A Comprehensive Report on Management Accounting Systems and Techniques

This report provides a comprehensive overview of management accounting, focusing on its application within Tech (UK) Ltd. It begins by defining management accounting and exploring various management accounting systems, including inventory management and cost accounting systems like actual, normal, and standard costing, job costing. The report then delves into different methods used for management accounting reporting, such as budgeting, cash flow, production, accounts receivable, and sales reports, highlighting their significance in minimizing losses, developing budgets, improving understanding, and enhancing financial returns. The advantages of management accounting systems are discussed, including price optimization and job costing systems. Furthermore, the report establishes the integration between management accounting reports and organizational processes, using examples like accounts receivable aging reports and job cost reports. The report also covers cost analysis techniques, including marginal and absorption costing, to prepare income statements. Finally, the advantages and disadvantages of different planning tools are examined, along with how management accounting systems can respond to financial problems, concluding with a summary of key findings and recommendations for Tech (UK) Ltd.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and different types of management accounting systems..........1
P2 Different methods used for management accounting reporting........................................4
M1 Benefits of management accounting systems and their applications...............................5
D1 Management accounting systems and management accounting reporting is integrated. .6
TASK 2............................................................................................................................................6
P3 Techniques of cost analysis to prepare an income statement of marginal and absorption
costing.....................................................................................................................................6
M2 Management accounting techniques and financial reporting documents........................8
D2 Financial reports that accurately apply and interpret data................................................8
TASK 3............................................................................................................................................9
P4 Advantages and disadvantages of different types of planning tools.................................9
M3 Different planning tools and their applications..............................................................11
D3 Planning tools for accounting respond appropriately to solving financial problems.....11
TASK 4..........................................................................................................................................11
P5 Management accounting systems to respond to financial problems...............................11
M4 Responding to financial problems, management accounting........................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
.......................................................................................................................................................15

INTRODUCTION
Management accounting refers to provision of financial advice and advice to an
organisation for using in company as well as development of business. It is a procedure of
making the management accounts and also reports which give timely and accurate financial
information needed through employers to make daily operations as well as short term decisions
(Arroyo, 2012). It is a necessary profession that contribute in monitoring, planning, controlling
and decision making of functions of company. Management accounting is wider concept that
involves costing provisions and helpful in developing better coordination between various
departmental functions. It aids management in order to achieve more flexibility in its structure
and also make better strategies which aids in attaining objectives of company. This report is
based on Tech (UK) Ltd. that manufactures the special chargers for the retailers. Under this
mention report discuss about the management accounting and provide necessary needs of various
kinds of management accounting systems. Advantages and limitations of various kinds of
planning tools which are used for budgetary control will also be mentioned in it. In order to
respond to the financial problems, firms adopting the effective management accounting systems.
TASK 1
P1 Management accounting and different types of management accounting systems
From: Management accounting officer
To: General manager of Tech (UK)
Sub: Management accounting system
Management accounting refers to a process that consists regards evaluate, interpretation,
identification and also presenting accounting information achieved through manager with the
help of cost accounting related techniques as well as management accounting. It is helpful in
decision making. It is helpful for management n develop along with execution of better strategies
in better or effective manner (Boyns and Edwards, 2013). There are various functions of
management accounting such as control, monitor, plan and also increasing employees
performance by make improvement of understand regarding various functions of departments.
Definitions of management accounting
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On the basis of CIMA, Management accounting involves determination, measuring,
interaction and interpretation of necessary information by which management can develop better
plan for proper utilisation of resources in order to achieve set objectives.
According to IMA, Management accounting is a wider concept that helps in process of
decision making, performance and planning of the management systems.
Significance of management accounting
There are many advantages which are related with management accounting applications
in an organisation (Cadez and Guilding, 2012). It is helpful in giving various kinds of
management accounting information that is helpful for management of Tech (UK) Ltd. It is used
as a decision making tools related to various aspects. Some importance of management
accounting mention below:
Identification of Aim- According to information and data available, management
accounting is helpful in identify its set aims and also try to search the better method by which it
can achieve its targets in easy manner.
