Management Accounting Report: IKEA Case Study and System Analysis

This report provides an overview of management accounting, exploring its importance in organizational decision-making. It begins with an introduction to management accounting and its core requirements, contrasting it with financial accounting. The report then delves into specific management accounting systems, including cost accounting and job order costing, explaining their functions and benefits, particularly within the context of IKEA. Different methods used for management accounting reporting are discussed, along with various types of managerial accounting reports such as performance and cost accounting reports. The report evaluates the benefits of these systems, emphasizing their role in price optimization and job costing. The conclusion highlights the significance of these methods in facilitating organizational success through growth and development, referencing relevant literature. This report offers valuable insights into the practical application of management accounting principles.

Management
Accounting
LO1

Table of Content
• Introduction
• Management accounting and essential requirements of its
systems.
• Difference between management and financial accounting
• Management accounting system
• Different methods used for management accounting
reporting
• Types of managerial accounting Reports
• Evaluating benefits of discussed MA systems
• Conclusion
• Reference

Introduction
Managing accounting is that kind of process which makes
identification, analysing, evaluation and interpretation
that expresses information to managers. This makes
goals to be achieved with objectives attain of an
organization. Under it cost is also been referred that is
used for making accounting information attained at the
time of decision making process in more effectiveness.

Management accounting and essential
requirements of its systems
Management Accounting: It is an
analysis of financial information that
is obtained from the financial
statements. The main purpose of
management accounting is to make
such decisions that is profitable and
helps a company to achieve desired
goal within specific time.

Difference between management and
financial accounting
Management Accounting Financial Accounting
It helps managers of an
organization in making
decisions which are profitable
for the company.
In helps management in
analysing company's actual
financial position with the help
of annual financial reports.
The information provided can be
either monetary, non monetary
or both.
The information so provided is
only in monetary term.

Management accounting system
Cost-accounting System: This systems helps in providing
information that will relate to company's cost which is
invested in manufacturing products and providing
services. This system will help IKEA to get the
information related to the cost that will be required in
manufacturing furniture. This will help finance
department to prepare a budget that can be used by the
company while manufacturing furniture.

Management accounting system
Job order costing system: This system provides the
information of an actual cost incurred while
manufacturing every units. It keeps track of the total
cost to help manager estimate the maximum profit
generating units. This system will help IKEA to
produce more furniture that requires less cost and
generate more profit. This will help company to
minimise its cost and also to increase its income.

Different methods used for
management accounting reporting
Management accounting reporting: This is where the
transactions of the business are recorded. This report
helps the management in making such decisions that
help company to generate profit. It includes cost
inventory report, cost accounting report, etc. Preparing
this report will help IKEAto analyse their financial
situation that is currently in the market.

Types of managerial accounting
Reports
Performance reporting: This is the
type of communication
management plan. It gathers
information related to work
performance, it is then analysed and
then the report is sent to the
stakeholders after being created.

Types of managerial accounting
Reports
Cost accounting report: This is the summary report of the
cost utilised in manufacturing. This includes: labour cost,
raw materials cost, etc. This report helps IKEA to know
the cost of manufacturing and can compare it with its
selling price. This report helps the management to get
estimate of the profit margin. This will help them to get
clear picture of the cost and they can make decisions
accordingly.

Evaluating benefits of discussed MA
systems
Types of management
accounting system
Its benefits and essential requirements
for an organisation
Cost accounting system Such accounting system is been used for
making information available upon costs in
relation to different operations been
performed under it.
Inventory management
system
Such kind of framework has various kinds
of advantages upon managing of sticks and
helping an organization take decision.

Evaluating benefits of discussed MA
systems
Types of management
accounting system
Its benefits and essential
requirements for an organisation
Price optimisation system As per the accounting system
IKEA makes setting of accuracy
within price over furniture and its
other products.
Job costing system This is another framework that is
advantageous over the
organization that makes
calculation of job costs.