Management Accounting Techniques for Financial Problem Solving

This management accounting report provides a comprehensive overview of various techniques and their applications within a business context, particularly focusing on Innocent Drinks as a case study. The report begins by differentiating between management accounting (MA) and financial accounting (FA), highlighting the internal focus and flexibility of MA. It explores various management accounting systems, including cost accounting, inventory control, and job costing, detailing their essential requirements and benefits for businesses. Furthermore, the report discusses different types of MA reporting, such as inventory reports, job costing reports, and performance reports, emphasizing their importance in decision-making. The document also analyzes the benefits of management accounting systems, such as inventory management and price optimization, and their application in a hypothetical company, LVS Small Plastic Parts Ltd. Finally, the report touches upon the use of planning tools for preparing and forecasting budgets and how management accounting can contribute to sustainable success by addressing financial problems.

Management
accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Part 1................................................................................................................................................1
Different kind of MAS along with essential need within selected business................................1
Various forms of Management Accounting systems:..................................................................2
M1. Benefits of Management Accounting Systems....................................................................5
D1 Critically assess how accounting management systems and reporting are incorporated into
organizational procedures............................................................................................................6
M2. apply a range of management accounting techniques and produce appropriate financial
reporting documents....................................................................................................................6
D2 Produce financial reports that accurately apply and interpret data for a range of business
activities.......................................................................................................................................7
Part 2................................................................................................................................................7
Different Accounting techniques to prepare financial reports.....................................................7
The benefits and drawbacks of different kinds of forecasting methods....................................12
Organizations are altering managerial accountancy systems, as seen through comparisons....13
M3 Analyse the use of different planning tools and their application for preparing and
forecasting budgets....................................................................................................................15
M4 Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success..........................................................................................16
D3 Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organisations to sustainable success..............................................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
MA mainly focuses on any form of transaction and is often used to relate to the accounting
methods that are responsible for monitoring both the monetary and also non - monetary records.
It seems that MA is structured for all administrative purposes, so that both monetary and non-
monetary resource based corrective measures can be taken (Amir, Rehman and Khan, 2020). e
company selected in the current study is Innocent Drinks which is a client company of AJ
and sons offering accounting-related consulting services. This is the article split into three major
parts, the first of which contains details related to MA systems & records. In addition the details
in the second section relates to financial strategies alongside their impacts on particular results.
Finally, focus is presented on the reference relating to the planning methods & MA programmes.
MAIN BODY
Part 1
Different kind of MAS along with essential need within selected business.
Management accounting relates to an efficient accounting that is specifically aimed for the
purpose of collecting and also reviewing all the details needed that happened mostly during fiscal
year. It's really the mechanism that is undertaken to create internal accounting documents that
act a very important part within a business entity's that directly enhance growth and performance.
It would seem that the key aim is to serve as among the most important and productive
elements for the key customers to help people make well-defined judgments (Balstad and Berg,
2020). This will be the accounting mechanism that serves as a structure that ultimately improves
the corporate entity's financial efficiency. In accordance to the above, it was also stated that
this method that functions mostly as process for regulating large businesses which contribute to
enhanced company operating efficiency.
Difference between MA and FA
Basis MA Financial accounting
Users It is the method of accounting and
is planned by all the internal
stakeholders.
Both internally and externally participants
utilise this process to make positive
decision.
Regulations It does not follow any guidelines The accountant has to understand this

and legislation to plan this kind of
accounting.
kind of accounting structure that includes
various kinds of regulations when writing
the paper.
Type of
company
It's really the sort of accounting
that can be applied in a corporate
organisation of some kind
(Bhimani, 2020).
So although this really is the financial
report involving specific entities normally
mentioned in stock exchange.
Various forms of Management Accounting systems:
Management accounting is among the most powerful accounting structures that are mostly
equivalent to each division of a corporate organisation. As a consequence, a significant range of
MA schemes will be listed as follows throughout this document:
Cost accounting system: This really is the accounting method established by monitoring
and managing any costs that could occur during an operating period in the corporate
organisation. This is the method explicitly specify and almost every object expenditure is
reported and also opposed to the uniform cost, making it easier to define the performance and
success of different activities in terms of their expenditures. Throughout the present sense of
Innocent Drinks, internal financial managers will obtain crucial knowledge with the aid of such a
accounting method on the expense of different operations and also the difference (Căpupuneanu
and et. al., 2020).
Essential requirement- This accounting system function is to efficiently manage any
unnecessary costs, which in essence enhances the corporate entity's profits. Referring to the
small Innocent drinks, this seems to be the accounting scheme that aims to minimise the extra
costs and also the expense of almost all of the unnecessary events.
Inventory control scheme: This kind of MA scheme is generally concerned with the
administration of all aspects of corporate company inventories. This could be achieved
efficiently by tracking any inventory on a regular basis consisting of entire raw material use,
semi-manufactured stock, processed stock, etc. In addition, it is the mechanism where the
management use inventory by including all the LIFO, FIFO process. It being said that in the
current selected business that perhaps the managers follow asset control scheme with a view to
efficient use of all usable manufactured goods (Endenich and Trapp, 2020).

