Management Accounting Report: Methods, Systems, and Financial Analysis

This report delves into the realm of management accounting, providing a comprehensive analysis of its core principles and practical applications. It begins by defining management accounting and outlining its essential requirements, emphasizing its role in providing timely financial and statistical information for managerial decision-making. The report then explores various management accounting systems, including cost accounting, inventory management, job costing, and pricing systems, while also evaluating the benefits of implementing such systems within an organization. Furthermore, it examines different methods of management accounting, such as management information systems, statistical techniques, and financial statement analysis, highlighting their significance in addressing financial issues. The report also discusses the integration of management accounting systems and reporting within organizational processes, emphasizing how these tools guide organizations toward sustainable business success. Finally, the report touches upon income statements as per marginal and absorption costing and analyzes different types of planning tools used for budgetary control. The analysis also includes how management accounting methods are utilized by organizations to respond towards financial issues.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1&M1 Explain management accounting and give the essential requirements of different
types of management accounting systems..................................................................................1
P2& D1 Evaluate the different methods of management accounting system.............................3
TASK 2 ...........................................................................................................................................5
P3, M2 & D2 Income statements as per marginal and absorption costing.................................5
TASK 3............................................................................................................................................7
P4 Different types of planning tools used for budgetary control................................................7
M3 Analyse over the utilisation of various planning tools of management accounting system
.....................................................................................................................................................9
D3 &M4 Analyse how, in responding to financial problems, management accounting can
lead organisations to sustainable success..................................................................................10
TASK 4..........................................................................................................................................11
P5 compare how management accounting methods are utilized by organisations to respond
towards financial issues.............................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Management accounting includes various techniques through which the managerial
personnels of any enterprise can frame certain decision in accordance with the objectives and
goals of such entity. Management accounting is a combination of concepts of financial
accounting and principles of management(Macintosh and Quattrone2010). Through this
managers can take any decision in reference of the purpose for which they are running their
organisational process. In this report management accounting has been defined in a detailed way
with its essentials requirements(JalaludinSulaiman and Nazli Nik Ahmad2011). Further it has
been defined that how management accounting system and management accounting reporting
can be integrated within the organisational structure of Sollatek. In this report different methods
of management accounting has been mentioned which can be used for financial reporting. In this
report various methods which helps in making budget are detailed with its advantages and
disadvantages.
TASK 1
P1&M1 Explain management accounting and give the essential requirements of different types
of management accounting systems
Management accounting is a proving timely finical and statistical information to business
managers so that they decision makes to day to day activity in the organisation and to decision
regarding short term based. management accounting is process of the help of the people to the
makes a decision making a management accounting is involves partners in management decision
making a expertise n financial reporting and control to assets management in formulation and
implementation of all organisation strategies to analysis management accounting system are
deployed to provide information that management can use to make good decision to
regarding(Baldvinsdottir,Mitchelland Nørreklit 2010). the information of capture and valuable
data can be used to mange and control a business better basically including features of reporting
sales analysis inventory storages analysis and production cost budgeted expenses and actual cost
analysis in this management system to mangers information with organisation and to provide
them with the basis to makes informed business decision making and control system.
A profession that involves in management decision making planning and performances
management system and providing financial report and control to assist management in the
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formulation all decision regarding strategies. Different types of management accounting system
to decision making regarding to the management system there are 3 types of management
accounting system cost accounting inventory management job costing system and pricing system
first one the cost accounting including system of costing in a framework used by firm to
estimates the cost of there product and there are profit to increase inventory valuation of the
product to analysis the cost control in the management in the cost accounting to cost allocation is
carried out based on either costing system including into the process cost and job costing cost.
Second one is the inventory cost to related the material and such the term stock and inventory are
often used in interchangeable up to da a job inputs in production process of production sold to
customers any sis job creation system involves the process of about the cost associated with
specific production or services job, it may require order to submit the cost information to a
customer contract to related by the job system.
