London Tradition: Applying Management Accounting Systems and Reports

This report provides an overview of management accounting systems and reports, focusing on their application within London Tradition, a manufacturing company based in the United Kingdom. It discusses various management accounting systems such as cost accounting, inventory management, job costing, and price optimization, highlighting their essential requirements and benefits. The report also examines different types of management accounting reports, including job costing reports, inventory management reports, performance reports, and product/service profitability reports, emphasizing their importance in analysis, interpretation, needs management, identifying improvement scopes, problem-solving, and decision-making. Furthermore, the report touches upon the calculation of costs using techniques like marginal costing. The analysis aims to demonstrate how these systems and reports can aid London Tradition in achieving its goals and objectives by improving efficiency and effectiveness. Desklib provides access to similar solved assignments and study tools for students.

Management Accounting

INTRODUCTION
Management Accounting refers to the way in which the use of different types of methods
and techniques can be made to take important decisions so that this can be helpful for the
organizations (Alsaid and Mutiganda, 2020). Management Accountants should make sure that
they are able to make its use for attaining goals and objectives in the future. Therefore, it is quite
crucial that it can be used according to the specific level of needs and requirements which persist
in the organization so that the necessary actions can be taken in order to solve the problems and
to take the important and crucial decisions which will be helpful for the company. London
Tradition has been selected for this report. It is a manufacturing company which has its
headquarters in London, United Kingdom. The focus of this project will be on the way in which
Management Accounting is required to be used so that the attainment of the goals and objectives
can be done.
TASK 1
P1: Management Accounting Systems
Management Accounting refers to the use of financial data, facts and information so that
the decisions can be taken in a better manner (Balashova and et.al., 2021). The managers of
London Tradition should make sure that they use it appropriately in a right way.
Different types of Management Accounting Systems can be used by the firms. Their
explanation is provided as follows-
Cost Accounting System- In this system, an accurate determination of the costs can be
made (Cvetkoska and Eftimov, 2021). Thus, it has to be used for the particular purpose of taking
actions which are crucial for reducing the costs. It is a system which is useful because it is
helpful in the determination of the overheads and segregating them according to the departments
which will therefore help a lot in taking of the necessary actions accordingly. Therefore, it
should be ensured that this system is used appropriately for managing the excessive costs in a
proper and appropriate manner. The management of London Tradition therefore should ensure
that its use is made quite properly.
Essential requirements-
 Assessment of the overheads can be done when the use of this system is made which will
help in enhancing the overall level of profits.
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 Through making the use of this system the way in which the costs are to be reduced
should be identified which can help the firm a lot.
Inventory Management System- Through the use of this system the inventory level can
be assessed quite properly (Golyagina and Valuckas, 2020). Thus, through making its use a
better track of the inventory items can be kept which will thus help a lot in taking of important
decisions for reducing the excessive costs which are related with inventory. It is required to be
used for the purpose of ascertaining the way in which the tracking of the stock items can be
carried out so that the appropriate actions can be taken accordingly. London Tradition therefore
has to make sure that it makes its use so that it can manage the different types of stock items in a
better manner.
Essential requirements-
 In this system, the tracking of the stock items should be done so that the needs and
requirements are managed well.
 In this system, the decisions which are related with inventory management should be
taken which will therefore help the organizations a lot.
Job Costing System- In this system, the better track of the different types of job orders
can be kept so that the right decisions can be taken in this manner (Indrasari, 2020). Therefore, it
can be stated that through its use the identification of the way in which the detailed track of the
different types of job orders can be kept can be done which will thus be quite helpful for the
companies. It is helpful in the identifying the way in which the enhancement in the profits which
are being earned through job orders can be done. In the context of London Tradition, it can be
stated that this particular system should be used which will help in the attainment of goals and
objectives.
Essential requirements-
 In this system, the job orders are required to be managed well so that the better decisions
can be taken. Thus in this way the better management of the job orders can be carried out
quite effectively and efficiently.
