting process which also include non-financialinformation which helps in identifying the key performance indicators for various parts ofbusinesses. For this report selected medium size financial consultancy organisation is TheBerkeley Partnership which deals in providing the best commercial services. In this report,explanation will be provided on managerial accounting and its essential requirement withdifferent methods of management accounting reporting. Further, calculation will be provided byusing appropriate cost analysis technique. Moreover, advantages and disadvantages of differenttypes of planning tools which used in budgetary control will also be discussed in this report withthe ways by which entity will use management accounting in for solving financial problems.LO 1P1. Explanation on management accounting and its essential requirement for different types ofmanagement accounting systemManagement accounting is the process of analysing costs which relates to businesses andoperations in order to prepare internal financial report, records and account so that managers ofthe organisation will able to develop decision for achieving business objectives and goals. Inother words it is the process of analysing data which relates to financial and costing so that it canbe translated into useful information (Kaplan and Atkinson, 2015). Generally this is the processwhich look into the events and transaction which happens in and around the business. These arethe type of accounting records which are often used for internal purpose and are confidential too.Calculation of such accounting will only be based on the managerial need only. Therefore, it canbe said that management accounting considered as profession which plays role in decisionmaking process of the management, devise proper planning and performance managementsystem and will also provide expertise financial reporting and control in order to developeffective organisation strategy. It is the process which provides effective way for communicatingthe plans of management which is through upward, downward and outward process. However,
this is the process of identifying reliability of the plans which has been set up by the managementof organisation.Distinction between management and financial accounting:Financial accountingManagement accountingIt is an accounting method which mainlyconducted for providing information to usersof the organisation.It is an accounting method which providesinformation to people and management withinan organisation (Otley, 2016).There are specific standards and formateswhich entity needs to follow in order toprepare its books of accounts.It is not specific. It does not require by law.Its essential requirement of different management accounting system are as follows-Inventory management system:This is the discipline primarily process which helps in specifying the placement ofinventory of goods in the organisation. It is a method of controlling and overseeing the stockwhich used in the production department of the entity. Thus, through this managementaccounting method, managers of the organisation will able to understand present inventory leveland requirement of minimise and maximise the situation of the stock. Through this accountingsystem, entity will able to improve its bottom line which will enhance accuracy of the inventoryfor better production activity.It is a management system which helps in tracking the goodsthrough entire supply chain or about the portion of business operations. This is the process whichmainly covers everything which is from production to retail, warehousing to shipping anythingwhich relates to business operation.Job costing system:It is the type of system which allocates and manufacture cost for an individual item orproducts of the organisational batches (Maas, Schaltegger and Crutzen, 2016). This is themanagement accounting method which involve the process of analysing and practising datawhich relates to cost of the particular products and services. Managers needs information relatedto production job for determining the accuracy and capability of the entity in order to generateefficient income.This is the accounting system which used by organisation in order accumulate
information which associate with the cost about specific production or regarding the service job.Mainly such information gets used by organisation in order to provide information to customer towhom entity is under the agreement of cost.Price optimization systems:This is the process which involve mathematical analysis in determining the reaction ofconsumers regarding the prices of goods and services which offered to consumers throughdifferent types of channels. It also helps in determining the price which will be best of the entityfor earning its growth and maximise the operating profit.This is the process by which management analyse internal areas which needs to improvefor earning better profitability. With its analysis managers of organisation creates budget so thatproper control will get develop on expenses of the entity. By analysing break-even-point,managers will able to maintain profitability of the businesses (Cooper, Ezzamel and Qu, 2017).This process used by organisation in order to analyse the willingness of customer in order to payfor goods and services. It is the type of mathematical program which mainly helps in calculatingthe demand which varies at different level of price.Thus, these are the essential requirement of management accounting by which managersof the Berkeley Partnership will able to develop effective strategies which will help in achievingorganisational objectives and to in meeting future goals with appropriate and sound businessoperations.Through this costing techniques entity and users of organisation gets the informationwhich is relevant, reliable and also accurate by which they may able to develop economicdecision regarding investment in the capital of company.P2. Explaining different methods of management accounting reportingManagement accounting generally focuses on generating internal information. This is anaccounting method which applied in the process of controlling, planning and in decision-making.This mainly depend on the financial statements which generally consist of balance sheet, incomestatements and cash flow statement. However, management accounting also applies in otherforms of accounting reports which are as follows-Cost reports-In this report of accounting management accounting helps in calculating costs which ofthe items which relates to manufacturing (Accounting reports,2018). This process generallydone by analysing raw product overhead, costs, labour and any other costs which take into
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