Management Accounting Report: Principles, Tools, and Analysis

This report delves into the realm of management accounting, offering a comprehensive analysis of its core principles, tools, and systems, particularly within the context of Rowlinson Knitwear. It explores the fundamental aspects of management accounting, including cost accounting, job costing, inventory management, and price optimization systems. The report details methods for formulating income statements, comparing and contrasting planning tools, and evaluating the effectiveness of management accounting in addressing financial challenges. It also includes discussions on marginal and absorption costing techniques and their application in cost calculation. The report concludes with recommendations for achieving sustainable business practices.

Management
Accounting
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Explanation of management accounting principles................................................................3
Role of management accounting and management accounting system.................................4
Cost calculation with use of the marginal and absorption costing.........................................7
Evaluation of management accounting and its integration among organisation....................9
Benefits of management accounting system........................................................................10
CONCLUSION..............................................................................................................................11
PART 2..........................................................................................................................................11
Compare and contrast three planning tools in management accounting .............................11
Effectiveness of management accounting in dealing with Financial problems ..................15
Recommendations and conclusion for achieving sustainable business ...............................17
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19
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INTRODUCTION
Management accounting is explained as the utilisation of different tools, provisions,
techniques related with financial aspects of an organisation. The main motive of organisation is
to improve overall organisational profits to maximise their business size in various geographical
areas. The prime focus of organisation is to enhance accounting systems and functions through
maximising knowledge related with financial factors. This report is written from perspective of
Rowlinson Knitwear which manufactures clothes for large corporate houses and schools.
Moreover, explanation of management accounting principles, role of management accounting
and management accounting system will be understand through this report (Chenhall and Moers,
2015). Methods and techniques for formulation of income statement is also analyse in the
upcoming report for understanding management system. Evaluation of management accounting
and benefits related with organisation is included in the report. In the last, compare and contrast
of different planning tools related with management accounting will highlight in report.
MAIN BODY
Explanation of management accounting principles
Management accounting is explained and refers according to all techniques, tools and
methods related financial section which aid respective organisation for accomplish of their
organisational accounting goals and objectives with decided budget and financial respective.
Management accounting principle (MAP) was formulated for serve core and all essential needs
of internal management for improving decision support system, objectives and use of resources
within organisation. Also, on the other side there are different task performed by management
and as per this some main principles of management accounting in context of Rowlinson
Knitwear are mention as follow:
 Designing and compiling- Accounting information perform an important role to record,
report, statement and all other past data related with accounts (Cokins and Căpușneanu,
2020). In the context of Rowlinson Knitwear management focus on compiling all projects
in an organised manner through modifying information related with business and
financial factors. This support organisation to manage task for a particular factor.
 Management by exception- All principles related with management exception are
followed by organisation to present all information such as budgetary control system,
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standard costing techniques, etc. to complete all task with decided accounting system.
Rowlinson Knitwear utilise management by exception through compare actual
performance with pre-determine deviations. On the other side, management spent less
time to read and study of information so work actions are started according to decided
time.
Role of management accounting and management accounting system
Management accounting perform an important role in the process of formulating all
report related with functions and operations of Rowlinson Knitwear (Fleischman and McLean,
2020). The main motive of managers is to generate long and short term decisions by measuring,
analysing, interpreting and communicating all information related with manager. The main
motive of respective organisation is to generate long term factors by considering different
accounting system in an organised manner as they plays an important role in company operations
that are mention as follow:
TYPES OF MANAGEMENT ACCOUNTING SYSTEM
 Cost accounting system- Manager ensures that they perform their role in an organised
manner through completing all tasks with decided factor in order to control cost of
business product and services. Rowlinson Knitwear control cost through increasing
efficiency of their cost accounting system.
Essential of cost accounting system- It plays a major role for minimising the overall cost
related with organisation. Right techniques and functions perform an important role to track
operational cost of business. It results cost accounting management helps managers for
completing their task according to decided cost for offering product at right price in market.
Also, the cost-accounting system helps for completion of work with decided budget and this is
used for manage task with use of reliable financial information.
