Managerial Accounting Techniques, Relevance, and Comparison Report

This report delves into the realm of managerial accounting, exploring various techniques utilized by companies. It begins by defining managerial accounting and then examines specific methods such as Activity Based Costing (ABC), Total Quality Management (TQM), and the Balance Scorecard (BSC). The report then explains the relevance of management accounting systems in business organizations, providing examples of how these systems aid in decision-making, improve operational efficiency, and foster a competitive advantage. Furthermore, it compares the management accounting systems used by different companies, highlighting the diverse approaches taken in manufacturing contexts. The report concludes with findings about the relevance of management accounting systems in today's competitive and uncertain business environment, emphasizing the importance of quality information and adaptability for future success. The report underscores the need for companies to adapt their management accounting techniques to meet changing business needs and improve overall performance.

Managerial Accounting

Table of Contents
INTRODUCTION....................................................................................................................3
MAIN BODY...........................................................................................................................3
Ques. 1. Different types of management accounting techniques used by the company.. 3
Ques 2. Explanation..........................................................................................................4
1. Relevance of Management Accounting System in the business organisation with
examples............................................................................................................................4
2. Comparing management accounting systems used by different companies................5
Ques. 3. Findings about relevance of Management Accounting System in today’s
competitive as well as uncertain business environment...................................................7
Ques. 4. Outcomes ...........................................................................................................8
CONCLUSION.....................................................................................................................10
REFERENCES.....................................................................................................................11

INTRODUCTION
Managerial accounting is defined as a term related with the process of collecting,
measuring, evaluating, identifying, analysing, interpreting relevant and crucial information
about a particular phenomenon. By making proper explanation of data gathered, it is very
much important to communicate it to its end users for assisting in their decision making
process. The present report will define about different types of management accounting
methods which has been adopted in by the company. Furthermore, explanation related
relevance of Management accounting system in context of contemporary business
operations will be made. Also, report will focus on making comparison in between
companies pertaining to management accounting systems used by them. At last, it will
make emphasis on identification of outcomes from research conducted.
MAIN BODY
Ques. 1. Different types of management accounting techniques used by the company.
Management accounting techniques refers to the procedure, methods and system
which has been used by the management of the company in performing and managing of
accounting as well as financial operations. By making use of proper and effective
management accounting tools, it assists the company in preparation as well as
presentation of better and meaningful information to its end users. Following are the
techniques which are used by the case company:
1. Activity Based Costing (ABC) – A method which supports company in monitoring
and tracking amount related to overhead cost and its allocation to defined objects.
This method helps company in making focus on identification of profitable business
activities, production processes with the help of which a particular job can be
processed (Kaplan and Atkinson, 2015). Such technique assigns overhead cost to
processes and product that yields or consume such amount of cost. For example –
It has been estimated by the management of the company that purchase of 10000
pieces of material will require overhead cost expenses of $20000 for such particular
time period.
2. Total Quality Management (TQM) – A process of continual nature engaged in
processes related to detection, minimization of errors as occurring while conducting
business operations such as manufacturing, management function in field of supply
chain operations, focusing on making improvement in customer experiences,