Essential criteria: It is the kind of accounting method that is very important for every business
organisations using the available resources wisely in an appropriate way. In the context of
Innocent Beverages Limited, it is often said that which is among the most essential factors that
help to successfully handle entire the raw product so how they can produce good outcomes in
compliance with their needs.
Job costing structure: Another form of MA system is work costing discipline that
relies primarily on monitoring job costs and also activities that are associated with the course of
performing the whole project in an efficient way. It would seem that the key object of present
management is that they could calculate the expense of each product in order to efficiently take
more judgments. With respect to the Innocent Drinks this method is used to classify the goals of
the designated job which requires particular amount of expense. In addition, manager can make
sure that no extra amount is used on careless or irresponsible job which is not doing anything just
raising the cost of company.
Essential function: This accounting which helps to define the number of jobs and activities
assigned in order to complete the whole operation and calculate the costs of each and every unit
is very important for the management to follow. The Innocent Drinks the internal
manager adopts this accounting method when they have broad portfolios of goods (Fleischman
and McLean, 2020). They also figure out that each job is making a good contribution within
company economic development and if there is any wastage of resources on any Job they may
take decision.
Various types of MA reporting:
The management accounting report is one of the main sources for ascertaining how our
business is performing. This report also shows the current or a particular financial report of the
business and collects financial information from accounting records. It includes the main points
of sales, transactions, operating costs and product profitability. The main point of making this
report is that by this the manager can take important decisions related to the business. For a
business that is moving very fast and that business environment pays more attention to
competition preparation of accounting report becomes very important.
Inventory Report:If your small business maintains a physical inventory or produces products,
you can use managerial accounting reports to make the manufacturing processes more efficient.
These reports generally include items such stock waste, hourly labour costs or per-unit overhead

costs. You can then compare different assembly lines within the business to highlight areas for
improvement or to offer bonuses to the best-performing departments.These are the three main
reasons they are used in businessbecause these three factors reveal the basic characteristics of
businessthe study of cost Budget and Stocks shows us that their report proves to be very
important for the business.Therefore, with the help of business manager, it should be made and
analysed on it.
Job Costing Report: AJ and Sons prepare Job costing reports are management tools used to
evaluate project or production performance against a known or estimated standard.
Job costing reports are not standard but customized reports driven by the purpose and the
respective industry standards. This article introduces the concept of job costing reports, how they
are developed and how to use them. Respective function can have several different types of
costs such as materials, labour and equipment within that function. Job cost reports help
management to understand its business model financially and to accommodate the
accompanying. Suppose today a company called AJ and Sons uses confectionery operations. Job
cost reports identify the amount of production against time. If the quantity is reduced within a
certain time frame, management must find out the underlying cause. Other reports identify
quantities and wastes associated with raw materials.
Performance Report: By AJ And Sons Company Understanding the business performance
against goals and objectives is the key to running a successful business. Businesses need to
continuously assess and report their targets, goals and objectives and make necessary
adjustments.To boost business process optimization, need to measure and report different
parameters such as customer satisfaction levels, sales, expenses and profits and the rate of
inventory turnover. Understanding business performance against goals and objectives is the key
to running a successful business. Businesses need to continuously assess and report their goals,
targets and objectives and make necessary adjustments.To promote business process
optimization, manager need to measure and report various parameters such as customer
satisfaction level, sales, expenses and rates of profits and inventory turnover.
Advantages of MAS
MAS Benefit
Cost
accounting
This MA system that is quite useful to corporate enterprises to resolve the
fields where spending on businesses is quite high.

