Management Accounting Systems and Techniques Report for XYZ Ltd

This report provides a comprehensive overview of management accounting systems and techniques, focusing on their application within XYZ Ltd, a manufacturing industry. It defines management accounting, differentiating it from financial accounting, and details various systems like cost management, price optimization, inventory management, and job costing. The report further examines the benefits of these systems and the importance of aligning management accounting reporting with the overall business goals. It delves into specific techniques such as marginal and absorption costing, presenting related statements and analyses. The report also explores the use of planning tools, including their advantages and disadvantages, and their relevance in budgeting and forecasting, as well as methods for addressing financial problems and ensuring sustainable success.

Management Accounting Systems &
Techniques

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Definition of management accounting and explanation of various system of this technique 1
P2 About managing accounting report........................................................................................1
M1 Benefits of management accounting system.........................................................................1
D1 Importance of alignment of management accounting reporting with system........................2
TASK 2........................................................................................................................................2
P3 Marginal costing and absorption costing statement...............................................................2
M2 Range of management accounting techniques......................................................................2
D2 Financial report which define management accounting techniques......................................2
TASK 3........................................................................................................................................2
P4 Planning tools and its advantage as well as disadvantage......................................................2
M3 Brief explanation of management accounting planning tools and its relevance in budgeting
forecasting....................................................................................................................................3
TASK 4........................................................................................................................................3
Explanation of financial problem and techniques use for solve this issue..................................3
M4 Use of management accounting tool for responding financial issue.....................................3
D3 Evaluation of how planning tools for accounting respond appropriately to solving
financial problems to lead organisations to sustainable success.................................................3
CONCLUSION................................................................................................................................3
REFRENCES...................................................................................................................................3

INTRODUCTION
Management Accounting this term is used to provide accounting information in systematic
way which help in taken future business decision. To understand this concept XYZ limited has
been taken it is a manufacturing industry. This report has been contain specific information
regarding relevance of various Management Accounting system and their use of former dating of
accounting reports it is a country in usefulness of marginal as well as absorption costing method
to calculate the value of profit and cost this report also define use of planning tool for taking
business decisions as well as various methods which help in overcoming financial problem.
TASK 1
P1 Definition of management accounting and explanation of various system of this technique
Management accounting: Accounting it is essential part of every business organisation.
On the basis of using techniques in system of accounting business organisation able to record
their transaction related with business activities Management Accounting is a part of accounting
this term has been combination of two words one is management and the other one is accounting
the term management define planning organising running controlling and monitoring business
activities and on the other hand accounting is the procedure of recording collecting and represent
entering financial transaction for relevant stakeholders (Fiondella, Macchioni, Maffei, and
Spanò, 2016).
Management Accounting is the procedure which help in represent information in
systematically wave which help in attending business objective within given time period this is
useful for take decisions there will be various branches of accounting financial branch is also
important.
Difference between financial and management accounting
Financial accounting Management accounting
Financial accounting is related with recording
transaction which only affected by cash related
transaction.
Management Accounting on the other side
record cash as well as other than cash
transactions for example depreciation and
amortization and adjustment of intangible
assets.
Main purpose of financial accounting is Information relevant regarding with
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providing information to external stakeholders. Management Accounting for internal users.
It is essential as per the accounting standards to
formulate financial statement at the year
ending on the basis of that manager able to
recognise their off energy performance.
It is not required to formulate Management
Accounting statement and use management
Accounting techniques for organisation.
Financial accounting is useful for managing
cash assets.
Management department use this technique for
take decision and control their cost.
There will be various type of system which is used by organisation to record their transaction
management department of XYZ Limited following systems.
Cost management system: This system is used by organisation to recognise cost of each unit
there will be various type of techniques which is implementing and related with Management
Accounting it in Cruise absorption costing standard costing SLS marginal costing by using this
technique management department able to understand relevance cost as well as those transaction
which may become the reason of generating higher cost. These tools directly impacted any
useful for take decision regarding these formulation policies of maximum minimises station of
cost.
