UNIT 5 Management Accounting Report

UNIT 5 MNG
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Defining management accounting and discussing various types of it.............................1
P2. Discussing various methods used for management accounting reporting.......................4
TASK 2............................................................................................................................................6
P3. Calculation of absorption and marginal costing and discussing differences between them.6
TASK 3 ...........................................................................................................................................9
P4. Various types of planning tools in the business...............................................................9
P5. Enumerate how company is responding to financial problems by adopting management
accounting systems...............................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting information is quite useful for management so that it may be
able to have better and effective decisions. It is useful for management to take internal decisions
for organisation in the best possible way. The present report deals with Vectair holdings, which
uses management accounting in daily operations quite effectually. The management accounting
information is helpful for managers to remove deficiencies in effective way so that profit may be
earned by satisfying customers. This report also highlights various methods of management
accounting reports and also methods which are being used by company for effectual results.
Moreover, marginal and absorption costing is also discussed in the same. Budgetary control tools
such as NPV, ARR and IRR are also discussed which are relevant to management for making
decisions concerning investment. Furthermore, it also discusses how financial problems are
effectively handled by organisation with the help of management accounting information.
TASK 1
To: General Manager
Vectair Holdings
From: Management accounting officer
Subject: Presenting report to General Manager in Vectair Holdings
Introduction:
Management accounting techniques needs to be used by Vectair holdings so that it may
have better internal efficiency in the organisation. This will help to have financial stability in
the organisation with much ease.
P1. Defining management accounting and discussing various types of it.
Management accounting is useful in organisation be it small, medium or large. This
guides management to take better and effective internal decisions for betterment of the company.
Vectair holdings is also benefited by using management accounting techniques and various
methods for better growth and effective functioning in the market. It is defined as the process of
analysis and interpretation of financial data collected with the help of financial and cost
accounting both. This branch draws conclusion from both accounting in order to assist
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management in the process of decision-making. Thus, it is clear from the above definition that
management accounting information is used to take internal decisions so that it may be helpful
for management to take better decisions (Albelda, 2011).
This type of accounting information is only available to management to take decisions
and as such this is not provided to users of accounting information. This information remains
within the hands of management of the company. Vectair holdings is much benefited by this
information as through this, it can analyse strengths and weaknesses of company. Thus,
management can strict action to remove such defects which hinders performance with much
ease. This is possible only because relevant and meaningful information imparted to managers.
Management accounting is a process of summarizing information, which is provided by
financial accounting through recording of business transactions in the books of accounts. As
such, cost accounting is concerned with controlling cost so that revenue may exceed expenses.
This information of cost and financial accounting is compiled in the form of management
accounting information, which is then provided to managers for taking decisions. However,
maintaining management accounting is not required by law but firm may prepare managerial
reports for the betterment of company (Burritt, Schaltegger and Zvezdov, 2011). The different
types of management accounting and essential requirements in company is listed below:
1. Inventory management system-
The inventory management system is not a static process but is a ongoing process as
production of goods is required so that goods may be produced at regular intervals. The
inventory is required to be updated so that no wastage may occur. If stock is more in quantity,
then it leads to unnecessary spoilage and adds to cost. Thus, inventory should be in adequate
manner so that no such wastage occurs which reduces profit of company. This management
technique helps Vectair holdings to effectively managed inventory at daily basis as it takes order
from customers and then timely ship products so that they may be satisfied with it quite effectual
way. It is a complex process, which has to be dealt by management of company in effective way
so that proper inventory system in organisation may be made with much ease.
2. Cost accounting-
2