 Job costing system- Manufacturing organisation engaged and perform their work
through focusing on job costing system (Hariyati, Tjahjadi and Soewarno, 2019). This
results management is able to complete task according to decided orders and time.
Similarly, job costing system ensures work is managed as per roles of organisation.
Essential Role of job accounting- It ensures that job orders plays an important role for the
organisation to perform their task in an effective and efficient manner. This also ensures work is
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managed by managing order of organisation through manufacturing products according to
customer requirements.
 Inventory management system- According to this system, manager considered that all
resources and inventory is used by organisation. From the perspective of Rowlinson
Knitwear, this is identified inventory management system monitor all resources which
is required to perform the project. It results less number of wastage resources control
cost of operations for completion of task in an organised manner.
Essential Role of inventory management- Role of inventory management system is to check
and track project as well as manufacturing is done according to decided number of inventory.
This also results (Hiebl and et. al., 2015). On the other side, role of inventory management is to
complete work with understand of company systems. This governs that inventory management
system monitor and check constant updates related with inventory to manage the cost of
inventory which also improve the organisation profits. Rowlinson Knitwear performs
manufacturing operations within monitoring of company authorities. The problems related with
supply and misuse of inventory is also resolved by management through use of inventory
management accounting system.
 Price optimisation system- Management accounting is used by all organisations
whether, small or large. But, according to present market conditions price optimisation
perform an important role to set or decide right price of company product and service.
Rowlinson Knitwear decide price according to price optimisation system.
Essential Role of price optimisation system- Price optimisation is used by organisation to set
right price of their manufactured products. This ensure management complete task according to
decided profits and system that results towards utilisation and maximisation of company profits
with monitoring their job roles. Roles of the price-optimisation system is to make accurate
information and this helps for manage and control price factors in a competitive-environment.
This define that the current system is used to manage and induce right price strategy within a
competitive environment.
Different methods used for management accounting reporting
Managerial accounting, also known as cost accounting and this emphasise on the
information which is received through the financial-accounting. In simple terms, Management
reporting is used for the planning, regulating, measuring and formulation of appropriate decision-
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making process. Moreover, the reports are constant and they are generated through the
accounting, book-keeping, etc. which exactly based on the situation. This is because critical
decisions depend on the reports so this is important for analyse the certain patterns which
impacts on the company performance. Manager also analyse the report for understand the
essential information which helps for completion of all task in an organised manner especially,
for generate the authentic results through adopt effective report systems which is related with
current management system.
 Performance Report- One of the most important task of performance report is to
formulate and review the performance of an organisation as a whole. This is important
for each individual or employee which engaged in the operations and functions of
Rowlinson Knitwear. The current performance report aids towards the analyse of key
strategic decisions by calculating and monitoring of the individuals at the end of financial
year. Moreover, managerial accounting reporting generate deep insight for generate the
company goals and completion of organisation work according to the capacity of
individuals. It refers performance report helps for manage the task as per individual
performance.
 Inventory report- With understand of business inventory report this is understand that
an organisation identify and define the nature as well as number of products which is
related with production activities. One of the most important factor of inventory
management accounting reporting is to manufacture and provide the current assets which
helps in completion of work with more efficiency. From the perspective of Rowlinson
Knitwear this is identified inventory valuation report helps to obtain and hold the
products with ensure the stock and then proper conditions to sell.
 Job-costing report- This is identified as an important technique and it is used for
implement effective management accounting. Management accounting also down the
basic units and this helps for evaluate the successful facilities that helps to make better
data-driven decisions by complete all work according to the decided profit related
systems. Moreover, the critical decisions related with business helps for set and utilise it
proper manner as this helps for make prospective customers decisions that helps to
manage overall job related factors. Direct and Indirect overhead cost helps for develop
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and implement better link with the projects by controlling and reducing challenges which
are managed with administrative expenses.
