Management Accounting Techniques and Financial Reports - Alpha Ltd.

This report provides a comprehensive analysis of management accounting practices at Alpha Ltd., a manufacturing company. It covers the essential requirements and types of management accounting, differentiating it from financial accounting. The report evaluates various management accounting methods, including cost accounting, inventory management, job costing, and price optimization, and their application in enhancing business performance. It also examines the integration of management accounting systems and reports within organizational processes, highlighting their impact on financial reporting and decision-making. Furthermore, the report discusses the advantages and disadvantages of different planning tools for budgetary control and how organizations, like Alpha Ltd., adopt management accounting systems to respond to financial problems and achieve sustainable success by using planning tools to address financial issues.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Management accounting and its essential requirements and types........................................3
P2 Types of methods which are used for management accounting report..................................5
M1 Evaluate the benefits of management accounting system and its application......................6
D1 Critically examine how management accounting systems and reports integrated within the
organisational processes..............................................................................................................6
TASK 2 ...........................................................................................................................................7
P3 Calculate costs using appropriate techniques of cost analysis...............................................7
M2 Apply management accounting techniques and produce appropriate financial reporting
documents.................................................................................................................................13
D2 Produce financial reports that accurately apply and interpret data for a range of business
activities....................................................................................................................................13
TASK 3..........................................................................................................................................13
P4 Advantages and disadvantages of different types of planning tool used for budgetary
control.......................................................................................................................................13
M3 Analyse the use of different planning tool and their application for preparing and
forecasting budgets. ..................................................................................................................15
TASK 4..........................................................................................................................................15
P5 Compare how organisation are adopting management accounting systems to responds
financial problems.....................................................................................................................15
M4 Analyse how responding to financial problems, management accounting lead organisation
to sustainable success................................................................................................................17
D3) Use of planning tools to responds all the financial issues.................................................17
CONCLUSION..............................................................................................................................18
REFERENCES .............................................................................................................................19

INTRODUCTION
Management accounting refers to the computation of several accounts that are exploited to
make more profit by taking appropriate decisions. Within the business environment various
kinds of organisations that manages several information to run their business operations that are
required to business information’s as well as taking appropriate and effective decisions. Also, it
can say that management accounting considered as a provision of data that are organised by the
managers for identifying the business performance. All information’s as well as accounts are
managed by the accountant who have proper knowledge to prove the accounts and operates
business operations effectively. The purpose of management accounting is to manage and control
the financial data to attain business objectives. In this report, Alpha Ltd. Is chosen which is a
manufacturing company that produce different kinds of products. Under this report, discuss
about the difference between financial as well as management accounting, types of management
reports and their integration that helps to get business objectives. In addition, this report covers
planning tools as well as financial problems which can be solved by using appropriate
management accounting system.
TASK 1
P1 Management accounting and its essential requirements and types.
Management accounting: It is considered as most important practices of a business entity
which find, evaluate, manage and interpret accounting information’s to operates business
activities in a successful manner. Management accounting termed as an attractive approach that
can be utilised to highly control the information and raise business performance (Weetman,
2019). It is required for all kind of businesses that helps in maintaining all accounts as well as
develop company's productivity as well as profitability. The administrator of Alpha Ltd. Control
all accounting as well as financial information properly that assists to get high profits. All these
are managed by the accountant of a company who keep all the records and make them profitable
through using accounting principles.
Difference between financial and management accounting:
Basis Financial accounting Management accounting
Meaning It is related to the external activities and It is related to the internal activities of

performance of a business entity which is
essential to present to customers,
creditors as well as external parties who
have interest in the company’s norms and
activities.
a business which facilitates
information to manage by designing,
organising as well as managing and
controlling them.
Time focus It is mainly focused on the past
performance that assists to take further
actions.
This is mainly affect business
decisions which are related to the
future.
Concentrate It is concerned with the entire
organisational performance.
It concentrates on the different
segments of business organisations
where several information’s are
collected and managed.
Principle
followed
In this, required to followed the GAAP
principles that helps to perform the
financial accounting appropriately.
There is no standard principles and
rules of management in order to
follow while preparing accounts.
Different types of management accounting system: Cost accounting system: It is associated with price of the goods and services for
analysing the profitability of a company. Cost accounting system is exercised to
approximate the cost of products as well as services that are significant to accomplish
business objectives. It is needed in an organisation as it aids to examine the actual price
of products that are produced by a business (Malina, 2018). It is essential for Alpha ltd. to
recognise that product is more profitable or not, that is only probable through
approximating the value of products as well as services that are facilitating by a
company. Within the context to Alpha Ltd, administrator needs to custom cost accounting
management system to approximate the cost of their producing products that assists to
recognise the net income on such manufactures. Inventory management system: This is extremely associated with handling the inventory
as well as possessing appropriate records of stock. It is necessary to monitoring and
sustain the records of goods that have accumulated by company. Whereas, it is essential

