Integrating Management Accounting Systems and Reporting in Business

This report provides a detailed exploration of management accounting, differentiating it from financial accounting and highlighting its application within Zak Limited. It covers management accounting systems, reporting methods, and the importance of accurate financial information. The report includes cost analysis, budgeting processes, pricing strategies, and SWOT analysis to improve an organization's financial position. Furthermore, it addresses financial governance, the characteristics of effective management accountants, and the role of management accounting in solving financial problems for sustainable success. The analysis encompasses the use of planning tools for budget preparation and forecasting, offering a comprehensive overview of how management accounting contributes to organizational efficiency and strategic decision-making. This document is available on Desklib, a platform offering a wide range of study tools and solved assignments for students.

Management Accounting
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Contents
Introduction.................................................................................................................................................5
TASK 1.......................................................................................................................................................6
1.1 Define and explain management accounting.....................................................................................6
1.2 What is management accounting system and why it is important to integrate it within the
organisation.............................................................................................................................................7
1.3 Distinguishing Management Accounting from Financial Accounting...............................................8
1.4 Define and explain different types of management accounting systems and their benefits within the
organisation.............................................................................................................................................9
1.5 Explain the different types of management accounting reports and methods used for reporting.....10
1.6 Discuss why the information needs to be accurate and understandable to the user..........................10
1.7 Evaluate the benefits of management accounting systems and their application in the organisation
context. (M1).........................................................................................................................................12
1.8 Critically evaluate how management accounting systems and management accounting reporting is
integrated within the organizational processes. Provide justifications to your proposed methods and
benefits in the organizational context. (D1)...........................................................................................13
TASK 2.....................................................................................................................................................14
2.1 What is the meant by cost? Explain different types of cost and cost analysis?................................14
2.2 define following terms with their explanation:................................................................................15
2.3 income statement with the helps of marginal and absorption costing..............................................17
2.4 What is the minimum number of unit that Zak needs to sell per year for X products? Use formula
product?.................................................................................................................................................19
2.5 Prepare a flexible budget.................................................................................................................19
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2.6 Prepare a financial reporting document...........................................................................................20
2.7 produce financial report that apply and interpret the range of business activities............................20
Task 3........................................................................................................................................................21
Introduction...........................................................................................................................................21
3.1 What are budgets and how are they prepared. (P4)..........................................................................22
3.2 Discuss different types of Budget....................................................................................................24
3.3 Discuss different pricing strategies and how do competitors determine their price.........................25
3.4 What is meant by supply and demand consideration and how does demand and supply affect
pricing...................................................................................................................................................26
3.5 How does cost system differ depending upon the cost activity........................................................27
3.6 How SWOT analysis improve financial position of organization....................................................28
3.7 Analyze the use of different planning tools for preparing and forecasting budget (M3)..................29
Conclusion.............................................................................................................................................30
TASK 4.....................................................................................................................................................31
4.1 Identify financial problems using indicators such as:......................................................................31
4.2 Define financial governance and how these are used to prevent the financial problems. How do we
use it to monitor strategy.......................................................................................................................32
4.3 Discuss characteristics of effective management accountant and how these are used to solve
problems................................................................................................................................................33
4.4 Discuss the significance of developing strategies which requires effective and timely reporting....34
4.5 Analyze how in respond to financial problem management accounting can solve lead to sustainable
success (M4)..........................................................................................................................................35
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4.6 Evaluate how planning tools for accounting respond to solve financial problem to attain the
sustainable success. (D3).......................................................................................................................36
Conclusion.................................................................................................................................................37
References.................................................................................................................................................38
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Introduction
The report deals with the explanation of management accounting with that how it is different
from financial accounting is also highlighted. With this the use of management accounting in