Cost calculation with use of the marginal and absorption costing
There are different techniques and methods exist and they are used by financial department
of the Rowlinson Knitwear for formulation of accurate balance sheet, financial statement and
income statement. So this is easy for management to improve their overall efficiency and
effectiveness by analysing company expenses and profits. From the perspective of top authorities
management is able to check the number of profits for formulating future project and policies
according to company financial positions (Leotta, Rizza and Ruggeri, 2017). Along with this
investors perform an important role to increase business size through investing there surplus
amount. So this is important for respective organisation to formulate right income statement.
Therefore, marginal and absorption costing perform an important role to generate accurate
balance sheet and income statement and it demonstrate actual number of profits. So it is mention
as follow:
 Marginal costing- It is explained as a technique and this is used for monitoring
marginal cost according to number of units. In simple terms, marginal costing refers to
contribute in cost through writing off the fixed cost. Also, the technique is used by
managers for calculation of profits and expenses related with business. One of the main
advantage related with marginal costing is to understand about overall goals and
objectives related with accounting and this is because it is easy to implement in all
departments of organisation (Marasca and Gatti, 2020). So profits levels of all
departments are easy for engage among company operations and functions. Moreover,
marginal costing technique helps to determine the accurate assessment related with
business financial data. It also results management is able to complete their task in an
accurate manner through interpretation and analysis all decisions related with business.
This results right approach is utilised by business to complete their operations and
functions. In the last, management is able to calculate profits by managing their
operational cost.
 Absorption costing- This is explained as the technique that is used by organisation for
calculating all identified cost related with production process. Rowlinson Knitwear
consider that their operational cost engage all factors which is related with business
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operations. Management also utilise absorption costing system to control overheads
related with business. This results all task are managed according to company
operations and functions that is used to control full production cost. The benefit of
absorption costing within the company is considered towards completion of task with
proper treatment of company overhead cost.
It results that both techniques is useful for the business houses to perform their work in an
organised manner. This also define that organisation profitability is managed by companies
through comparing all factors related with business (Padovani, Orelli and Young, 2014). Also,
competitors perform an important role for controlling variations and deviations by understanding
company cost. So this considered all work is done by rectifying organisation operations and
functions to ensure financial related factors and business.
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Evaluation of management accounting and its integration among organisation
Management accounting performs an important role to control overall cost of business. For
this organisation and financial department considered that management accounting and it system
are integrated among all company operations to perform all task in an effective manner. This also
define by engage and integrate company or organisation functions with financial information it is
easy to implement all data with more efficiency. On the other side, financial report is used by
organisation to generate better results through completion of all task by induce of interpret data
and information within company operations and functions (Seracino, 2020). It ensures that
respective organisation is able to complete their task according to collect information and task.
Moreover, authorities and top management ensure that manager complete task with more
efficiency by completing task according to decided strategy. This also results organisation is able
to obtain competitive-edge in market by managing task with understand of company roles.
Moreover, to engage overall financial data accounting methods related with business such as to
gain information in a detailed manner. It also results task are managed with completion of task
according to interpretation of company functions and operations which results to complete work
as per requirements of business. Example- Rowlinson Knitwear manufactures products in bulk
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so job costing system and inventory management system is utilised to gain competitive-edge and
this also match with company operations and functions. So all products are integrated by
management according to their financial information and data and it support to calculate right
operational cost.
The management accounting frameworks can be utilized by the organisations so they can
get the necessary degree of proficiency and viability. These frameworks are needed to be applied
in the correct setting by the directors of Rowlinson Knitwear (Shastri, Kumar and Shaw, 2019).
The directors of firm can ensure that they take the correct choices to support the organisation.
Consequently this will help them in expanding the usefulness so the present moment and long
haul objectives just as targets are accomplished without issues and issues later on time-frame.
Benefits of management accounting system
The administration and management accounting frameworks offer various kinds of
advantages to the associations. Cost Accounting System can assist the organisations with
ensuring that the expenses are diminished. Likewise it guarantees the decrease of overheads.
Stock Management System guarantees that the stock levels are appropriately overseen.
