Analysis of Management Accounting Systems and Reports for Dairy Crest

This report provides a comprehensive overview of management accounting systems and their application within Dairy Crest, a leading British dairy product company. The report begins with an introduction to management accounting, followed by an exploration of various accounting systems, including cost accounting, inventory management, job costing, and price optimization systems. It then delves into the benefits of these systems for Dairy Crest, such as improved efficiency and cash flow. The report also examines different management accounting reports, including marginal costing, absorption costing, break-even point analysis, and standard costing. Finally, it analyzes the integration of management accounting systems and reports with organizational processes, highlighting their importance in decision-making and overall business performance. The conclusion emphasizes the significance of management accounting in maintaining effective internal systems and facilitating informed business operations.

Management
Accounting
Task 1

Table of Content
• Introduction
• Management accounting systems
• Benefits of management accounting systems
• Management accounting reports
• Integration of management accounting system and reports with
organisational processes
• Conclusion
• References

Introduction
Management Accounting is presentation of several reports and accounts
which is prepare by accountant to present in front of managers. On the
basis of these reports to management can take suitable decision. To
understand the concept of the presentation selected organisation, Dairy
Crest which leading in British dairy products. In the following
presentation covers different types of management accounting system
and reporting method. In addition, analysis the benefits accounting
system and evaluate integration in organisational process.

Management accounting systems
In present business scenario, accounting systems is the most
important tool which is required in businesses and various
activities of the same. It is the process through which the cost of
businesses and operations can be analysed effectively and
efficiently in order to prepare internal financial reports and
records. Thus, this will be important for Dairy Crest organisation
because with this, the company will be able to analyse and
predict the future. It will assist the company in analysing and
understanding the performance variances and rate of return.

Types of management accounting systems
In Dairy Crest, the company will be able to use different types of
accounting systems and such systems are discussed below:
Cost accounting system: A cost accounting system is a model
which is used by companies in order to build estimation of cost
the products which will help in analysing the profitability. It is
the specialised division of accountancy where it consist of
classifying, recording and allocation of current and perspective
costs.

Continued...
Inventory management system: The term inventory is
concerned with the stocks. It includes tracking of goods and
services with the help of advanced technologies and processes,
the company oversees and monitors the movement of the
products. It is very important for the companies to have a proper
inventory system because if goods moved from the organisation
and there is no place to store them or track them then it can lead
to harmful effects like theft, misuse, black sale, etc.

Continued...
Job costing system: This method of accounting system involves
the estimation of the cost of materials, workforce and overheads
for a specific jobs. IN this, the cost of production is measured by
comparing the number of jobs completed. For applying this
system, the organisations will need to consider the various
documents like order of production, cost sheet, and others like
tool tickets, stocking documents, warehousing, etc.

Continued...
Price optimisation system: This is the formal method which
involves discovering of pricing structures that helps in
maximising the business goals and objectives. With this methods
the demands and requirements which varies at differentiated
pricing levels are calculated in order to combine the data with
information with the cost and inventory.

Benefits of management accounting
systems to Dairy Crest
Cost accounting method provides a greater level of importance to the
worker of Dairy Crest because the main focus of this is to increase
efficiency in the process for which various programs are organised and
incentives schemes are taken into consideration through which the
company is able to encourage the workers and improvises their
efficiency.
Inventory management system will have the benefit of improving
their cash flows and improvements in the potential of reporting and
forecasting the future aspects. The Dairy Crest will be able to minimise
the cost of storage, cost of labour and outdates stocks and materials.

Management Accounting Reports
Management accounting report is the process in which managers
can present reports of different department to top management.
The purpose of the report to described about the performance and
operations of various sections and provide appropriate
information. Through these reports managers can identify several
aspects which is related to management accounting system. With
the help of these reports analysis the performance of each section
then prepare effective strategies to reduce weakness and increase
productivity of an organisation.

Continued...
Marginal Costing Method – The particular method consider as
technique of management accounting which only takes into
account of direct cost to analysis the cost of products and
services. In marginal production cost includes sum of direct
material cost, labour cost, expenses cost and variable production
overhead cost. Through this method in Dairy Crest gather
information of production cost and also about extra unit which is
produced in particular period of time.

Continued...
Absorption Costing Method – It is type of management accounting
technique which point out the all direct cost where includes variable
cost and fixed cost have been allotted to produced goods. In this method
includes production cost of an item where calculate sum of direct
material, direct labour cost, direct expenses and indirect fixed cost.
There are defined principles of absorption costing method regarding
Dairy Crest to -
In cost per unit of the items less the amount of fixed cost.
Through this method accurately calculated inventory value.

Continued...
Break Even Point Analysis – The particular technique broadly
used by management accountant of the company. There are
including variable and fixed costs to compare sales revenue to
analysis of level of sales volume, sales value and production. On
the basis of result business makes neither a profit nor a loss. In
Dairy Crest analysing prices levels of several products s per the
demand of customers then apply break even analysis.

Continued...
Standard Costing – It is also known as Variance analysis and
used as management accounting technique. Through this system
analysing the differences between the actual cost of the products
as well as include those costs which is considering to calculate
costs. In this costing method includes direct material, direct
labour and manufacturing overhead (Variable and fixed
manufacturing overhead).

Integration of management accounting
system and reports with organisational
processes
Management accounting system and reporting methods is directly
connected with management accounting system because it consider
different systems like cost accounting system, inventory management
accounting system which is applied to prepare several reports of
business. It is directly connected to business and provide the report to
higher management. For reporting managers uses different methods to
calculate costs and sales level of production then it will help to smoothly
running of the business. In Dairy Crest apply to measure over all
performance of business and through system record several business
activities and through reporting methods presenting in effective manner.

Conclusion
Management accounting important part of any business which
can help to maintain internal system in effective manner.
Different accounting system help to conduct business operation
business activities and reporting method apply to prepare reports.