Management Accounting: Types, Techniques, and Adoption

Management Accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explanation of different types of management accounting systems and its essential
requirements:...............................................................................................................................1
P2 Explanation of different management accounting reporting methods:..................................2
M1 Evaluating the system of management accounting and its application in context to
business:.......................................................................................................................................3
TASK 2............................................................................................................................................4
P3 Calculation of appropriate techniques related to cost analysis for preparation of income
statement with the use of marginal or absorption costs:..............................................................4
M2 Applying techniques of management accounting and producing documents of financial
report accordingly:.......................................................................................................................4
TASK 3............................................................................................................................................4
P4 Different types of planning tools that is used in budgetary control are explained along with
its advantages and disadvantages:...............................................................................................4
M3 Analysis of different tools of planning accompanied with preparation and forecasting
budgets:........................................................................................................................................5
TASK 4............................................................................................................................................6
P5 Evaluating adoption of management accounting systems by organizations as a response to
financial problems:......................................................................................................................6
M4 Analysis of way of responding to financial issues by applying management accounting for
leading sustainable success:.........................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Management accounting, which can also be termed as managerial accounting, can be
explained as an activity of recording and interpreting financial data in a company with the
motive of enhancing process of strategy making (Agrawal, 2018). It is utilized by internal team
of management in an organization. Basic function of managerial accounting is enhancement of
decision-making in an entity, in such a way that efficiency of company improves. Only
requirement for implementation of management accounting is that financial data provided should
serve its motive, that is, data should be accurate and logical. Basis of this report is evaluation of
management accounting for Morrisons. It was founded in 1899 and the founder of a company is
William Morrison. Firm is headquartered in UK and is a public limited company.
This report consists demonstration of management accounting systems. Further,
management accounting techniques are applied. Planning tools are explained along with its
utilization in management accounting. In addition to it, application of management accounting in
regards to financial problems are compared.
TASK 1
P1 Explanation of different types of management accounting systems and its essential
requirements:
Management accounting is a procedure of developing business reports that enhances
decision making process of management. Identification, management and communication of
management accounting helps business in pursuing objectives. Management accounting systems
is a tool for tracking efficiency of an entity (Alsharari, 2016). Following are types of
management accounting systems accompanying with its essential requirements:
 Cost Accounting System: This system refers to a framework that is utilized by
organizations with the purpose of estimating cost of products sold by company. It enables
profitability analysis of Morrisons.
Essential Requirements: Implementation of cost accounting system in guiding expenses
that business should incur. It eliminates over expenditure and helps in reduction of costs
in Morrisons, that is, cost control is assisted due to it (Bennett and James, eds., 2017).
Inventory management system: It tracks entire supply chain of an organization from
purchasing of materials to production of end products. In other word, inventory
1

management system is applied with the motive of governing or managing inventory of
business.
Essential requirements: It enables Morrisons in evaluating situation of inventory in
company. It ensures on time order of stock, maintenance of safety stock, elimination of
more than required ordering of stock and other similar benefits.
 Job costing system: This system helps in identifying cost related to each specific job that
are performed in an enterprise. Applying this system helps in detecting profitable or
unprofitable jobs in Morrisons. It provides base for future planning (Collis and Hussey,
2017).
Essential requirements: It helps management of business in preparing estimate of
expenses required in each job. Efficiency of Morrisons can be identified through it. It
provides tool for cost analysis related to labour, overheads as well as materials.
 Price optimisation system: implementation of this system helps in identifying variations
in demand of customers in relation to price of product. Hence, this technique enables firm
in determining pricing strategy of Morrisons.
Essential requirements: Desired output as well as required input is selected through this
model. It clarifies value proposition of business and helps in setting strategy for effective
price formulation of an organization.
P2 Explanation of different management accounting reporting methods:
Management accounting report is an efficient technique that provides detailed analysis of
company’s financial data. It identifies current state of company in relevance to its financial
information (Gusc and van Veen-Dirks, 2017). It involves preparation of report by interpretation
of financial as well as statistical information for making proper managerial decisions in
Morrisons. Different methods of management accounting reports are elaborated below:
 Performance reports: It reviews performance of employees of company. Hence, it is an
important tool that overviews how an organization is performing. This analysis helps in
forecasting of revenues and expenses for future year. It pertains identification of issues
and hence, helps in effective planning of business goals. Performance report enables firm
in monitoring progress of business towards its objective by comparing actual and
estimated performance. It helps company in making continuous improvement.
2