Additionally following of stock is made conceivable. Occupation Costing System guarantees that
the work orders are appropriately followed. Likewise it ensures that work orders are overseen
without issues and issues. Value Optimization System guarantees that costs are upgraded
successfully in the associations. Likewise it ensures that the advantages of setting a correct cost
are accessible to the organisations by expansion in their benefits. Some advantages related with
Rowlinson Knitwear management accounting system are mention as follow:
 Proper planning- Good planning perform an important role in the era of current
situations. With formulate of management accounting plans financial department provide
whole knowledge related with production distribution and cost to business (Situngkir and
Napitupulu, 2019). Also, long as well as short term plans are generated to perform task in
a decided budget. On the other side, cost benefits and values is used for evaluating all
plans.
 Effective management control- With control of all activities management considered
that their task is managed according to decided scheme. The concept of actual works is
effective and appropriate as it is used for determining and controlling company functions
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to control company operation cost. On the other side, by analyse of business cost all work
is managed according to convection method.
 Beneficial for coordination- Rowlinson Knitwear perform their roles at a large level and
it also determines that management implement schemes at all departments. So this is also
necessary to manage task according to business activities. Management accounting is
done on the basis of all information related factors to complete task according to decided
number of approach and time.
 Increase in profitability- Business skills and actions perform an important role to
increase the number of profits (Takeda and Boyns, 2014). Effective decision-making
results towards increase in company profits by managing company operations and
functions according to decided strategy. Rowlinson Knitwear improves their productivity
through adoption of absorption and marginal costing techniques.
CONCLUSION
The above report is based on management accounting systems and it concluded that
application of organisation considered towards formulation of longer results by adopting strategy
related with business through engage management principles. According to this there are
different task performed by management and most of them are considered towards maximisation
of company profits. Financial reporting and management both results in enhancement of
company operations and functions through adopting all methods of management accounting to
track overall information related with business. Further, management accounting also conclude
that income statement and accounting information enhance overall results by considering
company functions in proper manner. In the last, applications of management accounting among
all departments generate different complex factors related with business. So to overcome from
them organisation also delegate responsibility to financial department to perform all function in
decided budget.
PART 2
Compare and contrast three planning tools in management accounting
Management accounting is the usual of the some of the tools that is logical and generally used
for the analysis of income as well as expenditure as well as the non- monetary functioning data
related to the internal sources. This will also help to give the administrative reports that can be
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easily organized and delivered by the use of top management as well as for making the quality
decisions making activities. This is related to the more examining view of research which totally
comprise the expectations as well as the tools of management that is utilised and created with the
help of high quality of the decision making within the business (Cokins, and Căpușneanu 2020).
This is related to the systems that is usable for the actual planning of the activities that is related
to the future goals. This tool is always helpful for the financial management for doing their work
in the very effective way. This will support the performance as well as evaluation of the
activities that can be only made through comparison of the actual budget as well as the financial
data. The planning tools will be follows-
Cash flow budget- cash flow budget is one of the important tool for resolving the issues
related to the business this is related to the working capital as well as obligation of the lack of the
cash that may affect the sustainability of the object if the business. as well as cash flow budget is
the part of the accounting activities that is performed by the assessment of the future number of
the financial factor by the help of analysing the recent leanings. There are also some of the
advantages of the cash flow that is cash budget making as well as progressive as diversified
strategy of the budget is very much compulsory tool for examining the budget of the business,
this will also cooperative for allowing the better causes of the delivery channels among the
different sections (Fleischman and McLean 2020). This is also based on the assessed this is the
reason they are suffering form the problem of the accurateness. this is the reason sometimes there
is lots of problems arises within the cash flow budget that will becomes the main objectives of
the any business as well as organisation that helps in maximization of the profits this objective
will attained by making the proper and or sound of the financial planning. Therefore, cash flows
budget is will be consider as the best tools for achieving the objectives of the business.
Advantages of cash flow budget
 To avoid the debt- One of the most important function is to avoid the unessential
expenses and this define about all those perspective which helps for completion of the
work in an organised manner through complete the task according to decided budget.
 To become more resourceful- With use of the cash budget this is easy for the
management to complete the work according to analyse of all efficiencies related factors
which helps for manage financial resources and tools. In context of Rowlinson Knitwear
this cash is save by eliminate the waste from budgets.
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