Management Accounting Report: Systems, Costs, and Financial Problems

This report analyzes management accounting systems and their application within Capital Joinery Ltd., a manufacturer of joinery products. It explores various management accounting systems, including cost accounting, inventory management, job costing, and price optimization, detailing their essential requirements and benefits. The report also examines management accounting reports such as job costing reports, accounts receivable aging reports, operating budget reports, and product/service profitability reports. Furthermore, it delves into the calculation of costs using marginal and absorption costing techniques. The report critically evaluates the integration of these systems and reports and provides a comprehensive overview of their role in financial decision-making and problem-solving within the company, highlighting the importance of accurate application of management accounting techniques for assessing profitability and making informed business decisions.

Management
Accounting

INTRODUCTION
Management accounting is a specific field of accounting in which the use of various
types of methods and techniques by the managers of an organization so that they are able to
ensure that they can better manage the firm's financial data, facts and information in a highly
effective manner (Apostolou and et.al., 2016). Its use is quite crucial from the point of view of
the organizations so that they are able to ensure that the attainment of the short-term, medium-
term and long-term goals and objectives can be done in the right manner. For this report, Capital
Joinery Ltd. has been selected. It is a firm which manufactures joinery, made-to-measure doors
and windows. In this report, focus will be made on demonstration of understanding of
management accounting systems, calculation of costs, explanation of the use of planning tools.
Additionally, focus on Comparison of ways in which the firms can make use of management
accounting to respond to the financial problems will be discussed as a part of this project.
TASK 1
P1: Management accounting systems
Management accounting is a tool which is used for the purpose of decision-making by the
management in a highly effective manner by the management (Management Accounting, 2020).
Capital Joinery Ltd. can make its use so that it can ensure that the attainment of the goals and
objectives can be made highly effectively and efficiently.
Different types of systems can be used by the organizations in it. These systems can be
explained as follows-
Cost accounting system- This system can be used by the organizations so that they are
able to ensure the calculation of the costs in the right manner (Astami and et.al., 2017). Thus this
system is used for the purpose of identification of costs, their segregation and ensuring that
proper techniques can be applied for ensuring their reduction. Therefore the use of this system
can be made by Capital Joinery Ltd. so that the attainment of the goals and objectives can be
done properly. As it is a manufacturing company it has to make an use of this particular system
to be able to identify its increase in the level of costs and take appropriate actions to be able to
deal with it in the right manner.
Essential requirements-
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 Different types of methods must be used in this particular system so that the costs can be
identified properly. Therefore in this manner this will help Capital Joinery Ltd. to be able
to asses costs effectively and efficiently.
 Cost Reduction techniques must be used under this system so that the company is able to
reduce the various costs properly.
Inventory management system- The use of different types of methods and techniques can be
made so that the management of the inventory can be done properly (Dinh, Kang and Schultze,
2016). Capital Joinery Ltd. Can therefore make sure that the management of the stock can be
done by it in the right manner by using it. This can lead towards an increase in the level of
efficiency and effectiveness for the management of stock level. As the company is a
manufacturing company, it can make sure that the level of inventory can be managed properly by
making the use of this particular system which will help in effectively and efficiently managing
the stock.
Essential requirements-
 This system helps in ensuring that the management of inwards and outwards movement
of goods can be tracked by making the use of appropriate techniques and methods.
Capital Joinery Ltd. Can therefore make sure that the techniques like LIFO, FIFO,
Weighted Average Cost etc. can be used by it for this particular purpose.
 The use of various types of techniques can be made here so that the reduction in the
excessive inventory costs can be done properly. Therefore, In this way the management
of Capital Joinery Ltd. Will be able to reduce the maintenance costs effectively and
efficiently.
Job costing system- Different types of methods and techniques can be used by the companies so
that the wide variety of job orders can be managed by the organizations (Egan, 2018). Therefore,
In this way Capital Joinery Ltd. Can ensure that the management of its job orders can be done by
it appropriately. The company thus has to ensure that the management of the items of stock can
be done in a right manner by assessing the job costs and ensuring that they can be reduced by
managing the job orders properly.
Essential requirements-
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 The use of right methods and techniques can be made for ensuring the proper
management of job orders. In this way, Capital Joinery Ltd. Can ensure that the
management of job orders can be done effectively and efficiently in an appropriate way.
 In this system, a wide variety of methods and techniques can be used so that the cost
reduction can be carried out in a proper way. Thus in this way Capital Joinery Ltd. Will
be able to reduce its costs effectively and efficiently.
Price optimization system- In this system the use of mathematical and statistical models can be
made so that the prices are set correctly for earning higher-level of profits (Ellström and Larsson,
2017). The company can thus set a right price by making the use of this particular sytem. The
company therefore has to make sure that it is able to effectively and efficiently manage the
