Management Accounting Systems: Costing and Planning Tools

This report provides a comprehensive analysis of management accounting systems, reporting methods, and techniques, with a focus on their application in a real-world scenario involving AJ & Sons, an accounting consultancy firm, and their client Innocent Drinks. It explores various management accounting systems such as cost accounting, inventory management, price optimization, and job costing, highlighting their essential requirements and benefits. The report also examines different methods for preparing accounting reports, including budget reports, accounts receivable reports, and inventory management reports. Furthermore, it evaluates the integration of accounting systems and reporting with organizational processes, discusses costing techniques like marginal and absorption costing, and analyzes diverse management accounting techniques. The report concludes by addressing the advantages and disadvantages of planning tools and how organizations adopt management accounting systems to respond to financial problems, ultimately leading to sustainable success.

Management Accounting

Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1. Management accounting with different types of systems..................................................................3
P2. Methods for preparing accounting reports.........................................................................................5
M1. Benefits of systems with their applicability......................................................................................6
D1. Evaluation of accounting systems as well as accounting reporting that are integrated with
organizational processes..........................................................................................................................7
TASK 2..........................................................................................................................................................7
P3. Calculation of cost with distinct costing techniques..........................................................................7
M2. Diverse management accounting techniques..................................................................................11
D2. Financial reports that accurately apply and interpret data...............................................................11
Task 3........................................................................................................................................................11
P4 Advantages and disadvantages of different types of planning tools..................................................11
M3 Use of planning tools and its application for preparing and forecasting budgets.............................13
Task 4........................................................................................................................................................13
P5 Organizations are adopting management accounting system to respond financial problems............13
M4 Management accounting can lead to sustainable success................................................................15
D3 Planning tools for accounting respond by solving financial problems.............................................16
CONCLUSION.............................................................................................................................................16
REFERENCES..............................................................................................................................................17

INTRODUCTION
A method for recording, reviewing and reporting operating costs and activities to make
financial decisions known as accounting for management. Focusing on all reporting of financial
and maintaining it in an efficient way is essential for the organization, so decisions can be taken
easily (Appelbaum, Kogan, Vasarhelyi and Yan, 2017). To better understand the concept select
AJ & sons which an accounting consultancy firm. The recent lock down due to COVID-19
impact on the businesses and they are closing their offices and start working online. At this time
many clients wants to taken consultancy advice from company to smoothly run their business.
The client of innocent drink, a company that makes smoothies and juices sold in supermarket,
coffee shops and different other juices. The firm advises them to apply management accounting
systems and reports to operate their business effectively.
Various concepts will be addressed in this article, such as management accounting and its
necessary criteria, types of management accounting framework, types of approaches that could
be used for financial performance and cost estimation using specific techniques to achieve
income. Furthermore, the strengths and drawbacks of the preparation methods and how they are
utilized for budget are monitoring and administration accounting systems which are used to react
successfully to fiscal challenges to be addressed in this study.
TASK 1
P1. Management accounting with different types of systems
Management accounting is concerned with laws relating to accounting details in order to
take strategic decisions. It's being used by every institution's administrators who efficiently
acquire, evaluate and track the financial details to preserve the productivity.
Management accounting system is the critical evaluation of financial reports which
corporations use to assess and analyze their system for organizational behavior purposes. This is
also used to handle situations such as investors and shareholders coming out of the company. All
companies would like to operate their company by decision taking, so they use various forms of
accounts management solution. In addition to making management decisions, it considers
different measures and financial reporting that are adopted by industry (Bawaneh, 2018).

