Management Accounting and Planning Tools

MANAGEMENT ACCOUNTING
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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................3
P1 Brief description of management accounting and requirement of different types of
management accounting..............................................................................................................3
P2 Methods of management account reporting...........................................................................5
TASK 2............................................................................................................................................6
P3 Statement of income through marginal costing......................................................................6
Statement of income through absorption costing........................................................................7
TASK 3............................................................................................................................................7
P4 Explanation of advantage and disadvantage of planning tools..............................................7
TASK 4..........................................................................................................................................10
Uses of management accounting technique in order to resolve financial problems..................10
CONCLUSION..............................................................................................................................12
REFRENCES.................................................................................................................................12
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INTRODUCTION
Business organizations in order to run their business activities in effective way use
management accounting procedure. It is the par of accounting in which mangers represent
information for decision making process. They present data in a way which help the internal
department to easily take decision through which organization able to attain goals. In this repost
Western Foods Limited has been taken, it is middle level organization. This report include the
importance of management accounting and its system. It considers various types of management
accounting and planning tools which help in formulating policy and take decision. These reports
also give information regarding how management accosting tools apply to overcome financial
problem of the organization.
TASK 1
P1 Brief description of management accounting and requirement of different types of
management accounting
Management accounting: It is define as broader term of accounting which is help in
managing all the accounting records in systematic way. Management accounting is a way of
collecting, recording, analysing formatting and presenting all the transactions in a way through
which internal department easily understand the transaction activity record of the organization.
Manager follow some principles to use the procedure of management accounting for running
business organization, theses are following
Management accounting principle: Effective management accounting implementation
can develop decision making in companies by using principles (Ionescu,
2016).
Influence: Theses principles based on the fact that mangers need to done their work in effective
way they which help in motivating employee by providing incentive and monetary benefits to
them.
Relevance: Accountant should be provide relevant information regarding the transactions of
business activities it is responsibility of them to systemic formulate every report.
Value: Only those activities are run in the business which is valuable and help in enhancing
business profitability rate.
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Trust: There should be trust build between mangers and employers and it would be not break the
information and data, report provides by the employers should be worth full to mangers.
Role of management accounting: It is pay important part in Western Foods Limited. Following
are the works done through managing accounting techniques
Budget: Budgeting reports provides base for formulating budget.
Handling taxes: With the use of cost, process, and accounting and financial statements mangers
able to control the tax.
Managing assets: With proper and systematic formulation of strategies and running business
activities manager of Western Foods Limited can allocate resource and manger working and long
term assets of the entity.
Help in strategic planning: The main role of managing accounting is that it will useful for
planning strategies and policies in order to achieve goals
Different types of management accounting system:
Inventory management system-Under this system various techniques of inventory management
have been used in order to manage the stock. They use EOQ, JIT techniques through which they
identify maximum, minimum level of stock and identify the requirement of materials supply for
their consumers.
Job order costing system: This system of management accounting is introduced in order to
determine the cost of every element of manufacturing procedures is used to take information of
every element of the procedure. It i also help in identifying the requirement of customers on the
basis of that mangers formulate furniture of the Western Foods Limited.
Price optimisation system: main object of apply this system in organization management process
to determine the prices of each product and serves offer by the organization. With the use of
price skimming, price penetration, discount pricing and premium pricing there are various types
of strategies are available Western Foods Limited able to earn profits if they adopt suitable
pricing strategy which satisfy customers as well as help in concerning the cost of manufacturing.
Cost accounting system-: This system is utilized for recognize value of cost incurred during
completion of operating cycle. Managers able e to use standard costing, job costing, marginal
costing and absorption costing methods through which they can calculate cost (Galos and Sîrbu,
2015).
Benefits of management accounting system:
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