Management Accounting Systems: A Comprehensive Report

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MANAGEMENT ACCOUNTING
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Table of Contents
Introduction:....................................................................................................................................3
Task 1:.............................................................................................................................................4
Part 1: Title - Management Accounting Systems:.......................................................................4
A. Management Accounting and Types of management accounting systems.........................4
B. Different methods used for management accounting reporting..........................................5
C. Benefits of Management Accounting System.....................................................................6
D. Integration of management accounting in organizational processes...................................7
Part 2: Analysis of three planning tools used in management accounting:.................................8
Conclusion:......................................................................................................................................9
References:....................................................................................................................................10
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Introduction:
This document is created to obtain an explanation for the use of management accounting in a
commercial enterprise corporation. The project is prepared based on the knowledge of junior
management Accountant for the XYZ employer. This report of the assignment is structured into
two sections. The first component explains management accounting and critical necessities of
various varieties of management accounting framework. The special strategies used for
management accounting reporting and the benefits of control accounting structures and their
implementation in a business enterprise. The other component contains the explanation of the
three plans making procedures utilized in control accounting. This file includes discussion on the
implementation of control accounting in the enterprise within the company's inbuilt process
system.
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Task 1:
Part 1: Title - Management Accounting Systems:
A. Management Accounting and Types of management accounting systems.
Control accounting may be understood as the investigation, evaluation, scrutiny, and elaborative
explanation of numerous records that are associated with the bookkeeping process. These records
can be received with the assistance of accounting information associated with the costing and
accounting related to the monetary transactions (Bromwich, and Scapens, 2016). Administration
of the association can utilize control accounting in an effort to make diverse decisions in an
effective manner. The assistance of control accounting framework can also systemize the
numerous policies of the corporation and may help in conducting various operations of the
organization.
 Cost accounting system: It is a type of management accounting system in which all the
statistics related to the cost or expenses of the product, department, and operations are
briefly studied. These studies are carried out to assist the managers in making their
efficient alternative choices. The cost accounting system accounts for all the expenses
and keeps a record for controlling the expenses in the firm. It uses different techniques to
support a controlled cost system in the company.
 Inventory management system: Inventory control system is another important type of
control system where the management uses different methods for maintaining a proper
record and exercising appropriate control over the stock of the firm (Hicks, et. al., 2017).
This system is essential to ensure the proper usage of inventory and smooth functioning
of the production process.
 Price optimization system: The system of price optimization accounts for maintaining
the suitable competitive prices in the market which ensures profits as well as market
share. The techniques used in this type of management accounting framework guides the
management in deciding the management their prices of sale and the amount of customer
response and profits the firm will earn at a specific price.
 Job costing system: The job costing system is another type of control accounting system
in which the profits, cost, expenses, etc. of the business is determined on the basis of jobs
and not according to the period of reporting (Kumar, et. al., 2015). In this framework, the
organization divided the different projects of the firm into different jobs and the profits
are calculated for the particular job by charging the expenses of the particular job to the
income generated from that job.
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B. Different methods used for management accounting reporting.
Different methods which can be used for management accounting reporting are as follows:
 Reports of organization’s budgets- This approach is required to be used to observe the
overall performance of the company by means of examining the performance measures of
the branch and for the management of costs so that one can make the price range
statement (Kihn, and Ihantola, 2015). There may be the uses of expenses which may have
been incurred in the past. This reports of the budgets may be utilized by the corporates so
that it will offer invectives to the employees for his or her higher performance inside the
beyond. This can no longer simplest encourage the employees to put in more and more
efforts of their work and also decorate the performance of the staff.
 Reports of Job costing - This method may be used so that one can identify the value,
profitability, and rate of a job. This procedure analyzes the employer so one can perceive
those trade activities of the business enterprise which is generating lower earnings for the
association (Kihn, and Ihantola, 2015). Corporations also may take help of this process in
order to identify the price of the task that is in development and has not finished yet.
 Time reports of the company’s receivables- This technique can be used with the
intention to identify the account receivable of the enterprise for managers to amplify the
limit of credit to its clients. It also identifies the various problems the corporation is
dealing with inside the method of collection of facts. In those techniques, suitable
apartheids of invoices are made a good way to discover the time period of the customer's
balance. This technique may be used to be able to hold the liquidity of the agency by
restricting the antique money owed (Kihn, and Ihantola, 2015).
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C. Benefits of Management Accounting System.
Control accounting has several advantages for the association. It is miles a bookkeeping
department that has evolved with the goal to assist the managers or other authorities for
exercising control inside the operations of their association and to help in making plans and
selection-making tactics (Lopez-Valeiras, et.al., 2015). A number of the essential benefits of
management accounting structures are furnished through the following factors:
 For supporting the decision process of the business: Control accounting has a crucial
position in making choices out of available alternatives to the enterprise. It provides
managers with all the monetary and other statistics required for taking exceptional
selections for achieving the aim of the enterprise.
 Management of expenses: The equipment and techniques of administrative accounting
are used to control and manipulate the price device in production and administrative
section of the organization. There are numerous strategies and processes of management
accounting which serves for managing prices in a company (Akkermans, and Van
Oorschot, 2018).
 Developing the efficiency and effectiveness in the company: Using control accounting
in an entity improves the efficiency of that corporation. The techniques of management
accounting serve an expenses analysis to the organization which facilitates them in
reducing their expenditures whilst preserving the quality standard of the item. It also
improves the performance of the employees operating inside the company as incentive
schemes are managed with the help of control accounting structures.