Performance measurement- Budgetary control standard costing is an effective
techniques that enable performance measurement. In context to standard costing, these are
identified once and also actual cost compare with the standard cost. Under this, it able
management to search all deviation among actual and standard cost. The budgetary control
system is helpful in analysing effectiveness of staff members.
Give better management control- Management accounting tools are helpful for
management in coordination, planning and controlling business activities, standard getting and
also assess the actual performance continuously able management to “management through
exception”.
Decision making- Management accounting system is helpful in make improvement in the
decision making of internal parties in order to get the high outcomes (Chiarini, 2012).
Make or buy- Under this, management accounting is helpful for owners of small
organisations which goods and services they should in manufacturing unit in first place. Cost
accounting system gives better opportunities to take better decisions related to outsourcing as
well as production. It is helpful in make improvement of profit of company.
Presentation of financial statement- Management accounting is helpful in gathering
various data and information which shows financial position of company. Various data and
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information related with finance and cost are helpful in prepare better financial reports that
contribute in the decision making.
Different kinds of management accounting systems
Inventory management- It is a supervision of the stock items as well as inventory. It is a
combination of the processes as well as technology which oversee maintenance and monitor
stocked goods whether those are raw materials, supplies,company assets, finished goods and
ready to send to end consumers or vendors (DRURY, 2013).
Cost accounting systems- It is helpful for management to estimate the product cost for
evaluation purpose of profit level, cost control and also inventory. Under this included process
and job order costing. Under this, it can be classified in actual, normal and standard costing.
Actual costing- It is a procedure of record cost of goods, actual cost of labour, overhead
and material.
Normal costing- It is used to produce goods on the basis of labour, overhead cost of
production and also actual material according to the predetermined production overhead rate.
Standard costing- It is regarded as the predetermined cost that incurred in manufacturing
of services and products.
Job costing- It is used for producing the multiple goods. It is helpful in cost allocation to
every product it gives better opportunity in order to track actual expenses those are incurred on
product manufacturing (Fullerton, Kennedy and Widener, 2013).
Difference among management and financial accounting
Management Accounting Financial Accounting
It is basically developed for the internal
parties.
It is basically used through the external
stakeholders.
It aids in analyse operational as well as
financial performance of Tech (UK) Ltd.
By use of accounting information provisions
, financial data is to be analysed.
Information and also data is used for the future
planning.
IT is based on the previous reports.
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Scope of management accounting is narrow
and also depends on deportments (Håkansson,
Kraus and Lind, 2010).
IT has wider scope and also cover all
transactions of full organisations.
P2 Different methods used for management accounting reporting
From: Management accounting officer
To: General manager of Tech (UK)
Sub: Management accounting system
Report is document that contain information and data related to necessary aspects those
are used through management for the future planning as well as achieve set objectives., on
context to Tech (UK)Ltd., in various types of reports involves accounts receivable, performance,
job costing, budgeting etc.
Significance of management accounting reports
Minimize loss- Various types of reports include different data or information which
which all problems are measured in order to minimize the future loss (Herzig and et. al. 2012).
For an example- Accounts receivable reports are helpful in determine outstanding debts
amounts. In this, correction in the policies are helpful in liquidity maintenance in firm.
Budgets Development- Various types of reports give information and data by which Tech
(UK) firm developed better budgets in order to guide staff members. Budgets are work as
standards that gives better opportunity to make improvement in performance and achieve targets
with in specific period of time.
Improvement in understanding- This type of management report plays a necessary role
to improve understanding among the activities of different departments. It is helpful in gain
support and also attain the common goals.
Enhanced financial returns- Job costing related reports are helpful in determination of
profitable project aspect. It is helpful for manager to use its whole efforts to improve necessary
areas. In addition to this, various reports provides better advantages to Tech (UK) Ltd. Firm.
Various kinds of management reports
Budgeting reports- It gives better standards as well as plans those are used to examine
organisational performance by comparison with the actual performance of various departments
(Hopwood, Unerman and Fries, 2010). In this, it aids in identify problems those are related with
functions and helpful in cost controlling. On the basis of this, incentive report is developed
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through management of various employees those contribute towards improving passion towards
work.
Cash flow report- It is necessary document that is helpful in better management in an
organisation. In addition to this, it gives accurate information related to outflow as well as inflow
of cash at the time of particular time period. It is helpful in maintaining liquidity in business
firm.