There are certain basic types of a management accounting to requirement to fulfilling the
a business entity traditional management accounting is the in which method in their entity
structures mostly job ordering cost is utilization by company for same reports the techniques is
better utilisation resources some cost based. In this lean accounting system to balance to
accounting of system. The requirement of system is hoped to providing management with the
most accurate and reliable information. To mangers have ensure that the right system for their
business module is selection for implementation.
Evaluate the benefits of management accounting systems: Sollatak is the use of possible
performance of the company to increases various types of efficiency of the entity
1 increase efficiency of the company: management accounting system is the operate of the top
management accounting to increase in the effective of the performance operations to optimising
this indirectly motives of employee to better performance as a end of result rewards an the
efficiency of the company.
The decision making in financial statements : a manager accountant to create a specific
report to creates a detailed simpler interpretations to represents the all types of financial data for
the specific purpose to better achievements.
Cost transparency: the work of the management accounting in the firm to work with the IT
department closely(Ward 2012). The action ensure that the budget actions to any sis to the
provides of the company.
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Flexible and freedom:The management accounting system ids the flexible nature of the
organisation to nature of dynamic to change the policy any change of accountant prepare a report
of the freedom based.
Management accounting system includes the following:
 Cost accounting system: This accounting system is used by firms to estimate cost of its
different operations. This is done by manager to predict profitability, inventory valuation
and to control the cost.
 Job costing system: Number of jobs are performed in an enterprise, cost of each job is
different from the other. Manager calculates or identifies cost related with each job.
 Batch costing system: Under this manager calculates the cost with each batch of
production. Direct and indirect all cost are calumniated in this.
 Inventory management system: Inventory management system means maintain an
optimum level of inventory at any time. If firm maintain an over stock that it will rise the
cost of storage and maintenance, on the other hand in case of under stock enterprise will
fail to meet the demands of customers. It is very important for every enterprise to
maintain an optimum level of inventory.
 Price optimisation system: This accounting system helps firms in set an optimum price
for its products and services. Price of product should be that it helps in generating
maximum profit and provide value for services to customers.
P2& D1 Evaluate the different methods of management accounting system
There are various types of method which are use of Sollatek. Which is used by the
management accounting system. To use of method solving various techniques related issues are
coving into the report first one is management information system: the management information
system is the information is essential for the effective function of business (Hiebl,2014.). The
management of the system in which all employee of organisation can asses the information for
used for dis charging their duties and taking quality.
 Statistical techniques:The techniques used in removing all accounting based problems
and any sis to the methods of least can asses regression and budgeting related issues are
coving into the methods to useful of the.
 Management reporting: management reporting is the report on basis of the contents of
profits and loss accounts and balance sheet are related information are coving into the
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submit for the top management. The prepare report are including all strength and
weakness indifferent financial activity.
 Historical cost accounting: in the method to analysis to the cost performances of
predetermined cost using in this method to analysis to the various cost related issues are
coving to achieving best cost past year relates.
 Financial planning: the financial planning is the objectives to any business organisation to
maximization of profit to achieving to all related to the financial information to related
down the financial benefits to specific objectives to covering into the best tools for
achieving objectives.
 Financial statements analysis: The financial statements is the analysis of the profit and
loss account and balance sheet important role playing in the management
accounting(Hopwood and Unermanand Fries2010.). The type of financial management is
the used of the business growth and business concerns. To also analysis is the ratio and
statements to comparative report.
 Ratio analysis: Ratio analysis is the the basically management of the forecasting and
planning coordination communication and control to over the management functions(P.
Tuckerand D. Lowe 2014.). It is the important simple process to controlling to all
operations of the management and undertaking by the appraisal of both physical and
monetary. Basically to ratio analysis to the decision making to regarding a operation
management.
Different methods of management accounting report:
 Sales report: Sales report is a record of keeping all products or services sold during a
specific time period. It is done by management to know about changes happen in sales by
comparing it from last year sales. Enterprises do many efforts to increase the sale of
company product.
