Management Accounting Report: Systems, Benefits, and Evaluation

This report provides a comprehensive overview of management accounting, focusing on its principles, various systems, and benefits. It begins by defining management accounting and its role in assisting management in organizational activities. The report then delves into key principles such as influence, relevance, value, and trust. It explores different types of management accounting systems, including cost accounting, job costing, inventory management, and price optimization, detailing their needs and applications within Sollatek (UK). The report further examines management accounting reporting methods, such as budget reports, sales reports, and financial reports, and their significance in understanding business operations. Additionally, it highlights the benefits of employing these systems, with a critical evaluation of an integrated management accounting system. The report concludes with a list of references, including books, journals, and online resources.

MANAGEMENT
ACCOUNTING
Sollatek (UK)

Management accounting with essential
requirements with its types
 Management accounting is referred as presentation of accounting information for purpose of
formulating policies adopted through management to assist its regular activities.
 In simple state, it helps management to perform its roles such as organising, planning,
staffing, controlling and directing.
 According to J. Batty, it is term used for describing accounting techniques, methods and
system along with special capability and knowledge for assisting management in task for
increasing profit and reducing losses.
 In the similar aspect, Institute of Charted Accountants of Wales and England states that it is
form of accounting as it enables business to be conducted in efficient manner as management
accounting.
 Further, R.N. Anthony states that management accounting is directly concerned with
accounting information which is very useful for management.

Principles of management accounting
 Influence: : Communication gives insight which is highly influential as it begins and
end with conversation. It raises decision making through communicating all insightful
information which allows eliminating silos and directly facilitates integrated thinking.
 Relevance: Information is relevant as it scans the best available resources of
information which is highly relevant for decision required to undertaken along with
application of decision style and process. There is requirement of attaining proper
balance among internal and external, past, present and future related and financial and
non financial information such as social and environmental issues.

Principles of management accounting
 Value: There is analysis of impact on value as management accounting links strategy of
business model and need of through understanding of broader macroeconomic
environment. It involves to analyse information with evaluating opportunities, value
generation path and to lay special emphasis on costs, risk along with value generation
of potential of its opportunities.
 Trust: Trust has been build through stewardship. Scrutiny and accountability forms
process of decision making in objective manner. The short term commercial interests
which is against long run for stakeholders which will enhances trust and credibility.

Types of management accounting system
 Cost accounting system: This system is referred as process of classifying,
summarizing, analysing, recording and allocating costs linked with process and to
develop different course of action for controlling system.
 Its objective is to advise management for optimising business processes and practices
on basis of capability and cost efficiency in Sollatek (UK). Generally, it is used through
manufacturers for tracing activities of production with application of perpetual
inventory system.
 In simple words, this accounting system is framed for manufacturers which traces
inventory flow on continual aspect via multiple production stages.

Need of cost accounting system
 It analysis profitability of individual services, jobs, products and various operations or
department.
 The prices have been set for covering cost and produce an acceptable level of margin.
 The delegation of responsibility has been facilitated for significant task and employee
rating as well.
 The operational efficiency and cost reduction raises which will help customers for price
deduction.

Types of management accounting system
Job costing system: this system directly involves about process for accumulating
information related to cost linked with particular service job and production. In simple
words, it is an expense monitoring system which assigns cost of manufacturing of every
product as it enables managers for tracking expenses of Sollatek (UK).
Need of job costing system
It might be needed for submitting cost information to a particular system in contract
where costs are reimbursed.
It is useful for identifying accuracy of estimating system of business and capable for
quoting price which allows for reasonable margin.
In this system, there is requirement of accumulating information related to direct
materials, direct labour and overhead.

Types of management accounting system
Inventory management system: This system traces goods via whole supply chain
and portion of business it operates. It recoups each aspect through production to retail,
warehousing to shipping along with every movement of parts and stocks in it.
Need of inventory management system
It is required for keeping proper track of inventory and offering to centralized view of
stock in Sollatek (UK).
It is essential for controlling costs with formation of stock reports to analysis inventory.

Types of management accounting system
Price optimisation: This system is a mathematical analysis through organization for identifying that
how customers respond for its different prices of its services and product via multiple channels in Sollatek
(UK).
Need of price optimization
The organization's use this system to help business for identifying initial pricing, promotional and
markdown or discount pricing.
Initial price optimization works very well for organization along with secure base of product's life cycle.
Promotional price helps for setting temporary prices for boosting item sales with long life cycle such as
products introduced.
Discount price optimisation leads to business for selling short life cycle products on basis of trends of
fashion and seasonality like hotels, air;line and clothing stores.

Methods of management accounting
reporting
Managerial accounting reports are tools used for understanding number what is going in
business as it includes standard traditional accounting reports which complex for purpose of tax,
data collection which is useful information on basis of operations. There are 6 types of
management accounting reports which are stated below:
Budget report
Accounts receivable aging
Job cost reports
Execution report
Sales report
Financial reports

Financial reports
 These are reports which directly differ through managerial accounting as traditional
financial reports gives useful information for understanding operations of Sollatek
(UK).
 In this report, statement of profit and loss reflects about its spending and earned on
overall perspective by breaking these numbers into summarized and categorised format.
 In the same series, it includes statement of financial position which summarizes that
how much Sollatek (UK) owes and earns.
 This information is useful for purpose of managerial accounting as it reflects
fluctuations of profit and loss over time and net worth of business for forming liquid
cash with operation's availability.

Sales reports
 This report is useful for purpose of management accounting as it reflects sources of
revenue of Sollatek (UK) and avenues are highlighted which are most and least
successful.
 In simple words, it highlights activities of business which earn high income like sales at
particular venues and accounts.