Management Accounting Report: Systems, Tools, and Decision Making

This report provides a comprehensive overview of management accounting, covering its functions, different systems, and the tools used for effective decision-making. It begins by defining management accounting and differentiating it from financial accounting, highlighting its role in internal strategic development and decision-making processes within a company like Imda Tech. The report delves into various managerial accounting tools such as margin analysis, constraint analysis, and capital budgeting, explaining their importance in evaluating performance, identifying bottlenecks, and making investment decisions. Furthermore, it explores product costing, various management accounting systems including cost accounting, inventory management, job costing, and price optimizing systems. The report also discusses the use of standard costing as a decision-making tool, emphasizing its role in budgeting and inventory costing. Overall, the report provides a detailed analysis of management accounting principles and practices, offering valuable insights for businesses aiming to improve their financial management and strategic planning.

Management Accounting

TABLE OF CONTENTS
Management Accounting.................................................................................................................1
TASK-1 ...........................................................................................................................................3
P1 Functions of management accounting...............................................................................3
Margin Analysis.....................................................................................................................5
Constraint Analysis................................................................................................................5
Capital Budgeting...................................................................................................................6
Trend Analysis/Forecasting....................................................................................................6
TASK 2............................................................................................................................................6
Product Costing/Valuation.....................................................................................................6
P2 Explain the different types of Management Accounting Systems ...................................6
P3 Marginal absorption costing..............................................................................................9
..............................................................................................................................................10
TASK 3..........................................................................................................................................11
P4 Budgeting method...........................................................................................................11
TASK- 4 ........................................................................................................................................19
P5 Explain what a Balance Score Card approach is and describe how the implementation19
References......................................................................................................................................24

TASK-1
P1 Functions of management accounting.
i) Define of Management Accounting. Distinguish between Management Accounting and
Financial Accounting.
Management accounting is amalgamation of finance and accounting, it is allocation of
financial data which suggest firm, its development considering all the internal and external
factors. Further the management accountant are not only qualified in accounting but they are
specialized professionals in decision making, advising, finance, monitoring risk and making
companies strategies. Imda Tech uses this to evolve solutions to increase companies profitability
and net turnover. Globally this concept is known as Charted Global Management Accountant
(CGMA).
Differentiate between financial accounting and management accounting.
Basis Financial Accounting Management Accounting
Nature
Financial accounting is used to prepare
financial statements, balance sheet and to
maintain financial records.
Management Accounting helps
business in decisions making,
developing strategic techniques.
Goals The purpose of accounting is to provide
financial information to external stakeholders.
The aim is to provide adequate
support for planning and
decision-making.
Time At the end of the financial year, financial
statements are made.
Mangers make decisions and
formulate policies regularly
throughout the business
operations.
Clients External Internal
report All financial reports provide a brief overview
of the financial situation of the organization.
The report provides detailed
information (Weetman, 2013).
Resolution It's all about preparing financial statements,
which are used by external stakeholders.
It is essential to predict, plan
and manage a continuous

process.
Necessary
information
Financial information is useful to maintain
record of monetary transaction.
Information is helpful in
maintaining quantitative and
qualitative data (Weetman,
2013).
Accounting
branch Financial information is stored.
It tracks all data on financial
and non-financial information,
or collections.
Privacy level It is not a secret, when it is tested and used in
internal and external stakeholders.
Policies and strategies used are
just a set of internal controls
and sufficient to be used. Top
privacy.
Format It has particular form of format for preparation
of financial statements.
This do not have specific
format. (Taipaleenmäki and
Ikäheimo, 2013).
Rules This accounting method is bounded by rules
and regulations like, GAPS and IFRS
In this accounting manager do
not follow any rules just try to
make decisions as per the
business requirement.
Review
The financial statements use it for inspection,
which will help to promote incorrect financial
statements.
No need to check and modify as
a voluntary set of information.
ii) Importance of management accounting information as a decision making tool.
Managerial team of Imda Tech uses different managerial accounting tools and techniques
for the successful decision making process.
 The method helps managers in making decisions effective and worth considering for
control and accounting activities. Monitoring control and access over accounting
techniques provides an essential support in regulation with economic activities.

