Management Accounting Techniques and Systems for Elegant Furniture Ltd

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Management Accounting
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Table of Contents
Introduction....................................................................................................................................3
LO1: Demonstrate an understanding of management accounting systems.......................4
Management accounting..........................................................................................................4
Management accounting systems..........................................................................................6
Benefits of management accounting systems......................................................................8
Evaluation of management accounting systems and management reporting integrated
into an organisation................................................................................................................10
LO2: Apply a range of management accounting techniques...............................................11
LO3: Explain the use of planning tools used in management accounting.........................14
LO4: Compare the ways in which organisations could use management accounting to
respond to financial problems...................................................................................................19
Conclusion....................................................................................................................................22
References...................................................................................................................................23
Appendices..................................................................................................................................25
Appendix 1...............................................................................................................................25
Appendix 2...............................................................................................................................27
Appendix 3...............................................................................................................................29
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Introduction
In this report, it will discuss management accounting is an important and essential role
in the individual department. In Elegant furniture Ltd, the previous management
accounting has not played a good position in the organisation for that the organisation
cannot compete with the competitor. In this report is also discuss the management
accounting system and report id giving brief knowledge and it makes the proper
satisfaction to the individual employee of the Elegant furniture Ltd. In the Elegant
furniture Ltd, the role of management accounting and it use the different methods to
enhance or achieve the organisational goals with a suitable situation. Management
accounting techniques are helping the income statement of the organisation, from the
comments it makes the reports to understand easily. It discusses the planning tool is the
critical part, and it solves or achieves the organisation objective from the effective
planning, and it makes the forecasting budgets to get the cost control from all the part of
the project or organisation. In the market, some of the organisations are not following
the management accounting that will discuss the difference among the organisations.
Management accounting will use methods to overcome financial problems.Management
accounting is having difference used in different organisation; there will be showing the
effects to those organisation is not using the management accounting.
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LO1: Demonstrate an understanding of management accounting systems
Management accounting
Management accounting is a different part of the accounting, which study or analysis of
business activities and identify the problems and it gives the suggestion to the
accounting system to follow them and achieve the organisation goals. Mainly the
management accounting is used to decide for the financial accounting and cost
accounting to attract the external part of the organisation (Nielsen, et. al, 2015).
Roles of management accounting
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Source: By Author, 2019
 Making a budget
The first role in the organisation or to start the activity, the management accounting is
making the individual budget to work in the field of the budget. After making the budget,
it will ensure that there will not take the extra cost of the work (All Business Schools,
2019).
 Determining the benefits and compensation
The management accounting is researching the market, finding the benefits for the
organisation and determining the value of the assets which is performing revenue or
not. The management accounting is taken care of all the departments with the
coordination among all.
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MakingbudgetDeterminingthebenefitsandcompensationAidinginstrategicplanning

 Aiding in strategic planning
The management accounting is assisted the strategic plan with the proper formulation,
and it gives the work assignment of the individual, and this will make the appropriate
schedule in which the work will do.
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Management accounting systems
Source: By Author, 2019
 Managerial Accounting vs. Financial Accounting
Management accounting is to study or discusses for the internal organisation to solve
the problem of financial accounting or cost accounting. Financial accounting will take
help from the management accounting this will add value, and they will formulate the
data to the external part of the Elegant Furniture Ltd. such as investors or stakeholders
(Thabet, et al., 2017).
 Activity-Based Accounting
The activity-based accounting is analysing the cost of the individual part of the
organisation such as production, data processing, factory cost and selling cost. All the
price will be added, and it will identifyper unit cost to get an accurate profit for the
individual product.TheElegant Furniture Ltd. has to require all the transaction to make a
successful accounting.
 Balanced Scorecard
Balance scorecard is to study the satisfaction level from the customer with the help from
the feedbacks, and balance scorecard is giving the different strategy or good thing for
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the organisation. The balanced scorecard is a requirement of all detailed customer and
compare the whole thing to the organisation's data.
 Managerial accounting
Managerial accounting is the most critical system of management accounting; the
management accounting is comparing the data from actual with the budgeted; this is the
internal comparison. It makes the reports from the contrast in the accounting such as
income and expenses report, sales analysis and returns on investment.
Different methods used in management accounting reporting
Source: By Author, 2019
 Budget report
In this budget report, it consists of the budget information of the individual department of
the specific part with the given period. The budget can be decided from the previous
budget report and this all news will be recorded for the future use, and this provides the
evidence, and the budget reports use to compare the cost (Cleartax, 2019).
 Cost report
Cost report is the report this will include all the cost, and it makes the cost analysis, how
the value has been decreased or increased, and this has to give the proper clearance to
the higher authorities and after makes authentication.
 Execution report
The execution report was done after making plans or new budget, and the budget will
be analysed with the organisation, and this will include all the detail, and then it
formulate or execute the plans with the effective manner. Execution is the critical part if
anything is forgotten then it would take much cost to develop or re-join with the task or
project.
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BudgetCostExecution