imparting of proper and updated business training to its employees. By adopting
this technique, it helps company in making improvement in its business processes,
maximizing customer satisfaction and business profit thereby reducing overall
business cost structure. For example – Reducing cost and development cycle
duration by making more focus on improving quality aspects of business,
3. Balance Scorecard (BSC) – One of the performance metric which helps company
in identifying its own employees weakness and strength and measures to be
undertaken by the company for overcoming such weaknesses (Hopper and Bui,
2016). It assesses standards and norms as followed by profit making companies
and thus helps company in making improvement its business operations. For
instance – Monitoring tool used by company as indicator of performance.
Ques 2. Explanation
1. Relevance of Management Accounting System in the business organisation with
examples.
With the help of management accounting system, every business organisation can
formulate its business plans and strategies in line with its business aims and objectives. By
adopting sound and proper management accounting technique, it helps company in
preparation of its final and managerial accounts. Following are the relevant aspects of
management accounting systems for business organisation:
1. It acts an instrument for smooth functioning of business operations with the help of
implementation of sound management accounting system pertaining to the
requirements of situation.
2. It assists in enhancing process of crucial decision making thereby facilitating proper
flow of information essential for decision making process (Bogsnes, 2016).
3. By adopting relevant technique of management accounting in the business, it helps
the company in bringing improvement in its overall business as well as operational
efficiency thereby increasing its profitability aspects.
4. Furthermore, it ensures that both the business planning, strategies are made with
proper efficiency and provides firm decision-making process along with the
achievement assisting company with creating positive impact on improving
operational excellence.
5. By taking into consideration better management accounting tools, it helps company
in gaining competitive advantages. Also, it made emphasis more on the control

quality measures of the organisation thereby ensuring that it aids to business in
positive manner (Maas, Schaltegger and Crutzen, 2016).
6. Before implementation of any business and management accounting tool, it is very
much important from the perspective of business to understand its impact on
business operations and growth.
7. For every company, accounting information plays one of the most important
business part on which most of the business operations depends. With the help of
proper as well as relevant accounting information, it forms base for every business
stages i.e. starting from the defining of business visions to formulation of business
plans and strategies.
8. With the help of management accounting techniques, a company can eradicate
different types of wastage, defects as associated with business processes. It helps
the company in identifying unproductive business procedures and eliminates cost
incurred due to such business production (May and et.al., 2015). It thus helps the
company in improving its business as well as employees operational efficiency.
In terms of benefits of contemporary management accounting techniques, it can be
said that a firm having ability of making modification or changes in its management system
comes up with more profits margin. Relevancy of MAS covers aspects in form of business
growth of which evidence and successful implementation plays an important role. For
effective and efficient business operations, it is required on the part of the management of
the company to ensure proper and smooth flow of communication. With proper planning,
directing, monitoring, organising activities of the company, it helps the management in
ensuring systematic regulation of the whole business operations (Otley, 2016). The
effectivenesses of management accounting system can be defined as a process of
benefits which has been provided from use of an accounting system as designed
especially for companies engaged in providing of essential business information for
making crucial business decisions. For example – The techniques of management
accounting such as Activity based costing, Total quality management etc. assists company
in making proper use of all the material as well as relevant information pertaining to the
business operations. Managerial accounting information makes its emphasis more on
internal business performance and provides suggestions for making improvement in it for
the betterment of both the business as well as employees.
2. Comparing management accounting systems used by different companies.
As per the different case study, it has been assessed that manufacturing companies

in both the articles are making use of different types of management accounting
techniques in their business operations. In case of given case study company A is making
use of Activity based costing, Balance Scorecard, Total quality management for its cost
and other related business decision-making processes. The company A has makes
implementation of Activity based costing and Balance Scorecard as its management
accounting techniques. Both the elements of Activity based costing as well as Balance
Scorecard has been used in by the company for making its decision related to cost and
management (Li and et.al., 2019). Furthermore, from such case study it has been
evaluated that the whole management accounting techniques are considered
as one of the most time consuming as well as cumbersome procedures from the
perspective of manufacturing business process.
With the help of adoption of the best management accounting techniques, it assists
manufacturing companies in improving its operational efficiency thereby providing high
profits. Management of the company is held responsible for
making effective decisions related to business operation having its main focus on all the
material as well as relevant information as provided by the company to the management.
On the basis of management accounting system, majority of information related to the
business and its operations are taken into consideration by the management of the
company. With the help of Balance scorecard, this company has been able to assess what
are the current market opportunities as prevailing in the market and measures to be
undertaken for gaining advantages out of it (Parmenter, 2015). Activity based costing on
the flip side is defined as a method of assigning costs factor which further helps in making
proper calculation in form of more accurate as well as relevant product cost by identifying
all major operating activities of the business enterprises.
On the other hand in case of second article as defined in the Journal of
Management Accounting Research, the manufacturing company is making use of various
types of management accounting techniques for making effective business related
decisions. As per the case specified under the given article, techniques of management
accounting used by the company includes Cash flow analysis, Marginal costing, Target
costing for carrying own of smooth as well as effective business operations. With the help
of target costing technique, it helps the manufacturing company in making effective as well
as efficient business decisions (Quattrone, 2016). It is one of the important costing tool
which aids in decision making process of the company. Under such tool, it is required on
the part of the management of the company to makes estimate about how much market