Production report- IT provides information related to products those are necessary to
manufacture for fulfil demands or needs of various consumers (Islam and Hu, 2012). It is helpful
in achieve targets to Tech (UK) firm.
Accounts receivable report- It contains information or data related to amount that is due
from the debtors. In context to this, for better management, there is a requirement to debtors to
invoice segmentation according of particular time period. It is helpful in assessing problems
those are present in process of collection, it increase decision making regarding current credit
policies and also make modifications in better or effective manner, it gives opportunities related
to minimising old debts amounts and also maintain liquidity that aids in better performance of
daily basis functions.
Sales report- It gives information related to sales amount those are necessary in order to
achieve providence of functions of business. It is used for guidance of staff members to give its
functions on the basis of needs.
Conclusion
It has been concluded from the above report that Tech (UK) Ltd. Needs to develop
various reporting methods due t the different functions (Kokubu and Kitada, 2015). Cash flow
statement related report is helpful in measure business solvency. Under this studied about the
different type of management accounting reports.
M1 Benefits of management accounting systems and their applications
There are several advantages those are related with the management accounting system
used through accountant of the Tech (UK) Ltd. Organisation in order to improve performance.
Advantages of various types of systems given below:
Price optimisation system
 It is helpful in identify purchasing behaviour of consumers at various pricing levels.
 It gives better opportunities related to increase profit by choosing better costs.
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Job costing system
 It is helpful in assessment of qualitative work which assign through company.
 It aids in eliminate duplication of tasks as well as activities (Kotas, 2014).
 Helps in identify all kinds of costs which are related with process of production.
D1 Management accounting systems and management accounting reporting is integrated
There is a relation established among management accounting reports and also
organisational process helpful in finish tasks in an effective or manner manner.
Type of reporting Integration with organisational process
Accounts receivable ageing reports An integration among function of report with
process of company that is ascertain according
timely gathering of outstanding amount and
also make some modification credit policies.
Job cost reports An integration is among process of company
and reports are helpful in achieving the cost
objectives as well as develop better pricing
strategies in significant manner.
TASK 2
P3 Techniques of cost analysis to prepare an income statement of marginal and absorption
costing
Cost is incurred through business firm at the time of manufacturing services and
products. It consist the paid off through firm at the time of process of manufacturing. All cost
are incurred through firms in order to accrued business operations with out any kind of
interruptions as well as achieve aims with in particular time period (Lukka and Modell, 2010). It
is a responsibility of finance department is to determine costs on the basis to allocated funds to
various departments. The cost of Tech (UK) Ltd. products is not much high. This company
works on minimising unnecessary cost for some segment of consumers. It is helpful in develop
positive affect on profit level along with productivity of company. In addition to this, there are
various kinds of costing and these are mention below as above:
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Marginal costing- It used the variable costs for costs calculation. On the basis of this
method provision, variable costs is charged towards the cost units bit the fixed cost is write off.
Under this costing includes cost determination, stock valuation, cost segregation in to variable
and fixed costs and also ascertain the profit level.
Absorption costing- It is an effective method of calculate cost of services and firm
through taking in to an account the indirect expensed along with the direct costs (Macintosh and
Quattrone, 2010). It is a method under which all variable as well as fixed costs are related to the
cost centres where they mostly accounted for the purpose of using the absorption rates. This
method is helpful in assure that incurred costs are to be recovered from selling cost of service
and products. Various items which involve at the tome of calculating cost are direct labour,
variable over head costs, direct, material and fixed overhead cost.
Difference among Marginal and Absorption costing
Comparison Marginal costing Absorption costing
Meaning It is regarded as technique of
decision making that aids in
identify cost of products.
It consist procedure in which
all costs are to be apportioned
for determination of the total
production cost.
Classification of overheads The overheads are divided in
to variable and fixed.
Under this, overhead is
classified as administration,
distribution, selling and
production.
Profitability In order to ascertain profit
ration, profit volume is used in
systematic manner (Otley and
Emmanuel, 2013).
Because of determine the fixed
costs, profit level of firm is to
be impacted.
Cost recognition In this, variable cost are to be
recognised and the fixed costs
are write off against the
contribution.
