Management Accounting and Techniques

Management
Accounting
Table of Contents

INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
P1. Management accounting and essential requirements of management accounting systems................3
P2. Methods used for management accounting reporting........................................................................5
M1. Evaluate benefits of management accounting systems with their application..................................5
D1. Critically evaluate how management accounting systems and management accounting reporting
are integrated...........................................................................................................................................6
TASK 2.......................................................................................................................................................6
P3. Define costs and prepare an income statement using marginal and absorption costs.........................6
M2. Apply a range of management accounting techniques....................................................................10
D2. Produce financial reports and interpret data for a range of business...............................................11
TASK 3.....................................................................................................................................................11
P4. Advantages and disadvantages of different kinds of planning tools................................................11
M3. Use of different planning tools with their application for preparing their budgets.........................14
TASK 4.....................................................................................................................................................15
P5 Compare how organizations are adapting management accounting systems to respond to financial
problems................................................................................................................................................15
M4 Analyze how financial problem and management accounting which will lead organizations.........18
D3. Evaluate tools for in respond to solve financial problem................................................................18
CONCLUSION.........................................................................................................................................18
REFERENCES..........................................................................................................................................20

INTRODUCTION
The term management accounting consists of providing financial information which is
helpful for manager to taking a business decision making (Agrawal and Cooper, 2017). It is a
procedure for analyzing, interpreting and communicating those members in organization who are
involved in financial decisions. For this assessment, chosen organization is Unilever is British
multinational consumer goods manufacturing firm in UK and it include products are food,
confections, energy drinks and soft drinks. It is largest producer soap in world and this brand
product is available in around 190 nations. In this report, various topics are to be covered such as
essential requirements of management accounting, types of systems, different methods used in
accounting report, costs using marginal and absorption costs, benefits and drawbacks of planning
tools in budgetary control and compare organizations in respond to financial problem.
TASK 1
P1. Management accounting and essential requirements of management accounting systems
This accounting helps to provide financial information which is useful for managers to
take business decision making and it is only tool for internal team members in organization
which is make for different financial accounting (Al-Absy, Ismail and Chandren, 2018). It is a
procedure for identifying, analyzing, measuring and communicating manager who are used for
financial information to accomplish their goals and objectives. The purpose of management
accounting is to support their financial and non financial information to firm management and
taking internal decision makers. Managerial accountants are work for firm with direct or indirect
process of financial which includes costs, spending and budgets for identify their past trends.
Key management accounting systems with their essential requirements are as follows:
Price optimization system: It is one of those systems which are required to identify
price for each products and demand varies from different price levels. This system helps to
provide such information which are related to cost as well maintain level of stock. It should
always focus to gain a competitive advantage of firm which helps firm to development of price,
promotion of various strategies that will be helpful to create better changes in price levels.

Essential requirements of price optimization systems are to estimate various prices at different
levels and combine both the data to calculate such information on costs and stock level to
recommend prices that will be helpful to increase their profits. It helps for firm to provide a
financial solution as per level of demand.
Cost accounting systems: It is defining that estimated for each and every product is
determined to increase their profitability levels of business concerns (Bartelmus and Seifert,
2018). It helps to generate more profits to control their cost of firm and helpful to identification
their profitable product which can be done by estimation of cost which will be offered by market.
This system helps managers of business to identify cost of product as well as service to generate
more profit. Cost should be recognizing that variable cost and fixed cost where variable cost are
change in additional output with varying of production activities. Fixed cost remains constant for
their lifetime of firm. Sometimes cost are incur in business where supply chain of raw materials
are end selling and service of business. Essential requirements of cost accounting system are it
helps to accomplish their decrease cost of operation and Unilever adopt this system because to
control over business cost.
Inventory management system: This system consists of tracking goods from one place
to another throughout raw materials to end user. It should optimize their whole time from order
placement with vendor if there is delivery system to customer to complete their procedure.
Managers of this firm are required and maintain their record whether goods are placed form one
place to another or not. It also maintains other activities for firm like preparation of bill, timely
placed order for vendor. It is helpful for collecting data for stock level and minimizing their
situation of stock level. Essential requirements of inventory management systems it reduces cost
of managing inventory. Unilever helps to manage inventory to provide such details and check
history of each and every product which product is delivered or not. It helps to ensure that stock
level is on control to purchase over raw materials for extra cost of warehouse.
Job costing systems: This system helps to produce business when they should be
produce different products or service (Chaplin, 2017). It consist that costing helps to identify
each and every products of goods and services which will be allow them to records every time.
Essential requirements of job costing system it assists those manager of firm who are estimated
each and every product or services, it will also be helpful for manger to take business decision in

business enterprise which increase efficiency and effectiveness for accomplishing their goals and
objectives.
P2. Methods used for management accounting reporting
Budget report: It is helpful to compare actual results with standard results and this report
is liable for managers to determine income statement which is usually operated for managers
(Fleischman and Parker, 2017). This report consists that to determine their expense are high and
take a suitable corrective action are required to decrease their expenditure as per budgeted
amount. It is mainly determine that how close budgeted performance of firm are actual during
their accounting period of time.
Performance report: This report consist that firm performance to be checked and
determine how firm can accomplish their achievements through its various programs. It is a way
for collecting more and more information related to work performance and analyzing for creating
reports to various stakeholders which is involved in project performance. They should provide all
essential information which is needed for shareholders for each and every detail of firm so that it
will be helpful to determine their performance of this firm. Manager of project deal with various
reporting activities in firm and assist their performance appraisal or evaluation of their
performance.
Account receivable report: It is a periodic report whether firm can work according to
length of time which has been outstanding. To determine their financial health of firm customers
and mainly it will be shown unpaid invoices balances of customer accounts which they have
outstanding. This report helps firm to identify various invoices which will help to allow them to
keep their paying clients. When business provides goods and services on credit basis to its clients
for identify potential profits and losses. Customers describe a summary due to all clients into
different categories to pay their invoices (Halaoua, Hamdi and Mejri, 2017).
M1. Evaluate benefits of management accounting systems with their application
Management accounting
systems
Benefits and application
Price optimization systems It is that systems which is beneficial and identify which price is
good for generate demand as well as profit for business

enterprise.
Cost accounting systems Managers of Unilever help to decrease cost of production and
improve their profitability and productivity level of enterprise.
Inventory management
systems
It is helpful to tracking of goods from one place to another and
requirements of purchasing raw materials to their end users
(Harash, 2017).
Job costing systems It is determine and identify each and every cost of production to
be estimated and assist which job is suitable or not.
D1. Critically evaluate how management accounting systems and management accounting
reporting are integrated
Accounting systems and reporting are should be integrated which is used to decrease
their extra cost for firm and enhance their productivity and profitability level in business
enterprise. This tool will be helpful for close for firm and helps to ensure to control their cost in
proper manner and efficiently. Manager are used to evaluate and monitoring their activity in
business enterprise and improve their overall efficiency of enterprise.
TASK 2
P3. Define costs and prepare an income statement using marginal and absorption costs
Costs defined that how much amount of money which they have spent on creation or
production of goods and services in terms to produce something (Henklang, 2020). It is
monetary values of expenses for services, supply of raw materials, labor, products which is
recorded to book keeping records as expenditure. This determines that they should not lose
money on such sales but firm make their profit easier and it does not include profit part. For
buyer’s point of view, it is the amount where seller charges a product and includes cost of
production of profit.
Marginal costing: Changes in additional cost with the changes in output while fixed cost
are completely written off against their contribution. It should determine increase or decrease
their production levels of business enterprise. Impact on variable cost is different levels of
production capacity so that they need to calculate and divide total cost into fixed and variable