 To increase the earnings of the business: System of control accounting helps the
business enterprise in decreasing their price and the strategies of control accounting assist
the business to devise for the functions of the trade (Akkermans, and Van Oorschot,
2018). These plans and strategies help in achieving the goals of the employer and
accordingly, will enhance the income earning potential of the association.
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D. Integration of management accounting in organizational processes.
The framework of control accounting is an incorporated system of control because it serves the
control in all the degrees of organizational operations starting from planning to the analysis of
performances of the enterprise (Osadchy, and Akhmetshin, 2015). The methods and techniques
of control accounting offer the administrative authorities such instructions for developing
strategies and making plans within the organization. The management strategies of the control
accounting present for the easy and organized operation within the association. The control
accounting also offers for the evaluation of outcomes and overall performance of an enterprise.
Hence, it supports the business entity in attaining the predefined goals of the entity in the most
effective and efficient way (Osadchy, and Akhmetshin, 2015).
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Part 2: Analysis of three planning tools used in management accounting:
Tools of planning are those techniques or procedures that assist in the starting stage of the
business enterprise to manual them for the formation of making plans and techniques for the
corporation with a view to attaining the motive or purpose of the corporation.
The three planning tools utilized in control accounting system are explained as underneath:
 Break-even analysis: Break-even analysis is a technique that's used to decide the output
or sales or revenue at which the organization doesn't incur any loss and is unable to earn
any income. It helps the control within the making plans the activities of a corporation by
suggesting the output which has to be produced if one wants to earn profits inside the
organization. In different words, break-even evaluation defines no profit no loss factor of
an employer (Lee, et. al., 2018). As any production or sales beneath the break-even factor
will incur a loss to the agency. As a consequence, it facilitates the organization in making
a profitable planning approach.
 Cash flow Budgeting: Cash flow budgeting with the flow budgeting is used as a
planning technique in administration accounting. In this method, budgets are prepared for
the cash earnings in the business and cash expenses of the corporation for the upcoming
future. It estimates the destiny inflow and destiny outflow of cash so that it will design
the strategies for investment purpose and costs management in the entity (Chen, and
Teng, 2015). It is a far powerful tool as it pre-estimate the destiny cash flows and enables
the employer in handling cash and selection making the procedure.
 Benchmarking: Benchmarking is a making plans tool that's used by the organization to
set the objectives for the organization. Benchmarking is used by the employer to
determine the described goal from which the control can evaluate the cease monetary
returns and consequences to discover the real performance of the organization.
Benchmarking manner putting the targets which might be potential with green and
effective operations and efforts of the humans in a business enterprise. This tool is
effective as it affords a course and motivation to the corporation (McCrory, et. al., 2015).
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Conclusion:
This document has a reasonable explanation for the use of the device of control accounting in a
business agency. The file has been developed by means of the XYZ Company’s junior
management accountant. The first segment of the report has explained management accounting
and essential necessities of diverse structures of management accounting. The document also
defines the critical tool of planning that is utilized in the control accounting strategies. The
wonderful techniques used to manage accounting reporting and the significance of the operating
framework of control accounting has been understood from the assignment. An expertise of the
cost of management accounting framework and its importance within the decision making,
production processes and administration working of the organization has been acquired from the
file.
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References:
 Akkermans, H.A. and Van Oorschot, K.E., 2018. Relevance assumed: a case study of
balanced scorecard development using system dynamics. In System Dynamics (pp. 107-
132). Palgrave Macmillan, London.
 Bromwich, M. and Scapens, R.W., 2016. Management accounting research: 25 years on.
Management Accounting Research, 31, pp.1-9.
 Chen, S.C. and Teng, J.T., 2015. Inventory and credit decisions for time-varying
deteriorating items with up-stream and down-stream trade credit financing by discounted
cash flow analysis. European Journal of Operational Research, 243(2), pp.566-575.
 Hicks, B.J., McWhirter, B.K., McArthur, D. and Williams, B., Retail Technologies
Corporation, 2017. Store mobile cloud application system for inventory management and
customer order fulfillment and method for retail establishment. U.S. Patent 9,747,632.
 Kihn, L.A. and Ihantola, E.M., 2015. Approaches to validation and evaluation in
qualitative studies of management accounting. Qualitative Research in Accounting &
Management, 12(3), pp.230-255.
 Kumar, R., Talwar, V. and Basu, S., Hewlett Packard Development Co LP,
2015. Method and system using admission control in interactive grid computing systems.
U.S. Patent 8,935,401.
 Lee, M., Hong, T., Koo, C. and Kim, C.J., 2018. A break-even analysis and impact
analysis of residential solar photovoltaic systems considering state solar
incentives. Technological and Economic Development of Economy, 24(2), pp.358-382.
 Lopez-Valeiras, E., Gomez-Conde, J. and Naranjo-Gil, D., 2015. Sustainable innovation,
management accounting and control systems, and international
performance. Sustainability, 7(3), pp.3479-3492.
 McCrory, C.C., Jung, S., Ferrer, I.M., Chatman, S.M., Peters, J.C. and Jaramillo, T.F.,
2015. Benchmarking hydrogen evolving reaction and oxygen evolving reaction
electrocatalysts for solar water splitting devices. Journal of the American Chemical
Society, 137(13), pp.4347-4357.
 Osadchy, E.A. and Akhmetshin, E.M., 2015. Development of the financial control system
in the company in crisis. Mediterranean Journal of Social Sciences, 6(5), p.390.
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