On the basis of view point of
this method, variable and fixed
cots are determined as cost of
goods.
Reporting purpose It is developed for the external It is formulate for the internal
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reporting. reporting.
Calculation through marginal costing using
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500 8000 8000
Contribution 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Computation of Net profit by using absorption costing
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Gross profit 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
In calculation of income statement by Absorption and Marginal costing, it can
determined that the net earnings from both techniques provides various results.
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M2 Management accounting techniques and financial reporting documents
Management accounting technique plays a necessary role that gives effective
opportunities related to preparing better financial documents. It is a duty of management to
develop better plan for future operations,it gives better chance to assess estimated expensed as
well as cost (Parker, 2012). In context to this, there is a requirement to management of Tech(UK)
Ltd. To use better tools which help in improving profit level of firm. Conservatism techniques is
helpful to manage risk as well as additional cost to manage all resources in an effective way.
D2 Financial reports that accurately apply and interpret data
There are two various techniques used for profit and loss calculation of Tech (UK) Ltd.
And these are absorption and marginal costing. In addition to this, profit that is ascertained
through firm, provision application of these both methods is varied from the each other. With the
help of using absorption cost, profit is 7500 and on the other hand, from marginal costing profit
is 7800. Difference in profit arise because of non- consideration of the fixed assets in method of
absorption costing.
TASK 3
P4 Advantages and disadvantages of different types of planning tools
Budget: It mainly concern with a plan which is prepare for a limited period of time as
well as it give various informations about all the companies functions. They had consider the
guidelines as well as directions to their workers about specific objectives and aims in an effective
way. It involve operating as well as finance budgets that support in proper use of funds within
various functions for managing use of available resources in an adequate way.
Budgetary control: It is an effective as well as important strategies of budgeting which is
beneficial for Tech UK. Organisation is performing their activities in an proper manner like as
analysis, coordination and planning (Fullerton, Kennedy and Widener, 2013). It also considered
the centre of budget where they are divided within various sections. They support in giving
various opportunities to supervisor of Tech UK in enhancing volume of sales as well as making
higher profits.
Process of budgetary control
 Consultation with managers: It is an main phase, where supervisor have to
consult with others department manager.
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 Effective assumption: Tech UK capabilities and abilities shows that how
company is interpreting data and informations are getting while discussions with
another department managers.
 Fixing of corporation- al information regarding budgets : It contributes the
process of gathering information and data in term of various divisions so that
objectives of business can be achieved (Macintosh and Quattrone, 2010).
 Measuring actual data : It is essential for employees of Tech UK to analyse the
collected of information and data is right or not.
 Review analysis : It is involved as final stage where every procedure can be
analysed once so that it can decided that task in a perfect track.
Forecasting tool : The strategies of predicting things for forecasting the things of coming days.
In order to this it refer business which consider existing facts as well as records so that effective
decision can be made.
Advantages
 From previews figures, organisation get an idea that what they have to do.
 Easy to apply (Hopwood, Unerman and Fries, 2010).
 It required skilled employees.
Disadvantage
 Forecasting tool is not always perfect.
 It is very costly within nature.
Scenario tools : Therefore alternative strategies can be implemented by Tech UK as per
previous conditions.
Advantages
 Offers increase the chance of planning and entire management.
 Could be changed in particular case.
Disadvantages
 It consumes time.
 Sometimes perfect data is not needed from the same.
Different planning tools
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Standard costing: It is helpful in identify cost that incurred at the time of manufacturing
service and products. It aids in setting standard cost according to the actual. It is used as the
target costs and also developed from this historical analysis of data.
Advantages
 Helpful in improve earning.
 Aids in fix standard costing which guide manager in performing departments.
Disadvantages
 Decided according to the historical cost but not similar each time.
Budgets: It is income as well as expenditure estimation for the set time period.
Organisations use this tool to forecast regarding future operations to achieve the set objectives
(Håkansson, Kraus and Lind, 2010).
Advantages
 Helpful in guide or lead staff members (Vasile and Man, 2012).
 Archive the set objective with in give time period.
Disadvantages
 Budget depends on an estimation and it does not give the accurate or relevant
information.