 Through this system, the tracking system can be used so that the job orders are managed
well which will help in taking important decisions.
Price Optimization System- In it, the mathematical and statistical models and
techniques should be used for setting appropriate prices (Klaprabchone, Chuaychoo and
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Chaemmuangpak, 2020). Thus, In this way better prices can be set which will therefore help the
organizations a lot in ensuring that they can enhance the overall level of profitability which will
help them a lot in ensuring that the overall level of efficiency and effectiveness level can be
carried out.
Essential requirements-
 In this system, the prices can be set according to the demand level so that the attainment
of the goals and objectives can be carried out.
 The market trends can be identified through the use of this system which will help the
organizations in attaining the goals and objectives.
P2: Management Accounting Reports
Management Accounting Reports should be used so that the Analysis and Interpretation
can be performed for deriving the conclusions and recommendations can be drawn (Lada,
Kozarkiewicz and Haslam, 2020). The following reports should be used by the managers of
London Tradition-
Job Costing Reports- In these reports, a proper and detailed assessment of the different
types of job orders and the costs which are associated with them should be carried out. The
managers of London Tradition should ensure that they should be able to make the use of these
reports so that the reduction in the job costs can be carried out (Le, Nguyen and Hoang, 2020). A
detailed review of the way in which the management of the job orders should be carried out
should be done by making their use so that it can help the organizations to be able to take the
right decisions concerning with the future. In this way, the reports will help the managers to be
able to take appropriate actions which will help them in the future.
Inventory Management Reports- In these reports, a proper and detailed assessment of
the inventory should be made so that a better track record of the stock items can be made which
will help in taking of the important decisions (Liem and Hien, 2020). They are helpful because
through making their use the action related with stock management can be taken in a better way.
Thus, this will be useful so as to ensure that the problems and issues persisting with inventory
can be resolved. London Tradition's managers should therefore make sure that they should be
able to make their use so that they can ensure that the appropriate management of the stock items
can be carried out.
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Performance Reports- In these reports, the assessment of the performance level can be
carried out so that the scope of making the desired level of improvement can be found out
(Madhoun, 2020). Thus, in this way the necessary actions can be taken for the purpose of
enhancing the overall level of performance. For the management of London Tradition, it is
therefore desired that the use of these reports should be made for the purpose of assessing
performance and attaining the future goals and objectives.
Product/Service Profitability Report- In these reports, the assessment of the profits
which can be generated through the Product/Service has to be carried out which will help the
organizations a lot (Mahajan and Deobagkar, 2020). The products which are producing regular
profits can be identified in this way and the products which are not producing regular profits can
also be identified so that the profits are enhanced. London Tradition's managers should therefore
be able to make sure that they can use them for the purpose of identifying the profitable products
and taking all the desired and necessary actions which are important for meeting the needs and
requirements.
There is an importance of making the use of these reports. This importance can be
explained as follows-
 Analysis and Interpretation- With the use of these reports, the Analysis and
Interpretation can be performed in quite an appropriate manner. Therefore, for the
managers of London Tradition it is important that they are used so that the Analysis and
Interpretation can be done quite effectively and efficiently.
 Management of Needs and Requirements- With the use of these reports, the
management of needs and requirements can be carried out in an appropriate way which
will therefore be quite helpful in taking all the desired actions. In London Tradition, it is
quite important that they are used in a right way.
 Identifying the scope of making improvements- Through the use of these reports, the
scope through which the improvements can be made can be identified. London Tradition
therefore needs to ensure that it is able to identify this scope which will therefore help it a
lot for the attainment of the goals and objectives.
 Identification of problems and ensuring their solution- It is necessary that this can be
carried out because the organizations will be able to take the right steps which will help
them a lot in making the improvements as and when required . London Tradition needs to
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ensure that it can do this which will help in taking of important decisions which are
related with the future.