will be willing to pay for new product even before such new product was design and
reproduced. Also, it has been assessed that company is making use of Marginal Costing
which is one of the best management accounting technique. As per this tool, only amount
of the variable costs are taken into consideration at the time of making computation of the
final cost of the product. The fixed costs on the other hand is satisfied against the total
amount of fund arising out of excess of selling price over total variable cost.
Thus, it can be said that both the companies in each given articles are making use
of different types of management accounting techniques for their decision-making
processes. Management accounting system thus assists in preparation of the internal
report on the basis of which the organization is able to make the decision for improving the
future performance and profitability. It also helps in making allocation of the cost amount
thereby identifying manners in order to reduce the cost for increasing the profitability of
organization.
Ques. 3. Findings about relevance of Management Accounting System in today’s
competitive as well as uncertain business environment.
As per the given case, observations has been made that Company A is having
intention of making changes in its existing management accounting technique for future
growth. The company has made decision related to making such changes and rolling back
of already installed technique of management accounting for the betterment of the
business as well as of its employees operations. Also, at the different levels of
management operations, its types
, scope changes has been made for increasing the level of productivity and profitability of
the company as a whole. It is very much important on part of the management of the
company to ensures the quantity as well as quality of accounting and managerial
information as available with the management of the company so as to measure the
performance standards of the business organization (Weygandt, Kimmel and Kieso, 2015).
The quality of processed and interpreted information available with the management of the
company needs to be more relevant and accurate from the perspective of future business
success and growth in more effective manner. It also helps company in meeting its set
defined business aims and objectives along with keeping in mind the needs of its end
users such as investors, stakeholders in their decision - making processes as well.
For surviving in the competitive world, it is required on part of the management of
every business organisation to adopt new and better improved business as well as

management accounting techniques. With the help of effective techniques of management
accounting, company can seeks advantages from such prevailing market opportunities by
formulating sound business plans and strategies. The most important factor from business
prospective is cost on the basis of which the profitability level of company changes ( Wong,
2018). By identifying the most unproductive as well as unprofitable business department, it
will help company in lowering its business expenditure associated unnecessarily with such
business processes. By eliminating such cost amount it helps company in improving its
overall business production as well as profit margins thereby increasing its level up to
some extent. It is required on the part of the company to design and formulate sound
business management techniques which will helps in providing useful information to the
management of the company for their decision - making process. The important aspect for
achieving business growth and success is to have proper understanding about current
market situation and customer demand. Also, by adoption of such opportunities along with
application of right strategies at the right time and place has helped the company in
making large profit as well as customer base (Butler and Ghosh, 2015).
Ques. 4. Outcomes
From the case study it has been evaluated that management accounting techniques
has assisted most of the companies in making their business related decision in more
effective manner. By implementation of best and suitable management accounting
techniques such as Balance scorecard, Activity based costing etc. it helps the company in
making requisite changes as well as improvement in its business performance level. Also,
it helps manufacturing companies in improving its operational efficiency along with
changes in the level of profitability and productivity.
Article 1 - Watts, Senarath Yapa and Dellaportas
The adoption of SAP R/3 will give more accurate accountability of the benchmarks
set by the company. The adoption of new accounting method and software will enable the
accountants of Australia to be more accurate over their workings. This can be supported
by the case where company An adopted to roll back the pre installed system of
management accounting as the new software was very complex and challenge for the
managers. When the system was adopted through the training of employees they
achieving excellence over their work. So the first outcome is that management accounting
shall be enhanced using the trainings of the members.