 Account receivable report: This report of enterprise tell manager or business owner about
the process of collecting loan from debtors. Managers try to make this process more
effective to timely collects all loans from its debtors.
 Performance reports: This report provide information to manager about performance of
all employees and department of organisation. After that manager take remedial actiions
to improve the performance, if required.
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 Inventory management report: This report show or give information to manager about
current inventory level. This helps manager in keeping stock in right quantity to meet the
demands of customers.
 job cost reports: To identify cost and profit relate with each job manager use these
reports. This report helps manager in knowing the most profitable jobs of firm and help
him in eliminating the non profitable jobs from organisation.
D1 Evaluate how management accounting systems and management accounting reporting is
integrated within organisational processes
Management accounting is the process of collecting and evaluating information poes and
substantial and interesting challenges of largesses organisation .there are more important
conceptual issues ton about to information aggregates information in order to measurements
services customers of the organisations for a specific times of periods to raise question of
substantial which there are often no clear answers(JalaludinSulaiman and Nazli Nik
Ahmad2011). The techniques for planning and controlling decision makings in the selected
manufacturings businesses of study of the area .the result of the management accounting
adoptions to various importance of managements accounting techniques of impact of the
economic parameter in is adoption and its effect as a planning and controlling making tools and
techniques are use of the to various types of the to descriptive study of the management of the
accounting system to manner of system(Cuganesan Dunfordand Palmer,2012). Including into the
way of management accountants can guides of organisation toward sustainable business success:
to identify the environment social trends of the ability to creates valve over times
to businesses challenges to the company to identify the business model and to create to the
outlook and licences of operates(Cuganesa Dunfordand and Palmer 2012). Explain the impact of
these various types strategies top including into the way of the affects to the business
environment. Development to the strategies to improve integrates issues to ensure relevant
financial and non financial information to the dis closed the reporting the creates to the investing
and appraisal and strategy planing. To apply the management of accounting tools and techniques
such as natural of resources availability life cycle costing and sustainability matters into the
decision makings
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TASK 2
P3, M2 & D2 Income statements as per marginal and absorption costing
Absorption costing;
Absorption costing is a management accounting cost of method of expensing all costs
associated with the manufactures a particular product and and services is required of the specific
method to including all labour cost and manicuring cost and direct cost including raw material
used in the production a product and all overheads cost to all utility cost are including. The direct
cost is the producing goods as the cost base. A direct cost is the method of costs with a process
and appointing them to individual product .To create the individual inventory valuation is an
entity of balance sheet. there are three principal of distribution the products uses basic, survey
basic, ability to pay.
Income statement on the basis of Absorption costing method:
Selling Price £35
Unit costs
Direct materials £6
Direct Labour £5
Variable Production overhead £2
Variable sales overhead £13
Budgeted production for the period is 600 units
Fixed cost for a month:
Production overhead: In this budgeted cost is £1,800 and Actual cost is £2,000
Administration Cost: In this budgeted cost is £800 and Actual cost is £700
Selling cost: In this budgeted cost is £400 and Actual cost is £600
Absorption costing
Working 1: Calculate full production cost
Direct material £6
Direct labour £5
Variable cost £2
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Fixed cost £3
Total £16
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*19 = £13300 100*16 = £1600
Working 3: under/ over absorbed fixed production overhead
Actual fixed production: £2100
Fixed overhead: £2000
Total £100(over absorbed)
Net profit using absorption costing £ £
Sales
(-) Cost of Sales:
Opening stock
Manufacturing
Closing stock
(Under)/ Over absorbed fixed prod. O/h
Gross Profit
Less Expenses
Variable sales expenditure
Fixed administration expenses
Fixed selling expenditure
Over absorption
Net Profit
0
11200
(1600)
600
700
600
(100)
21000
(9600)
11400
(1800)
9600
Income statement on the basis of Marginal costing method:
Working 1: Calculate variable production cost £
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Direct material 6
Direct labour 5
Variable production O/h 3
Variable production cost 14
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*14 = 9800 100*14 = 1400
Net profit using marginal costing £ £
Sales
Less Variable costs
Opening stock
Manufacturing
Closing stock
Contribution
Less Fixed costs
Variable Production expenses
Administration cost expenditure
Selling cost
Net Profit
0
9100
(1300)
600
2000
700
600
21000
(7800)
13200
3900
9300
Management accounting reports include the following:
 Job cost report: Different type of jobs are undertaken in an enterprise and some specific
amount or cost is related with each job. Under this manager of enterprise evaluate cost
related with each job and tries to eliminate those jobs who are unprofitable for enterprise.