 It helps managers for making comparison between actual and planned activities to
compute variances, which in turn, suitable decisions can be made for the business
success.
 It also gives the presentation to administrative department for evaluating overall
performance of the Imda Tech which helps in generating new rules and regulations in the
company to overcome business risk due to adverse change in external environment.
(Taipaleenmäki and Ikäheimo, 20 133).
 It also helps the company in making decisions related to products, like whether to buy or
make product, after examining the cost process.
 Accounting manager makes decisions which can be changed as per the market
fluctuations.
 It also helps in putting better control over the cost through taking rationalized measures
and drive better return to the entity.
 Imda Tech manager also keeps the business updated about advancement in technology.
Draft report and account management that provides operational statistics and financial
information timely and accurate decisions by the board on a daily basis and in the short term.
Unlike accounting, the annual report produces, particularly external stakeholders, representing
weekly or monthly reports to organize internal audiences, such as department heads and chief
executive. These reports generally show how much money is available, sales revenue, the
number of orders beads, account status, debtors, creditors, raw materials and inventory, can also
be trend charts, contrast analysis and other statistics.
Margin Analysis
Internal accounting management of marginal analysis, the profit or cash flows from the sale of
the resulting products, customers, or in some stores. The analysis includes border analysis,
further analysis of benefits through increased production and analysis of broken trends. Tie -
account analysis for the promotion and sales mix only now to determine how much when the
sales volume of the total of the same costs. These accounting data have been calculated useful
for determining the prices of products and services.

Constraint Analysis
The restrictions on production or sales, management accountants to determine where bottlenecks
occur and calculate the impact on the restrictions on income, profits and cash flows.
Capital Budgeting
t includes the recognition of the use of information management, and making investment
decisions. Management Accountants with the standard budget for capital ratios , as in the present
value and internal rate of return for supporting the resolution , which does not leave the capital -
intensive projects or study includes proposals for products or services required and to find an
appropriate way to finance the purchase made. This also explains the repayment period can be
controlled and cannot predict future economic benefits, and when it happens.
Trend Analysis/Forecasting
Finance and exploring some cost trend line to investigate irregularities or inconsistencies. The
region also makes use of the financial statements for the prior period to calculate and provide
future financial information. These can include historical prices, sales volume, geographical
location, customer trends, or account information.
TASK 2
Product Costing/Valuation
Accounting requires determining the actual cost of a product or service. Accountants calculate
and allocate appropriate costs around the actual cost of product production. It can be applied to
the expenses of the goods produced on the basis of a number of charges or the other driver, such
as box with top accountants use of direct costs to assess the appropriate cost of goods sold and
grains have different stages of the production process
P2 Explain the different types of Management Accounting Systems
i) Cost accounting systems
It is a process of used by companies like Imda Tech to estimate the cost of their product
in order to maintain net profitability, cost and annual turnover. Cost accounting system of the
business evaluate its actual cost, normal cost and standard cost. These cost involves material and
labour which are assigned. These costing method are used to value products and their actual cost

of production. Standard cost method is provides the values to manufactured goods and their
estimated material costs.
Estimating the actual cost of goods sold (COGS) is necessary to evaluate companies
profits. Hence, with the help of these methods firm can know products profitability.
ii) Inventory management system
It is a continuous process used by Imda Tech, this helps in maintaining daily incoming
and outgoings of the products and services from the firm. This system consists of receiving
inbound merchandise, transferring outbound merchandise, inquiry, sales, returns. It helps
company in maintaining enough stock for production on daily basis. It helps firm to keep a check
over daily inventory in order to regulate the demands of the customers. Companies also uses
machines to track all orders, vendors, etc.
iii) Job costing systems:
This system is used by Imda Tech manager to identify that its products are different from
each product because identical products and affects the sales and profitability. Measuring job
cost helps in reducing wastage of time and resources. Imda tech uses this to assign
manufacturing cost according to batches of products as per their functioning. This system
involves documentation of Costs of goods sold, finished inventory and work in progress.
iv) Price optimising system
It is an assumption process of the company, system which is used by Imda Tech to evaluate how
the buyers will react to its products and offered prices. The manager involves some important
factors to determine price which are, past prices, inventory cost, and operating cost of the
products. The system gives mathematical analysis of prices which includes the cost which firm is
planning to offer and which will be beneficial.
Lots of business management costs. These costs are separated into different types, such as:
job Costing:
 Cost function: - based on the cost function with 8 types, such as: -
 Production costs: - part of the costs incurred directly in the manufacturing process for
the production of goods or services are the so - called production costs. Where the cost of
direct materials, direct labor and other direct costs (Mastilak, 2011).

 Administration costs: part of the cost of the public sector in general is considered
indirect costs and are called administrative costs. As salaries, office expenses and so on.
 Selling costs: the costs of making the sale of the sale of goods and services, called the
cost. These commissions, discounts, etc. (Mastilak, 2011).
 It is encouraged to share production costs of their products in the market that are
recognized Distribution costs - distribution costs. Since transportation costs, warehouse
rental, etc.
 Research and Development cost (Ahmad, et al., 2014), the costs of executives to
develop new products or services or to make an adequate improvement of the product or
service is available and is known as the cost of research development.
 Conversion cost: direct costs in the form of salaries, overhead, which was created to
convert raw materials into finished products. There are different stages of production to
intervene for.
Analyse the use of standard costing as decision making tool.
Standard costing: This is the expected replacement cost of the actual costs of their accounts
to record the spread refers to the difference between the difference and the proposed costs of the
actual costs. It contains a collection of useful information that managers use to make effective
decisions (Farkas et al. 2016).
In fact the standard price is used as a decision-making tool, such as using different features as
follows:
Budgeting: - Budget reporting prepared using standard costs, because it can not be used in the
actual cost figures are not final, because the budget is always ready to begin treatment, and
underwent surgery after a period of entry into force of standard cost accounting is used
effectively . The use of standard modules is expected to cost different costs such as costs and
sales. The difference between a standard billing system and a standard cost-standard budget for
each product is an intelligent sharing of the degree that the system offers to accept the existence
of a partition wise. The standard cost used in budget preparation is estimated as the total cost,
because it is used less (VARCAS et al., 20166).
Inventory costing: cost accounting method is used to receive the rest of the unit costs lager
hankerings closed distribution devices. There is a big difference in stock to cover the closure and