Another outcome from the above case is that adopting different functions to check
the reliability and relevant for the business is more effective. Adopting a single system can
be risky for the company as failure of that can hamper the business process of company.
Accountants should adopt procedures that suits the environment of the company (Zeng,
2018). Company has used various facets from different techniques of management
accounting and built a single system for the business as per the business of the company.
Article 2 - The Use of Managerial Accounting as a Tool for Decision Making By
Manufacturing Companies in Albania
Timely adoption of new accounting techniques is important for the business so that
management accountant can provide accurate and relevant information related to the
business. This is said on the basis of present case where managers responded with
saying that they were not having enough in formation related to accounted techniques.
They were following the methods used by their prior colleagues. The lack of information
affects the business operations of the company therefore it is important for the
management accountants to remain aware of the current techniques. Managers are now
more active about the recent techniques of accounting.
Secondly the company should train the employees at time so that they can make
correct decisions over time. Management accountant should be able to make decisions
related to the adoption of accounting techniques (AL-Dweikat and Nour, 2018). Lack of
that make the management accountants less efficient and they are not able to take
relevant decision for the business.

CONCLUSION
From the above report it can be concluded that management accounting is related with the
process of preparation of managerial report containing about relevant as well as material
business information of the company. By adopting effective management accounting
techniques, it assists company in gaining competitive advantages in the market thus
providing it with increased customer as well as profit base. There are number of tools of
management accounting with the help of which a business can increase its value and
achieve success which includes Activity based costing, Total quality management, Balance
scorecard. All these aspects of management accounting techniques helps company in
identification of its weaknesses as well as strengths of its own business operations and
employees. Furthermore, it helps company in gaining in depth knowledge about standards
as well as norms as followed and adopted by other profit making companies in the market
on the basis of which changes can be made accordingly for the betterment of business as
a whole.

REFERENCES
Books and Journals
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Impact of Strategic Management Accounting Techniques on Quality of Financial
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Bogsnes, B., 2016. Implementing beyond budgeting: Unlocking the performance potential.
John Wiley & Sons.
Butler, S. A. and Ghosh, D., 2015. Individual differences in managerial accounting
judgments and decision making. The British Accounting Review. 47(1). pp.33-45.
Hopper, T. and Bui, B., 2016. Has management accounting research been
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Kaplan, R. S. and Atkinson, A. A., 2015. Advanced management accounting. PHI
Learning.
Li, H., and et.al., 2019. Targeting Building Energy Efficiency Opportunities: An Open-
source Analytical & Benchmarking Tool. ASHRAE Transactions. 125. pp.470-478
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability
assessment, management accounting, control, and reporting. Journal of Cleaner
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May, G., and et.al., 2015. Energy management in production: A novel method to develop
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Nitzl, C. and Chin, W. W., 2017. The case of partial least squares (PLS) path modeling in
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Parmenter, D., 2015. Key performance indicators: developing, implementing, and using
winning KPIs. John Wiley & Sons.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research. 31. pp.118-122.
Weygandt, J. J., Kimmel, P. D. and Kieso, D. E., 2015. Managerial accounting. Wiley..
Wong, I., 2018. Managerial Accounting Strategies for Optimal Costs.

Zeng, H., 2018. Reciprocal Interaction between Management Accounting and Other
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Online
The Use of Managerial Accounting as a Tool for Decision Making By Manufacturing
Companies in Albania. 2016. [Online]. Available through:
<https://search.proquest.com/business/docview/1758657110/FEA30AB55B1A44A8PQ
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