Price optimization system: This system is useful to formulate policies related with price it is
considered as most essential at the moment which help in generating of profit by formulating
policies regarding with prise organisation able change. Price related policies there will be various
type of policies regarding with prize which included price skimming price discounting
penetration pricing policies different kind of strategies for calculating a price on the basis of
applying particular strategy organisation able to take their decisions it will help in satisfying
customer with attaining goal of organisation within a given time period by generating revenues
Inventory management system: This is also essential tool of Management Accounting
inventory is the most essential tool for organisation managing stock isn't ask for organisations as
it will be useful in minimising cost related with maintaining of stocks and effectively manage
stock within a given time period there will be various type of methods and technologies which is
used to maintain balance of inventory which include ABC analysis as well as other stock
management technique by applying LIFO,FIFO, method organisation formulate policies and able
to recognise number of maximum as well as minimum level required for relevant organisation
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stock is essential part of organisation that by using Management Accounting business
cooperation able to sustainability e manage their inventory
Job costing system: this is term is implemented by organisation to recognise value and cause
realise for running particular business activities on the basis of activities recorded from
customers business organisation record order of their job this will help in in managing inventory
as well as record jobs system in effective for efficient way bi formulating job costing system
organisation able to have base regarding with formulation of report and take decisions regarding
with job costing.
P2 About managing accounting report
Budgetary report: This will also useful for formulating policies regarding with future business
decisions on the basis of that manager take decision which project is beneficial for them by
calculating cost of each alternative.
Inventory management report: Inventory report this report has been formulated to record or the
information related with maximum minimum and normal level of stock required this report
contains all the essential information regarding with each month and use of various technique for
maintain stock management and its balance on the basis of formulation of this report
management department of exaggerate Limited able to recognise the number of customer.
Performance report: Performance report this report has been formulated for or collect
information with each department on the basis of that manageable to recognise performance
within a given time period every department which include sales marketing finance as well as
manufacturing and production department it is very essential to formulating performance Report
as on the basis of that management department take decision regarding formulating of policies
for providing reward promotion as well as given recognition on the basis of performance and
skills of human resources (Alabdullah, 2019).
Cost report: Cost report this report has been formulated by data collection from cost accounting
system various statement has been useful for formulating the report cost is essential element does
it is really required to formulate the port which define each cost element as well as impact of
various business activities related with quotes on the basis of formulating cost record
management department of XYZ able to recognise all those activities which may become the
reason of generating risk regarding with hi cash outflows.
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Account receivables report: Account receivable report this report useful in maintaining balance
between amount received from debtors as there are various customer which are not able to fulfil
their death reliability for given time period these type of debtors considered and non performing
assets it is very essential for our organisation to formulate policies and report on the basis of that
they can able to recognise number of customer which may consider as non performing asset
management department of XYZ use accounts receivable report for recognise these type of
customer and on the basis of that they formulate policies which help in in controlling and reduce
the number of nonperforming assets by providing offer which influence customer to pay their
cash reliability with given time period.
M1 Benefits of management accounting system
Particular Management accounting system’s benefits
Job costing system By using job costing system organisation able
to recognise value of the Year each order cost
per unit and time required for converting raw
material into finished good and delivering
order as well as record all this transaction
which help in recording systematic manner
this is useful in measurement of performance.
Cost management system XYZ Limited use cost management system
with through which they can evaluate cost for
running their business activities as well as
identify those business activities which may
become the reason of generating high cost
(Alyousef, and Mickan, 2016).
Inventory management system Xyz Limited using various techniques which
help in managing their stock as well as
recording is level of the stock this will help in
measuring value of stock as well as
controlling and minimising their cost effective
and systematic manner. Level of stock which
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is really essential to maintain to fulfill order
of their customers this will help in managing
as well a controlling cost of inventory by
using advanced software this report help in
providing essential information regarding
with internal stakeholders
Price optimization system Xyz Limited applying price skimming
strategy for their products this will help in
generating revenue as well as satisfying their
relevant customer using affordable pricing
strategy help in maintaining there value of
resources as a less useful in generating sales
revenues
D1 Importance of alignment of management accounting reporting with system
Management department of XYZ Limited use cost pricing as well as job order system
which is related with Management Accounting the system are useful and with the alignment of
reports they are help in attaining business goal as they provide base for formation of report by
collecting information from these systems business organisation able to take decision this will
useful in providing base for budget which help in attaining business goal for future time period.