different types of prices in a proper manner to attain a higher-level of efficiency and
effectiveness and set appropriate prices to maximize the level of profits.
Essential requirements-
 For the purpose of forecasting of price, the use of mathematical and statistical models and
techniques can be made under this system. The forecasting of different types of prices
can be done by the company by making a proper use of this particular system.
 Overall job costs can be reduced when the use of this particular system is made by the
different types of organizations. This will help the company to make sure that it can
facilitate a reduction in the job costs.
P2: Management accounting reporting
Management accounting reports are those reports which are used by the managers for the
purpose of analysis and interpretation. Therefore the use of the of the following reports can be
made by Capital Joinery Ltd.-
 Job costing reports- A detailed report of the inflows and outflows of the different types
of job orders can be prepared by making the use of these reports (Farooq and De Villiers,
2019). Thus in this way overall job costs can be effectively identified by the organization
in the right manner in the firm effectively and efficiently. Therefore this can be quite
useful for the managers of Capital Joinery Ltd. so that they are able to assess their job
costs effectively and efficiently. Thus in this way the management of job costs can be
done in the right manner by the company. If the are any deviations or variations which
are identified then they can be easily rectified using proper methods as well as techniques
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in the right manner. The company can therefore make sure that by using these particular
reports the different types of job costs can be identified and the appropriate steps can be
taken in order to ensure that these costs can be reduced in a highly effective manner.
 Accounts Receivable Ageing Reports- A detailed analysis of the different types of
Debtors of the company can be made by using these particular reports. Therefore, In this
manner it is quite crucial that an overall summary of these Debtors can be prepared
effectively and efficiently. In Capital Joinery Ltd., it is highly crucial that these reports
are framed for the purpose of identifying debtors who have not paid their dues which will
help a lot in getting the payment from them within time. These reports are helpful for the
company in order to ensure that the different types of Accounts Receivables are listed
effectively and efficiently and thus the appropriate actions can be taken for ensuring their
proper management.
 Operating budget report- In these reports, there is a detailed report of the operating
revenues and expenses. In the company, it is very important that these reports are
prepared to assess the efficiency and effectiveness level of the operations. Therefore in
this way the company can target higher-level of operational profits. In these reports, the
company can make sure that it is able to prepare a detailed report about its various types
of operating budgets and reduce its various types of operating expenses and enhance its
overall operating incomes.
 Product/service profitability report- Different types of products and services and their
level of profits can be analysed when the use of these particular reports can be made
(Fitriyani, 2019). Thus, In the company It can be highly useful to ensure that the products
and services which are not making appropriate profits can be identified so that a suitable
action is taken by the management to improve their overall profitability level. In these
reports, the companies can make sure that they are able to prepare a detailed report about
their various types of products and services and thus make sure that they can find out
strategies and techniques to be able to enhance the overall level of profits on these
products and services in the right manner.
M1: Benefits of Management accounting systems
Cost accounting system can be beneficial for the organizations to identify and assess the
various types of costs. Also it can be used for the purpose of ensuring that costs can be
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effectively reduced. Inventory management system can be beneficial for the firms to identify the
level of inventory in the organization. Also is use can be made so that the costs related with the
maintenance of stock are reduced effectively and efficiently. Job costing system can be
beneficial for the firms to focus on the right management of the job orders. Also this system can
create an advantage for the organizations to reduce the costs of maintaining the job orders. Price
optimization system can be beneficial for the organizations to set a right price. Also this system
can be helpful for the firms to target higher-level of profits in the future.
D1: Critical evaluation of management accounting systems and management accounting reports
The integration of these reports can be carried out in the different types of processes of
the organization quite effectively and efficiently. In Capital Joinery Ltd., the focus has to be put
on ensuring that both of them can be effectively and efficiently in the right manner. Thus in this
way the management will be able to optimize the functioning of the company.
TASK 2
P3: Calculation of costs
Marginal costing- It is a technique through which the organizations can calculate the
overall level of profits as well as also ensure that calculation of Break-Even point can be done
(Gulluscio and et.al., 2020). It is a point where there are neither profits nor losses for the
organization. In the company, the use of this technique can be made so that the profitability level
can be determined in the right manner.
Absorption costing- The overall level of expenses can be calculated by making the use
of this technique (Matsler, 2019). Therefore, In this way it ensures that a proper treatment of the
overheads can be done in the right manner. It can be done through ensuring their right allocation
according to the various types of expenses of the different departments. In the company, this
technique can be used so that the profitability level can be assessed and the proper allocation of
overheads is made.
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