Management Accounting Systems and Techniques in Prime Furniture

UNIT 5

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
LO1..................................................................................................................................................3
P1 Determining various management accounting systems and its requirement in organisation 3
P2 Determining methods of reporting in Management accounting............................................5
LO2..................................................................................................................................................6
P3 Application of management accounting techniques within organisational context.............6
LO3..................................................................................................................................................9
P4 Budgetary control tools for planning at organisation with its advantages & benefits ..........9
P5 Comparison between how organisation are implementing management accounting system
due to solve the financial problem............................................................................................11
CONCLUSION..............................................................................................................................15
REFERENCES .............................................................................................................................16

INTRODUCTION
Management accounting is a process of collection of useful data & converting it into
information that can be communicated easily to managers for scaling up business. Management
accountants at workplace identify, analyse and interpret data into interactive logical content
related to cost or budget of products & services. This data is collected through various
performance reports, maintenance of track records etc. regulating profits or losses in business
environment. The report below show financial analysis of Prime Furniture based on link between
different departments. Below assessment show difference between financial & management
accounting with application of various techniques.
MAIN BODY
LO1
P1 Determining various management accounting systems and its requirement in organisation
Management accounting – This is an accounting tool that help in creation of financial
reports of organisation by proper analysis of business costs & activities. Junior accountant at
Prime furniture uses this form of accounting process to check management reports and
communicate them successfully to internal stakeholder of chosen firm.
Management accounting systems- These systems are used by management accountants
to examine overall company processes financially (Samuel, 2018). The superior managers of
Prime Furniture follow these systems to collect useful information & convert it into appropriate
information for making future plans.
Inventory and logistic management system- This system mainly deal with managing
statistical data related to stock inventory managed by organisation for monitoring final goods
production operations. In context with Prime furniture, This system is adopted to store various
type of goods detail such as wooden articles, furniture, raw material and finished products etc.
Below are various methods used to calculate inventory of selected corporation:
Average cost method(AVCO): This methods calculate goods as stock into warehouses on
basis of average cost price of every item. Sum total of all goods is divided by number of goods in
stock in this method on monthly or annual basis.

Last in first out (LIFO): This method help accountant use goods that were released
recently. Managers at prime furniture use this method to acquire current stock goods at store-
places.
First in first out (FIFO): In this method stock is calculated by accountant based on
stocks that were stored at beginning (Quattrone, 2016). This method help manager of chosen
firm use previous stocks at present to carry out business operations at workplace.
Cost accounting systems- This system help organisation determine different type of cost
incurred into various operations of company. Costs are categorised into different forms that is
overhead, variable, fixed, inventory and marginal costs. In context of Prime Furniture, marketing
executives use this system to know actual cost expenditure occurring at workplace. Based on
these expenses budgets are created for promotional activities.
Job costing system- In an organisation every department has different job roles & cost
expenses which are controlled or managed through Job costing system. Selected organisation use
this system to keep track of overall engineering costs, job orders, unit costs etc. to know actual
expenditures accumulated at workplace.
Price optimising systems- Based on actual cost or market cost of commodities, this
system is used to determine price of goods (Šiška, 2016). The manufactured goods produced by
Prime Furniture utilize price optimizing system to set affordable price rates of commodities.
Benefits and application of above explained management accounting systems to chosen
corporation:
Management accounting systems Benefit & application
Inventory management systems Prime furniture use this system to maintain
stock inventory of wooden furniture. The
method mainly focuses upon monitoring
utilisation of stock material according to
consumer demand.
Cost accounting system This method help chosen firm analyse
company budgets with incurring cost
expenditures during manufacturing process.
Also determination of different form of costs is