Management Accounting Application: Financial Solutions and Planning

This report delves into the role of management accounting within the financial consultancy firm AJ and Sons, focusing on how it aids clients like Innocent Drinks in navigating financial challenges, particularly during crises like the COVID-19 pandemic. It elucidates the core principles of management accounting, including internal financial reporting, strategic planning, and cost management. Various management accounting systems are examined, such as inventory management, job costing, price optimization, and cost accounting, highlighting their benefits and practical applications. The report also covers different methods of management accounting reporting, including budget reports, accounts receivable reports, performance reports, and cost managerial accounting reports. Furthermore, it discusses the merits and demerits of planning tools used in budgetary control, like zero-based budgeting, and explores how these tools can be leveraged to address financial problems and foster sustainable success. The analysis incorporates both marginal and absorption costing methods, along with financial reports and data interpretation, to provide a comprehensive understanding of management accounting's impact on organizational financial health.

Management Accounting

Contents
INTRODUCTION...........................................................................................................................................3
LO1..............................................................................................................................................................3
P1 Management accounting and its system.............................................................................................3
P2 Various method used for management accounting reporting..............................................................5
M1 Benefits of management accounting system and application............................................................6
D1 Critically evaluation of managerial accounting system and accounting reports.................................7
LO2..............................................................................................................................................................7
P3 Calculation of income statement by using marginal and absorption costing method..........................7
M2 Application of management accounting techniques........................................................................11
D2 Application of financial reports and interpretation of data...............................................................11
LO3............................................................................................................................................................12
P4 Merits and demerits of planning tools used in budgetary control.....................................................12
M3 Use of planning tools and its application.........................................................................................13
LO4............................................................................................................................................................14
P5 Management accounting system are adopting by organisation to respond financial problems.........14
M4 Management accounting help to respond financial issues...............................................................16
D3 Planning tools are useful to solve financial problems that lead a sustainable success......................16
CONCLUSION.............................................................................................................................................16
REFERENCES..............................................................................................................................................18

INTRODUCTION
Management accounting plays an important role in every company, and then after reviewing
both accounts and financial reports means making strategic decisions. It supports a organization
with financial reports and recommendations for the successful business operations by ensuring
consistent management and financial documentation (Dekker, 2016). This report based on the
financial consultancy firm AJ and sons which provide good financial advice to their Clients. One
of client Innocent Drink face the financial problem during COVID – 19 that time company
provide the suggestions to use management accounting systems and reports to effectively run
their business. This report's main aim is to clarify the requirements of management economics
and its method. The report would include different subjects including such form of accounting
management, program, procedures, and accounts reporting. In addition, this study will also
provide resources for preparation that help value all the partnership assets and solve financial
difficulties. The accounting method is also beneficial in maintaining a profitable company.
LO1
P1 Management accounting and its system
In order to make financial choices, management accounting is the basic information of
every group that provides to include inner financial reporting, documentations. This includes
business strategies for the lengthy period and for the brief period by maintaining appropriate
final records and reports. This is important to analyze related costs, target targets, make or buy
decisions, schedule, prepare budgets and monitor budgets.
Accounting management system the system for monitoring reporting operation and
presenting account statements relevant to a company. For example, Innocent drinks are a
financial accounting business that manufactures final statements, so administrators might use
documents regularly. It could be used by private entities including creditors, investors and
financial regulators. Innocent drinks follow various aspects of financial management system
offered below-
Inventory management system: This involves an inventory levels-level monitoring software
application, deliveries, inventory, and services and products delivery (Englund and Gerdin,
2018). This is primarily used throughout the manufacturing industries, and aims to establish a

registration form, input materials invoice, and other industrial documents. It's also the record-
keeping method of semi-capitalized assets and based on an analysis. Innocent Drinks Director
uses this program to retain information up to date and facilities given to consumers including
such insurance contract, loan number, and rental assets etc.
Job costing system: This method is used to distribute and recover cost of production for a
specific unit produced. This also includes multiple products that have varying prices, and should
be adequately and efficiently handled. For Innocent drinks, director or administrator make note
of the expense of any time and getting financial details necessary for business processes.
Employments are distributed depending on the job that allows to independently handle economic
activities and details. Costs are allocated as per the work method throughout this system, which
helps to reduce the company's costs (Jbarah, 2018).
Price optimization system: This system known a company's numerical simulation which
attempts to identify the responses of the buyer regarding various brand and product costs. In
particular, it's being used to assess the best prices of goods and services to allow banks
competitive. Any business seeks to achieve the highest services and products rates which will
improve the amount of clients and improve the business earnings. Innocent Drinks Company
charges the client a fair rate of interest or payment through receiving economic and advisory
services that will help increase sales. In Innocent Drinks Business, customers are expanding
quickly to really get financial services since it offers high quality service and investment advice
that is essential from each organization.
Cost accounting system: A program is maintained to monitor the costs that happened when
making goods. This includes the location, description and overview of fixed and variable costs.
In many other terms, this is a method that is used to measure the exact price of the goods for
benefit estimation and reducing costs. Innocent Drinks Executives follow this method to
understand the full expenses spent on workers and to make budget decisions. This also aims
people clarify in which an organization can spend by lowering costs to really get full profits (Lay
and Jusoh, 2017).