Cost accounting system: Managers use this method to analyze expenses related to
production and company practices with a view to improving productivity. This has an important
criterion for recognizing the additional spending and removing those costs when making goods.
Innocent drink's management utilizes this accrual accounting to learn the actual price of cement
and manufactured goods that are being used in building. Maintaining the costs and reducing
unnecessary costs through using cost accounting method is essential to all businesses. Thus it is
important that all organizations are using the cost accounting system and obtain real operating
costs in the enterprise of businesses. The essential requirement of this system that to set cost of
different products and services as per the organizational requirements.
Inventory management system: This system is used to monitor or track inventories that
are kept in warehouses. Its minimum necessities has as it works to control track of all inventories
that determine that content is in storage since it is not. Innocent drink's supervisor maintains
track of all products through a database that allows check the performance of specific stock. In
addition, it is necessary to recognize the under-stock and over-stock situation at the office and
consequently sell the goods (Datar and Rajan, 2018). The essential requirement of this system to
track the inventory at different levels from raw material to finished goods.
Price optimization system: This is also referred to as data methods that businesses in
various industries use to assess how consumers react to external service and product prices.
Prices are very important variables which motivate customers to buy certain items / solutions. In
the company, it has an important obligation to set the cost of goods and services that able to
stimulate buyers. Through using that same method, which satisfies customers and achieve
desired targets such as licensing authority, the Innocent Drinks manager control the price of
Smoothies and other products. The essential requirement to ensure they can chose the best prices
of the goods and services. Innocent Drinks supervisors are utilized to guarantee this occurs.
Job costing system: It is another stated method used to track job-by-job income and
expenses to improve work-by-job productivity. In many other terms, it is a tool that is being used
by managers to monitor production work costs rather than operation cost. It has critical criteria
including no company can stay on top of the expenses of and job because without that network
administrator, retaining data that is more important to organizations. Innocent Drink's financial
accounting costs to different employees that help control corporate expenditures and make

important decisions to efficiently conduct business activities (Georgantopoulos, Poutos and
Eriotis, 2018). The essential requirement of this system to assure about jobs in regard to arrange
the company effectively.
P2. Methods for preparing accounting reports.
A report which administrators schedule along with scheduling, legislation, progress
monitoring and business decision-making practices recognized as management accounting
reports. It supports in maintaining both money and non - monetary bank documents and then turn
these to valuable business information. This report includes organizational data, details, and
operational knowledge. The key aim behind such study is to evaluate the efficiency of the
company and implement modifications to boost efficiency. Accounting reports are compiled by
the director of innocent drinks, which helps to make more educated business sector decisions and
improving company efficiency. There are mentioned different types of accounting reports such
as:
Budget report: This is significant document within which a company organization's
economic performance is described. Budget report is the important specific document used by
executives to equate the programs total budget with existing projects to raise the selling price.
This aims to establish the overall budget for all expenditures and profits involved. Management
should set projected budgets for development in Innocent Drinks, and contrast them with real
budgets that actually indicate how much company wants to invest. In fact, it supports
administrators provide better benefits for workers, cut expenses and execute plans that preserve
profitability (Gomez-Conde and Lopez-Valeiras, 2018).
Accounting receivable report: Every economy depends on financing, so it's critical that
they plan deferred revenue account reports. This process helped hold creditors details and also
payment terms that specify when lenders must reimburse the balance owed. This report breaks
down the final balance in different periods of time, help companies to recognize the debtors and
find distribution identified issues as well. Innocent Drinks, for example, is a processing business
that produces building materials and markets them exclusively on lease and money to
manufacturers and consumers. It requires 30 days, 60 days and 90 days of credit, and maintains