M3 Different planning tools and their applications
Planning tool is helpful in forecast future related operations those gives better
opportunities in order to develop better budgets those gives the proper guidance to the staff
members in addition to finish task in better manner. There are various kinds of planning tool
which help Tech (UK) Ltd. Company to develop budgets in better manner. Forecasting planning
tool is helpful in make plan about future transaction and also contribute in order to assess risk
concerned with them.
D3 Planning tools for accounting respond appropriately to solving financial problems
There are several financial problems arise in company at the time of conduct their
functions. The problems impact on working capabilities of firm (Boyns and Edwards, 2013).
Significance of the planning tools related with the financial problems mention below as above:
Forecasting tool: It aids in standard setting that give guidance to staff members in order
to search deviations as well as make improvement in performance level.
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Scenario tool: It is helpful in identify risk that is related with working. It aids in
developing contingencies provisions those are tackle the future risk in proper manner.
TASK 4
P5 Management accounting systems to respond to financial problems
Tech(UK)Ltd is a British organisation which are able to produce high technical product
like high-tech chargers. More then 950 firms has a member of Tech (UK) Ltd.. They are help
organisation to develop market and relationship, reduce business costs as well as risk. Through
this, enterprises are capable to build strong market position as well as brand value which help to
operate whole business activities effectively in long period of time. Tech (UK) Ltd. has several
competitors at market place which are create negative impact in organisation sales performance
and profits. Due to this, management of Tech (UK) Ltd. has develop strategies, plan in order to
increase profitability and sustainability in long run.
There are several financial issues which are effected enterprises performance so that fund
manager has find out sources of money like loan, issue shares, productivity and many more in
order to operate whole business activities effectively with quality performance (Chiarini, 2012).
Accounting manager has analysis gap between actual as well as desire performance and select
best tools, techniques to reduce these gap appropriately through this firm are able to overcome
financial issues. This method are used by Tech (UK) Ltd. to set standard of performance so that
they are easily identify gap and develop action of plan to full fill it effectively in given time
frame. Some of tools are detail as follows:
Key performance Indicators: It is a management responsibilities to analysis each one
staff member performance find out issues thus affect their work negatively. Through this, Tech
(UK) Ltd. are able to enhance individual performance effectively and firm achieve goals and
objectives in limited time period (Fullerton, Kennedy and Widener, 2012). Key performance
indicators are divided into two type financial as well as non financial. In first, all financial
statement like profits and loss account, balance sheet, trading account and many other thus
provide information related to organisation performance at market place. Non- financial key
performance indicator analysis problem between management and employees.
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Benchmarking: This method help to select target for all staff members which are needed
to attain by performing all given function effectively. All target should be clearly define in a
early stages so help to provide right direction of work.
Tech (UK) Ltd. Imda tech
Tech (UK) Ltd. has implemented key
performance indicator so that they are able to
reduce issues related to money at their work
place in different department. It help to
identify issues and develop appropriate
solution in adequate time period (Herzig and
et. al. 2012).
Imda tech is face issues related to employees
negative behaviour at work place through this
they are able to affect work negatively. So that
management of Imda tech needed to
implemented KPI to resolve problem
effectively.
Tech (UK) Ltd. fail to provide right direction
to their staff members resulted they are not
able to completed task in given time frame. In
order to remove such problem organisation
want to adopt benchmarking technique which
give standard of working.
Imda tech has run their business activities for
selling product to large number of consumers.
In order to remove problem related to
regulation, company use financial governance
policies.
M4 Responding to financial problems, management accounting
Management accounting principles gives various types of techniques those gives
opportunities in context to respond financial problems. Under this, different tools are
benchmarking, KPI and financial governance (Håkansson, Kraus and Lind, 2010). All these are
helpful in give better standards and also regular monitoring performance level of company.
CONCLUSION
It has been concluded from above given report that management accounting plays
necessary role in an organisation to improve performance level of every department and also
contribute towards get over from the financial problems. It will help to manager to develop better
plans and also guide staff members in order to attain tasks with in specific period of time. There
are various types of budgets prepared in Tech (UK) Ltd. such as operations, master, financial and
many others. Under this mention report studied about adoption of management accounting
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systems for respond to the financial issues. Various methods used for the management
accounting reporting has been also discussed in this assignment.
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disadvantages/>.
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