Zak Limited is explained which helps them in management accounting reporting. The analysis of
variance is also done so that the performance can be evaluated. Budgets are also highlighted and
the merits and demerits of those are also explained. The ways in with the management
accounting can solve the financial problem to attain the sustainable success is also highlighted.
The planning tools used for planning and controlling budget are also depicted.
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TASK 1
1.1 Define and explain management accounting.
Definition of management accounting: It is a managerial process which involves planning,
identifying, controlling, measuring and communicating of information of the organisation.
Management accounting helps in decision making, formulation of plans and other things.
Further it helps to achieve its goals as the focus is on making of cash flows, budget planning,
financial statements (Johansson, et. al., 2012). On the other hand it truly differs from the
financial planning as it focuses on only organisation financial strategies.
It helps the firm to restructure its plans and actions with the management accounting techniques
which helps a company to gain the competitive edge. In all it is the internal focus on organisation
development through accounting techniques and tools like ABC model, ERM management
(Johansson, et. al., 2012).
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1.2 What is management accounting system and why it is important to integrate it within
the organisation.
Management accounting system involved the formulation of plans preparation of reports,
financial statements, cash flow statement, balance sheets and other agendas which help managers
to achieve organisation goals by quick and accurate decision making.
It also includes managerial accounting reports like financial reports, cash flow pro forma and
everything making of financial items (Johansson, et. al., 2012).
It is important to integrate within the organisation to improve decision making of managers,
helping in the issues like mergers, takeovers and acquisition. The management accounting is
helping to analyze about the future outcomes of risk, measuring of our results which
management tools (Johansson, et. al., 2012). In overall it helps us to pursue the goals of
organisation with the financial information and the statistical information provided by the
financial accounts.
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1.3 Distinguishing Management Accounting from Financial Accounting.
Particulars’ Management Accounting Financial Accounting
Meaning It is process of planning,
analysing, execution of
everything in organisation
context (Richardson, 2017).
It is calculated formula to
maintain financial records of
company
Focus Internal focus External focus
Consumption of time It is more time consuming
(Dälken, 2014)
Less time consuming
Benefits Helps to improve decision
making
Helps to maintain the
financial data (Richardson,
2017).
Time bound More futuristic Depends on historic data
Goal Made to achieve
organizational goal
(Richardson, 2017).
Financial goal of company
only
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1.4 Define and explain different types of management accounting systems and their benefits
within the organisation
1.4.1 Cost accounting systems.
It is also called as costing system used by firms to know the cost of the product for the stock
valuation and profitability analysis. Estimated cost is monitored by the actual cost.
Normal costing: used to measure manufactured products (Johansson, et. al., 2012).
Actual costing: it involves recording of product cost.
Standard costing: it involves substitution of estimated and actual cost.
1.4.2 Inventory management systems
This system helps in managing the inventory from factory place till the goods are delivered to the
distribution place to the customers. In short it’s the whole management of inventory at it each
stage of product. It includes keeping a month to month record of inventory. This can be done by
using a ERP system (Johansson, et. al., 2012).
Valuation of inventory can be done by methods:
FIFO: “first in first out” means goods added first to the inventory are assumed to be the first
goods.
LIFO: “last in, First out” means goods added last in the category are assumed to be the first
goods.
Average: It’s a rarely used method with less accuracy.
1.4.3 Job costing systems
Job costing or the job order costing is the method of assigning a manufacturing cost to each
product manufactured in a company, this method is used by a company when the companies
product is slightly different from each other (Modell, 2012).
Job costing method uses some information for its use like:
1. Direct materials 2. Direct Labour: 3. Overheads
1.4.4 Price optimizing systems
This system is used by the company to know which price should be used to gain maximum
profits or using a pricing strategy to determine how customers will respond.
It is used of historical cost past data and other figures (Johansson, et. al., 2012).
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1.5 Explain the different types of management accounting reports and methods used for
reporting.
Managerial accounting reports like:
1. Financial Reports: it consists of making of profit and loss statement, balance sheet (GÜREL
and TAT, 2017).
2. Pro Forma Cash Flow: It gives a month to month summary of inflow and outflow of cash
from the business operations.
3. Sales reports: Tool as it shows the profits on sale and let us know the revenue generation in
terms of the company expenses (GÜREL and TAT, 2017).
4. Item cost reports: it helps us to make you more accurate knowing of your expenditures in
terms of direct labor, material and overheads expenses.
Methods used in reporting:
Cost reports: reports made for identifying cost of business.
Budgets: a futuristic plan made for an organisation.
Execution reports: a report which is made directly to be executed and has everything within it
(Gomes and Romão, 2017).
Image: Types of reports
Source: By Author, 2018
1.6 Discuss why the information needs to be accurate and understandable to the user.
Financial information are the final records of the business organisation, it is presented accurately
because they reveal the true value of company (GÜREL and TAT, 2017). Goodwill of company
depends on net worth, so it should be shown correctly to the public. As well as the public are the
investors so they need accuracy in financial terms.
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CostreportsBudgets

Financial statements, balance sheet, profit &loss do reveal company true position. Like showing
of contingent liabilities at the foot note of balance sheet needs to disclosed as it gives true
information of company policies to the public (GÜREL and TAT, 2017).
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1.7 Evaluate the benefits of management accounting systems and their application in the
organisation context. (M1)
It helps in better decision making as making of reports and accounts, better controlling which
improves the efficiency of the organisation (GÜREL and TAT, 2017). It helps in better
management so that it serves customer satisfaction. It provides motivation to employers and
better flow of communication among the employees (Modell, 2012).
Benefits of management accounting in the context of Zak Ltd it provides better flow of
communication between the employees, it’s a manufacturing company which needs coordination
and utilization of units which now is happening with it (GÜREL and TAT, 2017).
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