Unit 5 Management Accounting

Note:- 1200 Words

MANAGEMENT
ACCOUNTING

Table of Contents
PART 2............................................................................................................................................3
Planning tool used in management accounting...........................................................................3
Management accounting system adoption..................................................................................4
REFERNCES...................................................................................................................................7

PART 2
Planning tool used in management accounting
Their are varieties of different planning tool which are generally used for the purpose of
budgetary control. Some of the planning tool and pros & cons associated with the same are
presented below:
Pricing strategy: It is the first planning framework which is used by Dell Inc. for the
purpose of budgetary control in organization. Pricing strategy used to consider the variety of
different element which may prove crucial for the company in regards of managing the budget in
Dell Inc. Different element consider are segments, ability to pay, market condition, competitor
action and trade margin (Kusmiati, Ungkari and Basit, 2020). This used to assist manager and
organization in making different decision in regards of managing budgetary control in efficient
way.
Advantage
Pricing strategy in the organization assists the company in building more competitive
budget as compare to the general budget. As pricing strategy incorporate the current budget of
the company with the market condition prevailing in the market. Pricing Strategy also assist the
manager in getting better knowledge about the cost of the company. On the basis of the same
different decision are taken to improve the relevancy and efficiency of the company budget.
Using Pricing strategy as a planning tool assist the management in getting understanding of the
current market situation as pricing strategy in the organization used to consider different internal
and external factor before fixing price of company product.
Disadvantage
Disadvantage linked with usage of Pricing strategy as a planning tool is that it does not
consider the future situation at the time of fixing up the price of different product. This
ultimately used to impact the efficiency of budget control in the organization. At the same time it
has been also analysed that any small mistake at the time of fixing the price under pricing
strategy can create the big issue in regards of construction or controlling the budget of
organization (Beusch, 2020). So over depending upon adopting pricing strategy as a planning
tool may create variety of the issue for the company.
Budgetary

Different type of budget formation techniques are also consider as a planning tool in
budgetary control.
Flexible Budget: Flexible budgetary technique is a technique in which budget which are
prepared used to change with change in volume of different activity produced. This tool assist in
monitoring different changes in budget. They generally used to consider looking at the current
market position which is prevailing and on the basis of the same budget of the company
generally used to adopt the different change on regular basis.
Advantages
Looking at the advantage linked with the Flexible budgeting, it has been identified that
this sort of planning tool used to consume the less amount of time of the organization to build or
construct the budget in the organization. As this sort of budget planning technique in the
organization used to assist the company in understanding the current situation which is
prevailing in the market. Also, this sort of budgeting technique will help the company in
incorporating variety of different task of the company with future issue which may be seen by
the company (Ugalde Vásquez, and Naranjo-Gil, 2020).
Disadvantages
At the same time there are variety of different sort of disadvantage which are also seen by
all the organization as it has been seen that this sort of budget planning or controlling tool is
confusing in nature. As this type of the budget require more planning in sense of track expenses
and adjust any change which has been occurred throughout the period of operation as well. As
number of the changes which generally used to come over the period of time used to make this
budget more confusing to present or read by different interested party in general.
Management accounting system adoption
Management accounting system generally used to help the company in overcoming
variety of the different sort of financial issue of the company for the same reason organization
used to adopt variety of different way to adopt the management accounting system and response
to financial issue.
Management Dell Inc. Lenovo

accounting system
Inventory Management
System
Dell Inc. generally operates in
highly competitive market, hence it
is very important for the
organization to maintain the trust
among the consumer by providing
timely delivery of product to the
consumer. So for doing the same
reason Dell Inc. uses Inventory
management system for planning
different inventories in a way that
organization is able to provide the
different product on time to the
customer in the market (Shields and
Shelleman, 2016). This type of
management accounting system
generally help the company in
managing the issue of scarcity of
resources in the organization.
Lenovo at the same time used to
adopt the Inventory management
system in the organization to
manage the inventory in the
organization. Lenovo generally
uses this type of management
accounting system to make sure
that production activity of the
company is going on the correct
path. This can be managed by
the company by having the
proper understanding of
Inventory. This generally help
the company in optimum
utilization of variety of the
different resources of the
company, as this type of
adoption of Inventory
management system help
company in managing the
wastage of company in better
way.
Cost Accounting
system
Dell inc in general use this type of
management accounting system to
understand the cost of different
product and on the basis of the same
they used to plan different activity
in a way that it used to help the
company in reducing the cost of the
At the same time Lenovo in
organization generally uses cost
Accounting system to fix the
price of the company in the
market. As it has been identified
that Lenovo generally used to
follow the cost plus profit

company. For example they used to
understand the cost of the company
and implement different activity to
reduce the same.
margin pricing scheme. For the
same reason Lenovo generally
used to find out the cost of the
company and on the basis of
same used to fix the price of the
company in long run (McLaren,
Appleyard and Mitchell, 2016).
Job Costing System Dell Inc. adopts the job costing
system to overcome the issue of the
profitability in the long run. Job
costing system generally allows the
Dell Inc. in assigning various cost
separately to individual operation in
the organization and on the basis of
the same Dell is able to find out the
profit associated with different jobs
in the organization. This generally
used to help the company in
managing the profit of the company.
As organization generally used to
analysis the need of different job
post by considering the cost linked
with the same and on the basis of
the same used to make decision
whether to retain the same job post
or not in the organization.
At the same time it has been
identified that Lenovo generally
used to adopt the job costing
system in the organization to
understand the cost incurred by
the company and on the basis of
the same they try to fix better
control over the cost which is
inured by the organization in the
long run. This activity is
generally performed by the
manager in the organization by
keeping track over individual
and team performance in regards
to cost control, efficiency and
productivity. By considering all
the above basis manager makes
the different decision to
overcome the issue of excess
cost implication in organization.

REFERNCES
Books and Journals
Kusmiati, E., Ungkari, M. D. and Basit, A. A., 2020, May. Planning, Implementation, and
Control of Management Accounting in the Public Sector. In 2nd International Seminar
on Business, Economics, Social Science and Technology (ISBEST 2019) (pp. 208-213).
Atlantis Press.
Beusch, P., 2020. Management accounting and control for sustainability. Accounting for
Sustainability, pp.33-50.
Ugalde Vásquez, A.F. and Naranjo-Gil, D., 2020. Management Accounting Systems, Top
Management Teams, and Sustainable Knowledge Acquisition: Effects on
Performance. Sustainability. 12(5). p.2132.
Shields, J. and Shelleman, J.M., 2016. Management accounting systems in micro-SMEs. Journal
of Applied Management and Entrepreneurship. 21(1). p.19.
McLaren, J., Appleyard, T. and Mitchell, F., 2016. The rise and fall of management accounting
systems: A case study investigation of EVA™. The British Accounting Review. 48(3).
pp.341-358.