P2 Various method used for management accounting reporting
Accounting reports for administration are the overview of every company that includes
evaluating, hiring, managing and monitoring business processes. It is obvious that a business
company can't operate for a lengthy amount of time while observing performance assessment.
This offers financial information that might be useful in planning long term financial strategies
and managing the organization's costs (Lindholm, Laine and Suomala, 2017). Reporting can be
used to learn the regular, weekly and monthly company's operations which provide detailed
insights for decision taking. Innocent Drinks, for example, is a global corporation that conducts
financial information on a regular basis to leverage the available funds in industry. This
examples range makes choices that are both successful and growing. This manages and
maintains the organization's business situation which aims to attain the goals of the company.
What company prepares budget reports which are mentioned below:
Budget report: This is an independent study that the supervisor has written and used to equate
projected expenditure results with total performance or expenditures. While expenditures are
financial targets that rely on projections and hopes for the future. In addition, budget reports are
helpful in analyzing both expected and real enterprise financial results. Innocent drinks that
production employer offers financing to various sectors concrete way and annual budget reports.
Such reports allow managers to fix business-related issues and make the results in background
more effective and investigate the production targets. Supervisors should determine the
knowledge they expect and make choices.
Accounts receivable report: Such reports contain new credit notes and overdue customer
invoices. The ageing report will be the first method that providers or receiving persons use to
determine which receipts are awaiting for payment. Owner and auditor of Innocent Drinks will
use these documents to let us understand the unpaid cash flows, including such who’s being
supported with financial services. It would also help to identify the consumers which pay
gradually then by delivering banking institutions make those decisions for more expenditure
(Nitzl, 2016).
Performance report: This study is often compiled by company administrators who assist in
understanding how effectively or not the money being spent on business activities is being used.
Such reports are often published by government entities which use resources to provide reliable

impact on performance assessment. For example, Innocent drinks allow performance evaluations
to determine the progress of a project or expenditure that is made in the access to financial
services. Executives evaluated worker and company's success and made the right and correct
decision.
Cost managerial accounting report: The report is helpful in maintaining accurate accounting
expense documents including such cost of raw materials, labor costs, overheads and other costs.
In fact, these reports help to calculate the price of money management and the policy's execution.
Innocent Drinks Company is investing resources in shape to offer smoothies and create a
lucrative company. The corporation's boss determines the amount of service delivery and takes
the best choice to make a successfully synthesized (Otley, 2016).
M1 Benefits of management accounting system and application
The potential advantages of the accounting management systems are presented in a table
format as below-
Job costing system This will help Innocent Drinks key organizational all expenses as
provided to different sector, prepare financial report and preserve
customer information.
It would also hopefully avoid the duplication of functions when
the same work is replicated.
Price optimisation method Innocent drinks can also get details on the mood and wants of the
consumer depending on multiple rates and costs.
Allows with the lowest fees to rising the total revenue.
Cost accounting system Innocent drinks can determine process performance and can
therefore help result in a change.
This will also dramatically reduce costs for the sector.
Inventory management
system
Innocent Drinks corporate executives can boost stock order
quality and use this program.

D1 Critically evaluation of managerial accounting system and accounting reports
Management accounting system is useful for just about any company that makes
management decisions which can influence the actions of management. Accounting system
provides consistent and realistic financial information that will help to successfully create a
business. It requires the employees of Innocent drinks optimize the amount of capital invested,
and make good business decisions (Oyewo, Ajibolade and Obazee, 2019) A company operation
can be handled efficiently by implementing the planning and budgeting documents. Thus the, the
director of Innocent Drinks can make sound business decisions by adopting the accounting
management system. This would also contribute to making use of business costs and rates. Thus,
the supervisor of Innocent Drinks can render smarter business decisions by adopting the
accounting management system. This would also enable allow better use of an organization's
resources and costs.
LO2
P3 Calculation of income statement by using marginal and absorption costing method
Marginal costing: It covers overhead costs including such labor and supplies, and overhead
expenses including such payroll management and sales commission. This tends to boost and
lower production costs, and to assess the corporation's payment ability.
Costing of absorption: It involve measure all production costs by adding fixed and variable
costs. This is often referred to as a complete costing approach that helps to determine the
organizations correct costs when making goods.

M2 Application of management accounting techniques
It has been known from the above analysis that accounting methodology such as marginal
costing and costing for utilization helps to evaluate correct costs and identify the business
earnings. Along with aid of accounting methodology and reports each employment base financial
statements including such trading and Profit & loss, balance sheet, report of inflow and outflow
etc. Accounting instruments receive investment research to inform in the preparation of financial
statement. Innocent Drinks Corporation provides investment resource and system to financial
information and records. This lets executives make smart decisions by cutting client expenses
(Richardson, 2015).
D2 Application of financial reports and interpretation of data
It can be noted that financial reports are the important part of any organization which
attempts to identify a company's bottom line and losses. Financial reports contain different
financial details which can be used by investors and stakeholders to calculate the business results