BTEC HND Unit 5: Management Accounting Systems and Reporting

This report provides a comprehensive overview of management accounting systems and reporting methods. It differentiates between financial and managerial accounting, highlighting the latter's focus on internal decision-making through reports like budgets, cost analyses, and performance evaluations. The report explores various reporting methods, including budgeting, accounts receivable aging, job cost, manufacturing, and performance reports. It emphasizes the benefits of management accounting systems, such as job costing, price optimization, cost accounting, and inventory management. The report also delves into the application and integration of these systems within an organizational context, using Dairy Crest as a case study. It examines how integrating budgeting, accounts receivable, opportunity reports, order information, and performance reports can enhance decision-making, cost reduction, and profitability. The report concludes by referencing relevant academic sources.

MANAGEMENT
ACCOUNTING

Management Accounting
Systems and Reporting
Methods The focus of the financial accounting is preparation of the
information for the external parties such as lenders, public
regulators as well as stockholders that is according to the
generally accepted accounting principles.
 However, managerial accounting takes the financial information
of the company and then it develops reports for the confidential
use by the managers. These are the reports that aids for making
decisions as well as it identifies the ways for running the
company much efficiently (Otley 2016).
 The reports prepared are based on informational needs of the
management as well as it includes budgeting, cost analysis of
product, breakeven charts, trend charts and forecasting.

Continued…
 Management accountants are generally considered to be forward-looking and they uses
the reports for helping to make the decisions, which affects organization’s future rather
than historical based recording as well as aspects of compliance in the financial
accounting. The trend lines are used for forecasting the sales and preparing the budgets.
 It identifies actual direct cost as well as cash flow and profits of the products and
services. Under this, management can determine whether the products or services are
profitable or not and the volume and prices of sales required for the break even.
 The performance reports are used by the executives that is also referred as variance
analysis from the managerial accounting for identifying the deviations of the actual
results from the costs that are projected.
 Managerial accounting has the benefit of analyzing the workflow in the process of
production or the activities in the process of sales.
 Information systems is designed by the managerial accountants for providing the data
for running their business effectively and reaching to their goals. These are the internal
repots constructed for meeting the specific needs of the company as well as their
mangers (Bobryshev et al. 2014).

Methods of Reporting
 Budgeting Reports: This sets out the planning for analyzing the
performance of company for making the evaluation of the
department of the performance as well as controlling costs.
 Accounts Receivable Aging Reports: It is concerned with the
management of the accounts receivables for the companies that
are engaged for extending credit for the customers.
 Job Cost Reports: It is concerned with identification of costs,
profitability and expenses of each of the specific job.

Continued…
 Manufacturing and Inventory Reports: The companies that
are involved in the process of manufacturing prepares this report
for making their inventory and manufacturing process more
efficient.
 Performance Reports: In this report, the comparison of the
actual results with that of the budgeted performance are
calculated and the differences are then analyzed.
 Other Information Reports: This report helps the management
for watching the trends in their business effectively and
efficiently.
 Opportunity Reports: It is the report that are prepared for the
management so that they would be aware of occurrences of the
particular event (Klychova, Faskhutdinova and Sadrieva 2014).

Management Accounting
Systems Benefits
 Job Costing System helps in estimating all types of the cost all
through the process of manufacturing. It helps in preventing the
duplication of the efforts. Moreover, it helps in evaluating the
work quality.
 Price Optimizing system helps in determining the customers’
attitude based on the various prices. Further, it helps in
maximizing the operating profit with the best prices. Moreover, it
assists in customers segmentations (Klychova et al. 2015).

Continued…
 Cost Accounting System measures efficiency in the processes
and then it assist in the improvement by using the system. It
helps in reduction and fixation of the prices. Moreover, it helps in
providing necessary information that are required for the
planning.
 Inventory Management System improves the inventory orders
accuracy by the help of system. It helps in improving the
effectiveness and efficiency and helping for saving the money
and time (Fullerton, Kennedy and Widener 2014).

Application and Integration of
Management Accounting
System The integration of the budgeting process and the organizational
process of Dairy Crest makes the path for the activities of the
organizations in order to concentrate on the results and objectives
targeted in the much better way.
 The integration of activities of organizations and account receivables
aging report of Dairy Crest should be achieved by making the efforts
for the timely collection of the accounts receivable as well as
creating the proper policy of collection, which should be monitored
on timely basis for their accuracy and flexibility.
 The integration of the processes of business with the opportunity or
business situations reports allows the management of Dairy Crest for
analyzing critically the situations as well as it acts accordingly for the
decisions.

Continued…
 The integration of process of organizations and order information report helps
the managements with analysis of the information of sales order and then
generating the various reports for tracking the customer’s order and its
fulfillment in the given time-period.
 The integration of performance reports and Dairy Crest business activities helps
the managers for planning the future production and the increase in cost that
leads to the reduction in cost as well as high profitability (Lavia López and Hiebl
2014).
 The activities of the Dairy Crest is directed for achieving the objectives of cost
as well as reports of cost that makes it easier for deciding about the strategies
of pricing as reducing overall product’s cost..
 The integration of the processes that are involved in Dairy Crest provides with
the better management of the levels of inventory of Dairy Crest and their
manufacturing cost to estimate required number of placing the purchase order
(Maas, Schaltegger and Crutzen 2016).

Reference
 Bobryshev, A.N., Tatarinova, M.N., Grishanova, S.V. and Frolov, A.V.E., 2015. Management accounting in Russia:
problems of theoretical study and practical application in the economic crisis. Journal of Advanced Research in
Law and Economics, 6(3 (13)), p.511.
 Chiarini, A. and Vagnoni, E., 2015. World-class manufacturing by Fiat. Comparison with Toyota production
system from a strategic management, management accounting, operations management and performance
measurement dimension. International Journal of Production Research, 53(2), pp.590-606.
 Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm performance: The
incremental contribution of lean management accounting practices. Journal of Operations Management, 32(7-
8), pp.414-428.
 Klychova, G.S., Faskhutdinova, М.S. and Sadrieva, E.R., 2014. Budget efficiency for cost control purposes in
management accounting system. Mediterranean journal of social sciences, 5(24), p.79.
 Klychova, G.S., Zakirova, A.R., Zakirov, Z.R. and Valieva, G.R., 2015. Management aspects of production cost
accounting in horse breeding. Asian Social Science, 11(11), p.308.
 Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized enterprises: current
knowledge and avenues for further research. Journal of Management Accounting Research, 27(1), pp.81-119.
 Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014. Management
accounting research, 31, pp.45-62.
 Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment, management
accounting, control, and reporting. Journal of Cleaner Production, 136, pp.237-248.