Higher Nationals Unit 5: Management Accounting Report and Application

This report delves into the core principles and practices of management accounting, offering a comprehensive overview of its systems, techniques, and reporting methodologies. It begins by defining management accounting and highlighting its crucial role in providing financial and non-financial information to support managerial decision-making. The report then explores various management accounting systems, including cost accounting, price optimization, job order costing, and inventory management systems, illustrating their application within a business context, specifically using Tesco Plc as an example. The principles of management accounting are outlined, followed by an examination of the role of management accountants and the methods used in management accounting reporting, such as performance reports and cost management reports. The report critically evaluates the interconnectedness of accounting systems and reporting, emphasizing their impact on corporate performance. Furthermore, it applies a range of management accounting techniques, including marginal and absorption costing, to calculate costs and produce financial reports. The conclusion emphasizes the importance of management accounting in enhancing business operations and strategic planning. References are provided to support the information presented.

Management Accounting
TASK 1 & 2

Table of Content
• Introduction
• Management accounting systems
• Principles of management accounting
• Role of management accounting
• Methods of management accounting reporting
• Benefits of management accounting systems
• Critically evaluate that how accounting systems and reporting linked
• Apply a range of management accounting techniques
• Calculate cost by using appropriate accounting techniques
• Conclusion
• References

INTRODUCTION
Management accounting is the process of managing internal
operational activities of the business. It support the managers
through providing financial or non financial information for
the decision making purpose (Azudin and Mansor, 2018).
Management accountant needs to address all the activities
which happening around the business or which can affect the
productivity as well as profitability of the company.

Management accounting systems
• Cost accounting system: It is mainly focused with recording
all the costs that are resulting in expenses for the entity. With
the help of it, the managers of Tesco Plc analyse the actual
costs of carrying out the operational activities.
• Price optimisation system: Managers in most of the
organisations use it to determine the best rates for the items that
are offered to the customers so that they can buy it and their
expectation level could be met.

Continue..
• Job order costing system: This system of management
accounting is focused with recording of costs of all the jobs that
are performed by the organisation so that the highly profitable job
could be identified.
• Inventory management system: It is mainly used in such entities
that are involved in manufacturing activities so that proper and
detailed information of goods could be recorded. In Tesco Plc it is
used by the managers to make sure that they are having proper
details of the stock which is used to meet expectation of clients.

Principles of management accounting
• Management by exception
• Control at source accounting
• Integration

Role of management accounting
Role of management accountant and MAS is to design the
framework for cost and accounts and further produce financial
reports for the managers to make strategic decisions in context of
organizations. In a Tesco Plc Company, role of management
accountant is to done short term or long term planning, produce
management information system, maintain capital structure,
control over the entire business process and at the end made
decisions for the success of organizations.

Methods of management accounting
reporting
There are several methods of management accounting reporting
which are used by the accountants of Tesco Plc Company.
Some of them are as follow:
• Performance report
• Cost management report
• Accounts receivable aging report

Benefits of management accounting
systems
Cost accounting system:
• This method is helpful when estimating the total cost of the commodity, so that
the optimal profitability can be reached.
• That's also beneficial for the examination of mistakes in estimating the firm's
corporate operational costs.
Job order costing system:
• This helps employers to measure the income gained from particular workers,
allowing them to properly assess if similar job roles in the future are attractive.
• In this method, each job's productivity can be calculated independently which
assists in financial reporting.

Critically evaluate that how accounting
systems and reporting linked
All MASs and reporting methods are strongly integrated, from
which they can rely on their contribution to corporate
performance. It can be best illustrated in the explanation
below, cost accounting and performance analysis are
interrelated which aids with the overall estimation of
expenditures generated in sales and other operations in order
to gain support in pricing techniques.

Apply a range of management accounting
techniques
In an organizational context, there are several accounting
techniques which are used to calculate the profit of the
company and with the help of it, accountant produce the
financial reports for the analysis of several stakeholders.
Marginal or absorption costing techniques used to evaluate the
overall production cost and further helps in calculating profit.
This information helps the managers to produce profit & loss
statement, balance sheet, cash flow statements etc.

Produce financial reports that
accurately apply and interpret data
It is important for Tesco Plc to view their financial statements in
a way that their managers can appreciate them and that they
might make good decisions resulting in high-end productivity
and expansion will be of benefit to them (Usenko And et.al.,
2018). This is helpful to the business in prominently achieving
its goals by which they can reach great market image.