Management Accounting Systems Application for Financial Problems

This report provides an analysis of management accounting systems and their application within Zylla Company, a multinational corporation facing internal and external changes due to market expansion. It explores various management accounting techniques, including cost accounting, pricing optimization, and inventory management systems, and their role in addressing financial issues and promoting sustainable growth. The report also examines different management accounting reporting methods, such as budget reports, sales reports, inventory reports, and investment reports, highlighting their integration within organizational processes. Furthermore, it delves into the application of planning tools for budgetary control and analyzes how management accounting can lead organizations to sustainable success by responding effectively to financial problems. The report concludes by emphasizing the importance of management accounting systems in balancing internal and external business environments and facilitating informed decision-making for long-term financial stability and growth.

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Management accounting

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Contents
Introduction:...............................................................................................................................4
LO1: Demonstrate an understanding of management accounting systems...............................5
P1. Explain management accounting and give the essential requirements for different types
of management accounting....................................................................................................5
P2 Explain different methods used for management accounting reporting...........................8
M1 Management accounting systems and their benefit in the context of Zylla Company:.10
D1 Critical evaluation of how management accounting systems and management
accounting reporting are integrated within organisational processes..................................12
LO2: Apply a range of management accounting techniques...................................................13
P3 Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costing................................................................13
D2 produce financial reports that accurately apply and interpret data for a range of business
activities...............................................................................................................................16
LO3: the explanation of the application of planning tools in management accounting:.........17
[P4.] Advantages and disadvantages of planning tools for budgetary control: -.................17
[M3]. Analyse the use of different planning tools and their application for preparing and
forecasting budgets...............................................................................................................20
LO4: Compare ways in which organisations could use management accounting to respond to
financial problems....................................................................................................................22
P5, Compare how organisations are adapting management accounting systems to respond
to financial problems............................................................................................................22
M4, you should analyse how, in responding to financial problems, management accounting
can lead organisations to sustainable success......................................................................24

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D3, you should critically evaluate how planning tools for accounting respond appropriately
to solving financial problems to lead organisations to sustainable success.........................25
Conclusion:..............................................................................................................................26
References:...............................................................................................................................27

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Introduction:
Zylla Company is the largest multinational company. An organisation wants to make analysis
and proper observation of the number of changes occurred in the internal and external
environment of the company due to market expansion and restructuring in management.
Company's director is concerned and asked management accountant to consider uses of
management accounting systems within the organisation to respond such changes and
financial issues and making responses to sustainable growth and progress. This report will be
made by management accountant to Finance Director of the company on an implication of
management accounting systems and review the research on development in management
accounting as a profession. This report will also explain such comprehensive changes with
the use of management accounting system. Proper management accounting technique, costing
methods, financial analysis to determine cost will be analysed in order to recommend
comprehensive changes that will cover the significance of management accounting tools and
budgetary planning tools related to the concern of managerial and financial matters to deal
with. It will acknowledge the management of Zylla Company to examine and evaluate the
successive growth of an organisation in terms of changes in the external market.

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LO1: Demonstrate an understanding of management accounting systems
P1. Explain management accounting and give the essential requirements for
different types of management accounting.
Management accounting is quite different from regular accounting. It includes regular
managerial thinking and helps in the interpretation of budgetary behaviour in the
organisation. It is the concept that refers to taking righty steps and decisions in relation to
expenditure and policies of investments.
Definition:
Management accounting is a concept of identification, measurement, organisation,
accumulation and interpretation of accounting information utilised by a financial department
to plan, control and implement within the organisation. It is the process of assuring accurate
and appropriate sources of accountability and comprises the management report and financial
statements. It gives an opportunity to the stakeholders, creditors, regulatory bodies to
evaluate financial changes in the performance of the company in order to save their interests
(Fisher and Krumwiede, 2015).
Characteristics:
 It is simple and easy to understand while managing and correlating with its core and
explore the reality associated with accounting principles and convention.
 Management accounting uses various kinds of managerial tools such as cost
accounting systems, price optimising systems, inventory behaviour systems to
obscure accounting data in order to make valid accounting and financial plan to get
long-term achievements.
Types of management accounting systems:
1. Cost Accounting systems:
Costing accounting systems is also known as product costing system which is utilised by
firms and companies to create a framework to estimate the cost through analysing