lenders information. That organization’s management must maintain stricter accounting policies
for the aim of acquiring reimbursement at growth. Thus it is necessary for organizations to plan
trade receivables for ageing and recover the timely payments
Inventory management report: A report that is used to monitor the stock or maintain
sufficient information provided as the inventory management report. This study lets leaders
know how much inventory system they have had on order. For example, Innocent Drinks good
for beginners inventory control document on the raw materials used in making Smoothies such
as Fruits, ice creams and so on. It improves overall sales volumes and ensures that inventories
are correctly tracked by management teams (Heinzelmann, 2018).
M1. Benefits of systems with their applicability
System Benefits and application
Inventory management system This program is helpful to monitoring the stock and position
officials understand for all company. It is implemented by
director of Innocent Drink to learn about over inventory or
under raw storage facilities. This includes keeping track of all
inventories that are accessible in the business.
Cost accounting system This method offers an advantage in calculating cost and
promoting economic operation performance through reducing
expense. This is implemented by Innocent Drinks
management who lead in rising cost of raw materials,
managing supplies and also helping boost output.
Price optimization system It's important to set services and products rates that enable
consumers to purchase products. This implementation is
described as manager of Innocent drinks control the price of
hope cement that they manufacture and increase sales from a
company to purchase fruits (Hilorme and et.al, 2019).
Job costing system This system gives organizations broader advantages in
calculating money generated on specific employees, and
reporting relationships with because in particular industries.

Its usage is described as Innocent Drinks Manager dividing
costs into different departments in the manufacturing system
that aims to function efficiently.
D1. Evaluation of accounting systems as well as accounting reporting that are integrated with
organizational processes.
The accounting management method and documentation was combined with company
operations such as sufficient service. Accounting system is used to define and evaluate the
results, and reports are being used to keep all payments registered properly. Innocent Drinks
Corporation, for example, needs to sue stock control system to monitor remaining supply and
compile purchase orders for ordering appropriately. Price management program helps Innocent
drinks set cement and other cost of materials, and ability to spend information which helps align
with real budgets (Horvat and Mojzer, 2019). Often useful for Innocent Drinks is the cost
accounting system and task costing system to keep track of all costs and relevant jobs to preserve
money. The accounting method and reporting are also incorporated with the operational process ,
which supports to accomplish company objectives using both the processes and documents
TASK 2
P3. Calculation of cost with distinct costing techniques.
Marginal costing: The monetary value that is spent by institution on having extra sections of
outcome to generate profits considered as marginal costs. This analysis is used to measure the
volumes of output in which smaller numbers are measured for increasing amounts being
produced.
Absorption costing: Company uses this strategy which specifies all costs including variable
costs and fixed costs are known as unit costs. This is a decision-making process after
consideration of the higher overhead costs.

M2. Diverse management accounting techniques
There are various forms of accounting management methods, such as marginal and costing
methods for accumulation, and are used by companies to gain income. Marginal costing is a
methodology that organizations use to measure the benefit and aims to create financial reporting.
Businesses apply both method to investigate the earnings and preparing financial statements.
Innocent drinks employ marginal and absorption techniques to boost efficiency and performance
in preparing and presenting financial. These businesses use strategies that help to sustain
profitability by measuring revenue and expenditures that often contribute to business operations
(Jarwal, 2018).
D2. Financial reports that accurately apply and interpret data
The companies should use them so that they can implement as well as analyze the data
quickly and productively. And they will ensure that they can achieve significant aims and goals
avoiding complications and complications. It is very relevant in the sense of Innocent Drinks that
its executives are able to use the financial results to boost the total efficiency in the organisation
and thus gain a competitive advantage over competitors.
Task 3
P4 Advantages and disadvantages of different types of planning tools
Budget: This is a quantitative statement that for a stated amount of time reflects financial
projections of revenue and assets. It allows by approximating the costs for the company to earn
money. In many other sentences, budget is a financial comment that is planned in regard to
evaluate the destiny for a specified period. Every company, only with aid of this expenditure,
will plan a spending plan that allows realize the ramifications cost and benefits. Innocent Drink's
manager prepares spending plan with the assistance of last year's spending plan to really get
earnings (Lowe, 2019).
Cash budget: Generally, cash budgets are created by management practices on financial
performance after planning sales, spending and infrastructure sector which actually decide the
spare cash inside the company. Each form of budget illustrates cash inflows and outflows when
planning the financial plan. Its principal objective is to maximize market share and increase net
income. In Innocent drinks management builds financial statement by including both revenues