Management Accounting Report: Costing Methods for Crest Dairy

This report provides a comprehensive overview of management accounting systems, focusing on their application within the context of Crest Dairy. It begins with an introduction to management accounting, highlighting its role in measuring and evaluating internal processes to enhance efficiency, productivity, and profitability. The report then delves into various types of management accounting systems, including cost accounting, job costing, inventory management, and price optimization, detailing their functionalities and benefits. It explores different reporting methods such as budget reports, accounts receivable reports, and inventory reports. The evaluation section assesses the pros and cons of each system, followed by a critical analysis of their application and integration. Furthermore, the report examines absorption costing and marginal costing methods, providing calculations and interpretations to recommend the most suitable approach for Crest Dairy. The conclusion summarizes the key findings and recommendations, supported by relevant references.

Management Accounting

Table of Content
• Introduction
• Management Accounting Systems
• Evaluation of benefits of MA system
• Critical evaluation of application and integration of MA system
• Absorption costing
• Marginal Costing
• Conclusion
• References

INTRODUCTION

Management Accounting Systems
• Management accounting (MA) is internal systems which is used by the firm in order to
measure and evaluate the process for management.
• Thus, the tools and reports are assist to raise efficiency, productivity and profitability.
• In the same way, by using same tools and techniques, Crest Dairy can ensure effective
management of operations.

Types of management accounting system
Managemen
t Accounting
system
Cost Accounting
Price
Optimization
Inventory
Management
Job Costing

Continue…
Cost Accounting
• This system is used by the firm for inventory evaluation, profitability analysis
because it is link with cost of product/services.
• Along with this, cost accounting assist the management of Crest Dairy in order
to measure the financial performance by comparing the actual output with
standards.

Continued…
Job Costing
• Another MA system which allocate the manufacturing cost
to individual items of a product i.e. raw materiel, labor
and other overhead.
• By using this method, Crest Dairy easily determine or
monitor the cost of job.
• Moreover, this information also applied while assigning
the inventories cost to particular products.

Continue..
Inventory Management
• This method is all about to controlling
and overseeing the products selling and
storage.
• Thus, ordering and holding are the two
cost which is link with stock.
Price optimization
• This tool assist firm to examine the
manner through which customer will
respond at different price level.
• Thus, it is quite important in this era
because after recession, customers are
more focused upon price, that is why
company are using this method.

Reporting methods
• It is also known as managerial
accounting method which provide day to
day activities of business.
• These reports are used by management
team of Crest Dairy for planning,
regulating and decision making process.
Budget
Report
Account
Receiva
ble or
aging
report:
Invento
ry
report:
Cost
Manage
rial
report

Types of reporting method
Budget Report:
• This managerial report assist to measure company performance and creates an overall
budget in order to understand the financial performance.
• Moreover, this report further assist to examine the reason of not met any target for a
particular time.

Continued…
Account Receivable or aging report:
• This report assist to examine the time period o debtor that influence the level of working
capital. That is why, this report is completed by company's manager in order to examine
the period within which they are making payment.

Continued…
Inventory report:
• This report is concern with stock and provide a clear information with regards to cost
level of unit.
• Hence, through this report, manager of Crest Dairy may easily determine which product
is highly used and sold, or product which need to be replaced.