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profitability, inventory valuation and controlling cost, It is used for estimating the flexible
and accurate cost of items from beneficial operations.
Essential requirements of Costing accounting systems:
 It is an estimating behaviour of the accurate cost of the product that operates
whole profitable projects related to ascertainment of cost.
 In cost accounting systems. Job order costing methods are used to accumulate
production cost separately for each project job orders.
 Process costing methods is used in the cost accounting systems to ascertain each
job cost by involving different procedure and various cost flow from operation.
For example; uses of cost accounting systems in process costing v\by oil
refineries, cement manufacturing companies etc.
 It helps Zylla company to calculate contribution margin by re-evaluating cost
measurement activity and revalue relevant gross profit.
2. Pricing Optimising systems:
Pricing Optimising Systems is the concept in which proper mathematical analysis and
evaluation by an organisation would be done to re-evaluate customer’s responses and
determine prices of different products according to market survey and customers’ choices.
In pricing optimising systems, various costing channels are used to determine best prices
of company’s products to meet requirements to the extent of maximising profit. It sets
max-to-max prices that people are willing to pay. Zylla can use and apply this system in
their company to ensure and regulate quality and efficiency of their products with price
value association (Briefly, 2017).
Essential requirements of pricing Optimising systems:
 It is used to make analyses of big data to evaluate and forecast the behaviour of
potential customers at different prices.
 Price optimising systems are used to evaluate pricing structure and buying
structure of initial pricing strategies, promotional buying strategies and
discounting methods.

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 Zylla can make the proper evaluation and monitor its pricing value of products
based on demands of different segments by examining how targeted audiences
and the market could be responded to price fluctuation.
3. Inventory Management systems:
Inventory management systems are referred to the procedure of carrying, ordering and
handling company’s inventory and stock valuation process. It is a major element of supply
chain process that includes the factors of controlling, monitoring and evaluating the aspects
related to overseeing inventory management activity.
The essential requirement of Inventory management systems:
 Evaluating right amount and value of inventory for valuation of stock becomes quite
crucial in order to avoid the risk becomes obsolete.
 Inventory management systems help the business owners to decide how to reordering
inventory.
 It supervises of non-capitalised assets as stock and inventory items to manage supply
chain management, a flow of products from producers and their facilities of scale.

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P2 Explain different methods used for management accounting reporting.
Preparation of Management accounting reports is essential in the management of the
organisation in order to observe necessity and accuracy of financial outcomes. Management
accounting reports are prepared by managers to evaluate and monitor the financial
performance of the company. Financial reports help the company to measure accuracy,
transparency and flexibility in the business operations.
Management report
(Source: Author)
Types of management reports:
1. Budget report: Budget reports are prepared according to the company's financial plans
and budgetary obligations. Budget is prepared to allow the company to regulate and control
audit and financial requirements through successful implementation of financial plans.
Budgets reports are prepared with the help of sales, purchase and production report
(Horngren, et. al., 2014).
Budget report
Sales report
inventory report
Investment report

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2. Sales report: Sales reports are produced by any company to track each task related to sales
and promotion activity. Sales reports are basically based on production and operation
activities of the company. This report provides effective managerial knowledge related to
related to sales and revenue objectives relation in the company.
3. Inventory report: Inventory reports are prepared through inventory management systems.
Through inventory management systems companies are allowed to make the profitable
decision related to storing inventory. Inventory reports give effective and reliable knowledge
regarding inventory supervision and managing good and effective flows of the inventory
(Paul Singh and Hahn Winther, 2017).
4. Investment report: investment decision is made by regulating sales and capital procedure
of an organisation. A company is allowed to make investment report based on understanding
and effectiveness. Investment appraisal report is created to optimise and gather knowledge
related to investment proposal and to understand the market demand and investor choices.

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M1 Management accounting systems and their benefit in the context of Zylla
Company:
Financial Forecasting:
 Financial forecasting is the process that includes managerial planning, evaluating
and interpreting various facts to take financial decisions.
 Management accounting systems are useful in collecting relative facts, organise
them and implement financial plans in order to make forecasting process more
flexible and feasible to convert long-term target into reality.
Cost measurement:
 Cost measurement means analysis of managerial and financial facts in order to make
long-term forecasting decision effectively and correctly.
 MIS uses cost management systems to analyse and measure the accuracy of cost-
revenue relationship and effectiveness to optimise actual and estimated variables to
make company's objective target oriented.
Financial Forecasting
Cost measurement
Investment appraisal

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Investment and profitability decisions:
 MIS is used by the organisation in relation to determining prices and investment
strategies.
 MIS allows the company to make profitable decisions through managerial information
and financial facts so that company could attain long-term opportunity of increasing
productivity (Otley and Emmanuel, 2013).

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D1 Critical evaluation of how management accounting systems and management
accounting reporting are integrated within organisational processes
Management accounting systems are those systems which give a platform to the company to
observe, evaluate changes and interpret cost and funds analysis behaviour in order to
maximise profit and reduce the cost of wastages project. Zylla Company should apply
management accounting systems in order to balance between internal and external business
environment to expand their business and acquisition activities in an accurate and flexible
manner. A company could use cost management accounting system as the decision-making
tool to measure cost accuracy and effectiveness. Investment management systems help to
make effective and reliable policies related to funding and additional spending to avoid
business risk. Inventory management systems are made to monitor each job task and direct
employees to examine the managerial performance of the company (Soin and Collier, 2013).