[Source: Zainqureshi, 2018]
Benefits of management accounting systems
 It helps in planning
In Elegant Furniture Ltd, is researching as per the market and it is finding the best
solution to the organisation, from the effective plan the organisation will achieve the
objectives. The project can be successful in management accounting. Elegant Furniture
Ltd is using the MA for creative planning with the current trend in the market.
 Effective management control
The management accounting will control effectively for all the work is done in the
department. The power can be done such as behaviour, rules and regulation and cost.
From managing the job, it gates the less time to do the work.
 Creating coordination
The management accounting is doing work in a team then it creates coordination
among all over the side, then only it will gate the success (Theriou, 2015). Management
accounting is maintaining personal communication with the department to solve the
problems of the organisation.
 Maximise the profitability
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Management accounting is creating indirect profitability for the organisation.
Management accounting is making a return to the organisation.
 Evaluation of performance
The management accounting is studying personal behaviour and working performance,
and it will evaluate the individual employee to know about the employee. The core team
is determining the excellent employee and giving the awards and recognise another
employee of Elegant Furniture Ltd.
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Evaluation of management accounting systems and management reporting
integrated into an organisation
Management accounting is having an active role in all the stage of the organisation.
Elegant Furniture Ltd. is creating a different work standard for the employee. The
management accounting is used to make plans to get useful, the management
accounting is preparing the budget of the various department, and this will build the
foundations for the individual, so they have to invest that much cost to the task, and it
will minimise the damage. Management accounting systems will work with the plan, and
this all are systems that will be recorded in the management accounting reports, it
decides for the individual. At last the management accounting is used by Elegant
Furniture Ltd. to overcome the financial problems and get sustainable success. The
management accounting is taking the additional cost to get the extra return to the
organisation.
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LO2: Apply a range of management accounting techniques
Marginal costing
The marginal costing is the cost which gets from the additional cost to the organisation.
The marginal costing will include fixed costing and variable costing. The marginal
costing is done for the individual product cost, and it consists of the fixed and variable
cost of the product. The marginal costing is a small type of cost holding in a particular
department. The value was done with the proper costing, and it can also make to
forecast to get the order in the organisation. Marginal costing can maximise the profits
from the clients.
Income statement using marginal costing
The solution has mentioned in Appendix 1
Absorption costing
Absorption costing is the costing includes all the cost from raw material to finished
goods. The absorption costing is mainly required for the external financial reporting and
for reporting the income tax. Absorption costing is not including direct costing or variable
costing. Overhead is also added to find out the profit or income statement using
absorption costing.
Income statement using adsorption costing
The solution has mentioned in Appendix 2
Reconciliation statement
Reconciliation statement is the statement that begins the accounting for own use to
show the figures in the marginal costing and absorption costing. The main work of
reconciliation statement is to adjustment of third-party account.
There is also having the Reconciliation statement using marginal costing and absorption
costing to solve the difference in the profit; this is mention in Appendix 3.
Management accounting techniques with the reports of the Elegant Furniture Ltd
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Source: By Author, 2019
 Cost-benefit analysis
Cost-benefit analysis is the general term that uses for the organisation to comparing the
cost of business strategy with its likely result of the organisation. It reports the value and
makes them sure to use proper cost with the minimum examine of the task or project.
 Forecasting
Forecasting is the primary technique to set the strategy with the need of the
organisation and get the result as per the organisation need. Before formulating the
plan, the management accounting will forecast the result to get a good result. The
forecasting has a different task, and this can be done with the help of the market
situation.
 Cost to company
Cost of the company is also a technique to assure the value of an individual employee
annually. The management accounting is making a different stage to take easily find the
cost to the company. The cost to the company is essential to make the budget for the
employee (Spacey, 2019).
 The total cost of Ownership
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