Management Accounting and Reporting: Essential Requirements and Methods

MANAGEMENT
ACCOUNTING
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1. Management accounting and provide essential requirements of various types of
management accounting system.............................................................................................3
P2 Explain different methods of management accounting reporting.....................................4
TASK2.............................................................................................................................................6
P3 Calculate cost by income statement using Absorption and Marginal costing...................6
TASK3.............................................................................................................................................7
P4 Advantages and Disadvantages of various planning tools for budgetary control.............7
TAKS4...........................................................................................................................................10
P5 Uses of management accounting systems in resolving financial problems in an
organisation..........................................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Accounting tool and technique is one of the crucial work for business in organisation.
This helps in presenting information related to finances to different users or stakeholders who
have keen interest in company and its operations. Therefore, term management accounting
relates to providing information and various resources which may be required to managers in
taking suitable decisions (Angelone, Neopost Technologies, 2015). Business organisation which
will be considered for this report is Brush Electrical Machines which is involved in manufacturer
of electrical generators. This report will contain understanding of management accounting. The
required cost will be calculated by using appropriate techniques of cost analyses so that income
statement can be prepared. This will make use of planning tools used in management accounting.
The last part of report will make comparisons of different ways through which companies are
adopting management accounting system in order to respond to different financial problems.
TASK1
P1. Management accounting and provide essential requirements of various types of management
accounting system.
Management Accounting: It is also known as managerial accounting and can be explained as
process of supporting managers with financial information for decision making. It is also use by
internal team of company because it uses statistical data to create base for decision making
process. It includes concepts and methods that are necessary to plan effectively for selecting best
alternatives from business decisions for evaluations of performance and controlling actions.
From Brush Electrical Machines point, there are many applications of management accounting
for instance, it helps in decision making, aids in planning process regularly, identify problematic
areas of operations and creates base for strategic management.
Essential requirements of various management accounting systems
 Presentation of financial position: Application of various type of management
accounting systems provide useful information to managers which help them, in present
financial reports. Further, data collected from different systems help in take right
financial decisions.
 Allocation of resources: there are various inventory management systems that help
managers in maintain an optimum level of stock within the organisation. EOQ is a tool
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that provide useful information to managers and help in identify the right time to reorder
the stocks to maintain an appropriate level of stock required to fulfil the requirements of
key customers. All this improve efficiency and reduce cost of company’s operations and
at the same time help in achieve set goals and objectives of the enterprise.
 Budgetary control: This is another significant tool that support in identify the future risks
associated with company’s project. All this help managers be aware about future risks
that are about to rise and help in formulate contingency plans for effective management.
Below is some management accounting which are used by Brush Electrical Machines in its
decision making process Cost accounting system: It is also known as product costing system which is a structure
used by business to find out cost of products for controlling cost, valuation of stock and
profit analysis(Appelbaum and et. al., 2017). Main benefit of this system to Brush
Electrical Machines is that it estimate accurate cost to measure profit margins and areas
of operations which are profitable to company. It also finds out value of stock, work-in-
progress and finished products of for financial statement which helps in decision making. Inventory management system: It is combination of procedures and technology that
monitors, maintain stock of company like assets, raw material or finished products.
Without this system goods will be in imbalance so to keep harmony in flow and record of
every stock inventory management system is necessary. In Brush Electrical Machines it
is used to maintained integrity in record of assets, location of item, information of
supplier and value of stock for generators. Job costing system: It is special costing method which is applied to execute specific
customer order work in strict manner. It totally depends on numbers of orders from
consumer so delivery is made on immediate basis (Chenhall and Moers, 2015). Main aim
of this accounting system is to estimate cost and profit or loss for each processes. Brush
Electrical Machines applies this system to find out which area of operation is more or less
profitable and to compare actual cost with budgeted cost of electric generators. There is a
specific process which is followed by organisation to use this accounting system:
following are the steps:
Receiving enquiry: It include procedure of get the customer’s views about quality of products
and time period require to complete.
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