system
Inventory
management
system
It is one of the valuable tools that assist a business organisation in determining
the possible and efficient use of the entire product available. With that kind of
accounting information system, the financial officer of Innocent Drinks gets
rewards mostly with support of providing all the entry forms relevant to
everyday consumption.
There are various kinds of MAS and also MA studies that support an enterprise to
successfully achieve success (Golyagina and Valuckas, 2020). Different types of management
accounting were included in above study that supports the specified company's finance team.
Additionally, Management Accounting is indeed a study that is primarily correlated with the
procurement study that is related to the division of development. This is the alignment that
typically helps to lead the management because they can take the right choices to stay
competitive on the industry.
M1. Benefits of Management Accounting Systems
Management accounting system includes several system like cost accounting, inventory
and others. All these has their own importance. So, their benefits as well as application in LVS
Small Plastic Parts Ltd. Are discussed below:
Management accounting
system
Benefits and application
Inventory management This system of management accounting is advantageous as this
aids them to trace the stock, develop business performance as well
as enhance their effectiveness (Lachmann, Trapp and Trapp,
2017). Through using this particular system, LVS Small Plastic
Parts Ltd can able to get information regarding inventory as well
as track it for the intent to maximise sales.
Price optimization system It is the system which is beneficial to set out the products as well
as services prices which maintain supply an demand equally.
Through usages of such type of management accounting system
LVS Small Plastic Parts Ltd. can able to decide the cost of their
services of injection moulding, selection of plastics and others to

grab the attention of more clients.
Cost accounting It is beneficial to obviate the wastages as well as losses of
manufacturing in order to maximise profitability. Through
applying cost accounting system LVS Small Plastic Parts Ltd can
able to develop the manufacturing procedures, find reason for
profit and loss, maintain affordable products and services cost.
Job order costing This system is advantageous for LVS Small Plastic Parts Ltd to
allocate cost into separate order or projects as well as ascertain
profit through approximating products costs. Through using such
type of system manager of respective firm can able to examine the
raw material and final product costs in order to to ascertain
profitability.
D1 Critically assess how accounting management systems and reporting are incorporated into
organizational procedures
After the critical evaluation, it can be concluded that system as well as report of
management accounting are integrated with the procedures of company. Through
utilising inventory management and reports, the manger of LVS Small Plastic Parts Ltd
can able to trace inventory which aids into organisational process. So, respective firm
usages various management accounting system like cost accounting, inventory
management, cost accounting and other which are associated with the management
decision. Moreover, all the reports and system aids LVS Small Plastic Parts Ltd to
concentrates upon the manufacturing as well as enhance profitability. Also, it assists to
provide information regrading product costs, raw material etc. then then formulate
report for effective operations of the business into company.
M2. apply a range of management accounting techniques and produce appropriate financial
reporting documents.
Techniques of management accounting is advantageous for firm as this assists them to
formulate documents of the financial reports as well as maintain the products and services cost
within business concern (Salterio, 2015). Techniques like marginal and absorption states whole
cost of company and then ascertain net profits into company. It is the accountability to manage

many information related to accounting as well as maximise productivity. Both techniques are
useful for LVS Small Plastic Parts Ltd. Like their accountant can prepare appropriate
management reports through evaluating revenues as well as expenditures which aids in making
decisions. Also, this assists in enhancing production and sales in respective organisation.
D2 Produce financial reports that accurately apply and interpret data for a range of business
activities
Financial reports is defined as the annual report that is formulated through manager at the
end of the year for obtaining profitability and losses from respective enterprises. The main
purpose objectives of this is to utilise appropriate system of management accounting as well as
develop financial reports which aids in performing the activities efficaciously. LVS Small Plastic
Parts Ltd. Plastic and injection moulding firm plastic materials, injection moulding etc. to their
clients. Respective firm income statement states that in may the net loss is -550 and in June the
net profit is 5750 by using marginal costing techniques. Where as while using absorption costing
method the net profit in may is -630 and in June is 6550. so it is analysed that net profit or loss is
more while utilising absorption costing method.
Part 2
Different Accounting techniques to prepare financial reports.
Marginal costing: This is a strategy used during finance that is related to the production of
cash flow statement by essentially treating all contingent costs as their key cost and fixed costs as
the recurring cost (Johnstone, 2020). It has been claimed that overall product applies to the shift
in their overall cost that typically happens as the amount generated through one system is
enhanced.
Absorption costs: This is the other accounting strategy involved in the development of a
statement of profits where all discretionary and fixed expenditures are deemed the key factor.