the actual cost of the traditional normal expected to be effective for each part separately from the
different stages of the production process control of economic (Farkas et al. , 20166).
Controlling: - Administrators can use this tool in the management of their activities and make
adequate improvement in their institutions. They are used to reduce the total cost of increasing
the level of income at the highest level. Using shared spreadsheet software performance and
contrast analysis help you determine the difference between the unit cost and the actual standard
cost per unit (Martin, 20 155).
Performance evaluation:with the standard cost managers can assess the overall performance
they actual performance to take responsibility for basic needs to install evaluation. By
recognizing their achievements, employees are truly motivated to achieve specific goals (Martin,
2015).
Price setting: Use of standard administrative value to determine the price determines the price
accordingly, in order to assess the total cost of survival. They increase the appropriate margins
for their expenses, so they went out at reasonable prices to attract customers to their products
(Martin, 2015).
recognition
TASK-2
P3 Marginal absorption costing
The value of work - work values refers to the way the cost of this method because of cost
calculation. This is mainly used for industrial or corporate purposes that ensure a variety of
contracts and jobs. This is due to a number of rules that will help the technology used in different
situations according to different tasks to these specific customer requirements. Labor costs help
keep accounts straight and indirect. Set of contract method of labor cost.
Precious process - the cost of the additional costs or preparation of the production process steps.
This is the unit cost of the product to ensure that each unit production costs produced by the
standard process division. London CIMA describes the process of value "as a form of influence
on the price, which can be used for the production where standardize goods". These methods can
be used in industries such as chemicals, oil, textile, rubber, sugar, coal, etc.

Investment services - operating costs refer to the cost of the administrative costs of the company.
Quite simply, these costs are made by the organization on a daily basis or every two days. This
cost is a combination of fixed and variable costs. Fixed costs are those costs that remain even if
actual production exceeds total production, while variable costs vary regardless of the number
found.
Marginal cost method is very good to describe the marginal cost to determine the changes in
cost, size, etc. The so- called price and marginal cost. This is achieved by the total cost of the
fixed and variable costs of separation.
Standard costs - the cost of the standard cost of materials directly in production , direct labor and
direct expenses. Analysis of variance is an important part of the cost of the standard, which
shows the real difference between the actual cost and the cost of some of the most important
languages variation in the size of the fluctuations and changes significant cost savings in labor
costs and other (Madegodwa 2007)
Historical cost accounting - recording of the actual cost costing. Materials known the real cost of
the historic work and cover overhead together.
Absorption of cost - This is a method to extract all the variables and fixed costs, products and
processes or services. Absorption fixed price is also known as full cost accounting.
If the launch of a Mobile gadget each of the above techniques can be adopted. Since the
absorption of only marginal costs differ only in the treatment of public expenditure in the
accounts, the financial statement.

Marginal costing: This method only considers variable cost of production in finding out the cost
of the goods as it is based on the assumption that fixed cost remains fixed and will incur even at
no production. Therefore, it computes contribution as an excess of sales over variable costs
whereas net profit is determined through finding the excess of total fixed cost over contribution.

According to results derived, gross profit in absorption cost is 17500 and the contribution
in marginal method is 22125. The results differ because absorption costing had considered both
the fixed & variable cost of production @20 per unit to determine the cost of sales. However,
marginal costing had considered only the variable cost @15 per unit to determine COGS.
Besides this, net loss under full costing method is shown to 375 whilst the same in variable
costing is reflected to 2875 because fixed overheads on closing inventory of (500*5/unit) to
2500.
TASK 3
P4 Budgeting method
Budget preparation is an important part of keeping business organizations smooth. Budgets are
ready to determine the needs of corporate financial needs and efficient allocation of resources in
the company already confirms the impact of cost control report contains a description of the
nature and behaviour of the description of the costs of various valuation methods. The positive
and negative differences in cost and analysis are determined in detail with the budget included
reveal the purpose of regulation
 The budget provided by the institution to provide the direction of the company to achieve
organizational goals and objectives.