TASK 2
P3 Marginal costing and absorption costing statement
There will be various type of techniques which help in recognising value of cost as well as
profit generating by organisation within a given time period however when organisation choose
Management Accounting for their recording and presenting information following are the
technique has been used for calculating profit and cost (Hutaibat, and Alhatabat, 2020).
Marginal accounting: This is the most essential and useful method of calculating profit as well
as cost marginal costing help in recognising value of revenue by calculating all the essential
variable cost elements they only consider those element which are very from time to time they
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are not consider fixed elements does it is also known as variable cost accounting by applying
marginal costing and provide base to evaluate value of break even analysis as well as value of
margin of safety which directly impact on and give information regarding how these tools are
relatable with each item of income statement
Marginal costing:
Total cost of production:
Direct materials 60
Direct labor 40
Variable production cost 20
Full production cost 120
Income statement:
Particulars May June
sales 25000 18750
Less: Variable cost
Direct materials 6000 4800
Direct labor 4000 3200
Variable production cost 2000 1600
Opening stock 0 0
Closing stock 0 600
Variable sales commission 500 375
Contribution 12500 9375
Less: Fixed cost
Fixed production 2000 2000
Fixed administration 3000 3000
Fixed selling 1000 1000
Net profit 6500 3375
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Absorption accounting: This is also known as famous tool of calculating cost absorption
costing is used to consider fixed as well as variable cost elements thus it is considered as reliable
technique most of manufacturing business corporation applied this tool for calculating their
profit value a particular statement has been formulated which help in defining gross profit as
well as profit and after adjustment of all the essential transaction this is also useful for providing
accurate and reliable business decision and calculate cost within a given time period.
Absorption costing:
Total cost of production:
Direct materials 60
Direct labor 40
Variable production cost 20
Fixed production cost 20
Full production cost 140
Income statement:
Particulars May June
Sales 25000 18750
Less: Cost of sales
Direct materials 6000 4800
Direct labor 4000 3200
Variable production cost 2000 1600
Fixed production cost 2000 1600
Opening stock 0 0
Closing stock 0 700
Under/Over absorption 0 400
Gross profit 11000 7850
Less: Expenses
Variable sales commission 500 375
Fixed administration 3000 3000
Fixed selling 1000 1000
Net profit 6500 3475
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Reconciliation statement:
Particulars May June
Net profit under absorption costing 6500 3475
Add/Less: Closing stock 0 (100)
Net profit under marginal costing 6500 3375
Calculation of material
variances
Budgeted Actual Variances
Materials cost per unit £24 £18.67 £5.33
Inventory ledger record LIFO Method
Date Description Sale/Purchases Balance
Units Cost Total Units Total
Jun-
01
Opening
Inventory 10 £35 £350 10 £350
Jun-
09 Purchases 15 £38 £570 25 £920
Jun-
15 Issued -12 £38 -£456 13 £464
Jun-
20 Purchases 10 £32 £320 23 £784
Jun-
23 Issued -10 £32 -£320 13 £464
Jun-
27 Issued -3 £38 -£114 10 £350
Jun-
30 Issued -2 £35 -£70 8 £280
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Average cost methods
Date Purchases Units Cost Total
Jun-
01
Opening
Inventory 10 £35 £350
Jun-
09 Purchases 15 £38 £570
Jun-
20 Purchases 10 £32 £320
Total 35 £1,240
Average cost of Inventory =
Total/Units
=
1240/35
= 35.42857143
Standard costing: This this method of calculating cost is unique from marginal as well as
absorption costing method by applying Management Accounting tool of standard costing
management department able to recognise difference between actual as well as much did it cost
it is useful for defining various variance on the basis of calculating differences between various
variances they are able to recognise but state as well as actual outcome management department
use reply material overhead as well as labour value answers through which organisation identify
the main cause of differences within given time period standard costing help in defining impact
of each cost element on generating cost (Pelz, 2019).
M2 Range of management accounting techniques
By applying techniques of Management Accounting xyz Limited able to understand cost
generating from using age costing accounting technique they use absorption costing as it is
related with manufacturing industry and by using absorption costing they are getting accurate
and reliable result.
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