for the company Alpha ltd. to accomplish the business activities properly by handling all
inventory. This system covers several methods to achieve the inventory like Just in time,
perpetual stock inventory and so on. Whereas, Alpha Ltd needs to succeed as well as
track the inventory that aids to generate profits properly. Job costing system: It is associated to analysing the expenses in to each job that are
sorted in to numerous activities and functions. The prerequisite of such system in big
portfolio in which extensive products ranges are manufactured. It is essential for the
Alpha ltd. In order to allocate the larger business activities in to small and grow profits
consequently. Whereas the manager of Alpha Ltd required this system to organise cost in
to different activities that aids to runs a business appropriately (Bedford, 2018).
 Price optimisation: It is essential to use by the Alpha limited in order to sets optimum
prices of their products for creating is able to satisfy customer’s expectations or not.
P2 Types of methods which are used for management accounting report.
Management accounting report: It is considered as a crucial tool for a business organisation
which assist to perform the activities in a successful manner. A company have clear
information’s and view that states how a company require to execute and how get a high
profitability by considering the management as well as finance activities. As the company Alpha
Ltd. Defined as a manufacturing business whose manager emphasise on the management
accounting and manage several kinds of accounting systems.
Types of management accounting reports: Several kinds of management accounting report
are discussed below: Performance report: It can be used for the motive of keeping all the records of a business
performance of Alpha Ltd. This is to be prepared by a manager in order to collecting as
well as recording information’s regarding the performance and workers of a firm. This
will help in providing bonus and incentives to their workforce as per their efforts towards
the task achievement that are assigned to them separately (Azudin, 2018). Inventory management report: This kind of report can be exercised to possess the
records of inventory that is kept by the Alpha Ltd. It is advantageous for the company as
it assists in knowing the company’s stock status which is already delivered to its clients.
 Account receivable report: This is related to the formulating a list of several customers
and can exercise while a firm Alpha Ltd. Facilitates goods and services to them on a

credit basis. This assists in ascertaining the unpaid amount that are due by customers and
resolve the specific financial issue regarding the late payment by clients.
M1 Evaluate the benefits of management accounting system and its application.
Management
accounting systems
It's benefits
Job costing system It is mainly related to the process of an organisation that facilitates
information towards the many business activities. The company Alpha
Ltd. Exercises job costing system and take advantages of estimating
the cost into various activities that make easy management and
operations.
Cost accounting system It is helpful for organisations as it assist to calculate the cost of all
goods as well as services that are facilitates by the organisations. This
will minimise the cost of producing which benefit to Alpha Ltd. By
reducing operating cost and get high profitability.
Inventory management
system
This is benefited for the business organisations as it helps in tracking
raw material as well as finished goods within the time frame. Through
this system the company Alpha Ltd. Can lead heir own inventory that
assists to generate huge profit by reducing the storage cost.
Price optimisation This method is beneficial for the Alpha Ltd. In order to set particular
product prices which are needed to satisfy the customers expectations
and requirements.
D1 Critically examine how management accounting systems and reports integrated within the
organisational processes.
Several kinds of management accounting system adopt by businesses and formulate
accounting reports that assists to improve the procedure of company. Accounting system as well
as management reports are combined within business procedure such as inventory management
system that is exercised to lead stock appropriately that aids to formulate inventory management
report which states how much stock are presented in warehouse (Kerzner, 2018). Whereas, cost

accounting system is exercised by business organisation to estimate the exact value of product
that they have creation which made-up cost report that are linked with organisational procedure.
Company should use system as well as reports accurately that assists to achieve all tasks properly
and rise productivity and profitability.
TASK 2
P3 Calculate costs using appropriate techniques of cost analysis.
Marginal costing method: It is planned in the costing method that is used to understand the
profits of a company by seeing variable as a product cost. This will help to maximise the
company’s productivity as well as profitability as manager examine all functions as well as uses
methods to identify the level of profit.
Absorption costing method: This is exercised by the company to calculate the profitability by
captivating the all costs. This includes fixed as well as variable cost while formulating income
statement that assists to states and know the profits (Eldenburg, 2019).
Cost analysis: This can be stated as a process that is in used to identify the importance of many
actions that are taken by Alpha limited for earning profits. This will assist in examining the
decisions that were framed by company in order to attain long term objectives.
Cost variance: This is used by Alpha limited to examine the gap between actual as well as
budgeted cost of manufacturing.
Calculation of profit by using Marginal costing method