 Taking Decisions- The use of these reports should be made for the purpose of taking
decisions . This is so because the organizations will be able to draw the conclusions and
recommendations which are helpful for it and ensure that the decisions can be taken
accordingly. Through the use of these reports, the managers can make sure that they are
able to consult with their subordinates in detail about the actions which they need to take
for enhancing the efficiency and effectiveness level in an appropriate way.
Thus, it can be stated that through making the use of Management Accounting Reports
the managers should be able to take the essential and desired actions which can be useful for the
organization.
M1: Benefits of Management Accounting Systems
The Management Accounting Systems are helpful for the firms and therefore they have a
wide range of benefits. In London Tradition, it is therefore important that the use of these
systems should be made in such a way so that the essential needs and requirements can be
managed within the company. They are to be applied within the functioning of the company and
thus become an essential part of the organizations so that they are able to make a proper progress
in the future which can thus help them a lot.
D1: Critical evaluation of Management Accounting Systems and Management Accounting
Reports
Their use is important because in this way the organizations will be able to identify the
best decisions can be taken. This is so because because through their use the conclusions and
recommendations can be drawn and accordingly the necessary actions can be taken. London
Tradition is required to make sure that it is able to find out the way in which they are to be used
which will therefore help it a lot in attaining the necessary goals and objectives in the future.
TASK 2
P3: Calculation of costs
This is crucial so that the organizations are able to make sure that they can take better
decisions in a right way (Safari Sarchah, Yazdifar and Pifeh, 2020). London Tradition is
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therefore required to make sure that the use of certain techniques can be made for this particular
purpose. These techniques are explained as follows-
Marginal Costing-
It is a technique which is used in the firms through which the calculation of Break-Even
Point can be done (Semenyshena, Khorunzhak and Zadorozhnyi, 2020). At this point, there are
no profits and no losses for the firm. London Tradition should be able to make sure that it is used
quite appropriately for the particular purpose of taking of important decisions in the future. This
is so because its use is helpful for ensuring that the comparison can be carried out in a better
way.
Advantages-
 The use of this technique is important for the purpose of taking of Short-term decisions. It
can therefore help the organization a lot.
 Through its use the Cost Control can be carried out so that the management of the
different types of costs can be done.
 The use of this technique can be made for avoiding the complication of under or over
absorption of overheads.
 It is quite helpful in the comparison of performance between two or more products and
departments.
Disadvantages-
 In this technique, the separation of the costs is difficult and therefore this can lead
towards inaccuracy in the results.
 Calculations which have been done through making the use of this technique can be
misleading.
 Control provided through budgetary control and standard costing is effective as compared
to marginal costing.
 This technique is useful only for a short term period. It is not useful for long term
decision making.
Absorption Costing-
It means linking of the production costs to the cost unit so that the full cost per unit of
inventories can be calculated. For an organization like London Tradition, it is important that it
can be used so that it can be useful in enhancing the overall level of profits.
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Advantages-
 It is the best method through which the overall costs which are associated with a
particular product can be ascertained quite effectively and efficiently.
 It is the most suitable method through which the preparation of accounts can be done.
Thus, in this way it can be quite helpful for the organizations.
 Through the use of this method the costing for smaller companies can be done. Therefore
this can be beneficial for the organizations.
 It is helpful for the businesses which have a constant demand for their products. Thus,
this can help the organizations.
Disadvantages-
 It is not useful as a monitoring tool and therefore in this way it cannot be used for the
purpose of keeping a check within the company.
 When the use of this method is made the company's performance can look more desirable
and good. In this way this can create a particular level of impact on the different types of
organizations.
 The use of this particular technique is not helpful for the purpose of calculation of Break-
Even Point. Therefore, it can be stated that this can impact the organizations because they
will not be able to do comparison.
 Cost Control and Cost Comparison is quite difficult when the use of this technique is
made. Thus, this can affect the organizations.
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