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 Account receivable reports: This report tell manager about its debt collecting system and
if necessary delays are taken in collecting period than manager takes the remedial action.
 Sales report: This report tells manager about the sales achieved by the firm in specific
period of time. Managers take or do necessary improvements to increase sales of the
company.
 Inventory management report: This report help manager in maintain an optimum level of
inventory every time to meet the specific requirements of large number of customers.
TASK 3
P4 Different types of planning tools used for budgetary control
 Financial budget:Financial budget is one of the most important budget or tool used for
planning in the enterprise. Financial budget is the budget which tells the enterprise about
all the sources of its income other than this also tells the operations on which these
income will be spend. The income sources of a firm includes sale of the products,income
received from selling of shares and of selling of fixed assets. Financial budget of a
company includes balance sheet,capital expenditure budget and the cash budget.
Advantages of financial budgets
 Financial awareness: Financial budget helps the enterprise more aware about its
expenditure and about the sources of its income. Financial reports helps the organisation
in getting the knowledge about how much revenue the business is generating every year
by selling of its goods and services other than this tells also what are the main and
important sources of the income foe the business(Sharma, Lawrence and Lowe 2010).
The financial budget tells about the company currents liabilities and assets. It makes the
firm to know about that the financial standing of a company is positive or negative. It
tells the company about the current financial position also guides the manager of the
company further to make the other important decision.
 Business opportunities: One of the main advantage of having financial budget that it
helps the enterprise in making full use or advantage of a opportunity and expand the
business at large.
 Communication tool: By making a monthly budget it will help the enterprise in making
annual budget with more efficiently. Annual reports are overall information about all the
revenues and expenses of the enterprise which not only help the business owner in
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making useful decision but also the investors in making the decision in taking investment
decision(Håkansson Krausand Lind 2010.).
 Financial planning : Financial reports provide the true picture about the company current
financial position this information further help the business owner in doing financial
planning.
Disadvantages of financial budgets
 Time required: the one of the most drawback of financial budget that it takes a lot of time
in preparing the budget(Wu, Jboateng 2010.). A lot of management time get wasted in
making a financial budget. A lot of time and skills needs to make the financial budget of
the enterprise. Sometimes it become difficult for the management to make the financial
budget for the enterprise according to its requirements.
 Rigidity: The other main drawback of making a budget is that once the budget is made by
the management than it become difficult to make any changes in it. Once the
management of the enterprise allot the fund to every activity of the enterprise than it
becomes difficult to change the amount fund allotted to that activity.
 Considers financial outcomes only:The financial budget first allocate the amount to be
spend on every task and after that evaluate only the financial outcomes of the task and
does not give any importance about the quality of the project and all(Bennett
Schaltegger, and Zvezdov, 2013). What revenue is created from the activity is given
focus not the quality of the output. The output is get measured in the monetary terms only
which is one of the main drawback of this budget.
 Operating budget: Operating budget is one of the another tool of planning the budgetary
control system. It is the budget which is made by the management of the enterprise for all
the operations of the budget. Like the project budget,expense budget or sales
budget(Englundand Gerdin2011). Operating budget decides the amount to be allocated to
every operation of the enterprise and also keeps try to minimise the expenses of the
operations of the firm. It helps in achieving the efficiency in the operations of the
enterprise with minimum cost.
 Advantage of operating budget
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