Tuffen Mark Ltd: Management Accounting System, Techniques & Tools

This report provides a detailed analysis of management accounting, covering its explanation, essential requirements of different systems like cost accounting, job costing, price optimization, and inventory management. It explains various types of management accounting reports, including budgeting, accounts receivable aging, job costing, inventory manufacturing, performance, order information, and opportunity reports. The report further discusses the benefits of the management accounting system and its application to Tuffen Mark Ltd, highlighting how job costing, price optimizing, cost accounting, and inventory management systems can improve efficiency, profitability, and decision-making. Additionally, it explores standard costing, income statements under absorption and marginal costing, cost-volume-profit analysis, and financial reports for business activities. The report also examines planning tools used in management accounting for budgetary control and their application, evaluating their effectiveness in solving financial problems and contributing to sustainable organizational success, with a comparison of how different organizations adapt management accounting systems to address financial challenges.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Task 1: Introduction to Management Accounting.....................................................................3
Explanation of management accounting:...............................................................................3
Explanation of essential requirements of different types of management accounting
systems:..................................................................................................................................3
Explaining the different types of management accounting reports:...........................................5
Benefits of the management accounting system and its application on Tuffen Mark Ltd:....7
Critical evaluation of how management accounting system and management reporting is
integrated into Tuffen Mark Ltd organization procedure:...................................................10
Task 2: Management accounting techniques...........................................................................12
Standard cost per ventilation system using absorption costing and marginal costing:........12
Income statement of the budgeted results using absorption costing and marginal costing: 12
Cost analysis and CVP analysis:..........................................................................................13
Financial reports for a range of business activities:.............................................................14
Task 3 Planning Tools used in Management Accounting:.......................................................15
Planning Tools Used for Budgetary Control........................................................................15
Application of Different Planning Tools..............................................................................16
Evaluation of how planning tools for accounting respond appropriate to solving of
financial problems to result an organization to sustainable success:...................................18
Comparison of how different organizations are adapting management accounting system to
respond to the financial problems:.......................................................................................19

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Analysis of how responding to financial problems, management accounting can result in
organizations sustainable success:.......................................................................................21
References:...............................................................................................................................22

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Task 1: Introduction to Management Accounting
Explanation of management accounting:
Management accounting process refers to the preparation of management reports and
accounts that offer accurate and in time financial and numerical information that is required
by the managers to undertake the daily and short term business decisions. Not like the
financial accounting that produces the annual report largely for the outside stakeholders, the
management accounting produces monthly and weekly reports for the company’s internal
audience namely the department managers and the chief executive officer (Kaplan and
Atkinson 2015). The reports typically reflect the sum of cash available, sales revenue
produced, the quantity of orders in hand, situations of accounts payable and accounts
receivables, outstanding debts and inventories including the trending charts and other
statistics. The management accounting system is such that it applies the professional
knowledge and skills in the preparation of the accounting information in a manner so that the
tool helps the management in formulating the policies in planning and controlling the
operations of undertakings.
Explanation of essential requirements of different types of management accounting
systems:
There are several kinds of management accounting systems which includes the
inventory management, cost accounting system, price optimization and job costing system
that has numerous accounting objectives, functions and elements (Langfield-Smith et al.
2017). Nevertheless, all the basic elements of the accounting system create the standardized
context as the aim of the data is to analyse, identify and communicate the information.
Cost Accounting System: The cost accounting or system of costing represents the
framework that is applied by the company to estimate the cos of its products for valuing the

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inventory, analysis of profit and controlling of cost (Otley 2016). In the system of cost
accounting, the cost allocation process is performed based on either the activity based costing
system or traditional costing system. The system of cost accounting is the kind of accounting
system that aims to capture the cost of production by weighing the inputs of every production
step along with the fixed cost such as depreciation on capital equipment’s. The essentials of
cost accounting system is stated below;
a. Participation and Cooperation of executives needed by numerous departments:
This would ensure that the suitable participation and cooperation is in place to build
the process of cost account system as this would help the management in correctly
determining the cost of products.
b. Flexible and simple: The cost accounting system that is developed must be flexible
and easy to understand and perform (Saeidi et al. 2018). It also satisfies the
requirements of numerous users and adapt to the requirement of business.
Job Costing System: Job costing helps in assigning the manufacturing costs to each product
while simultaneously keeping track of the expenditure (Fullerton, Kennedy and Widener
2014). Tuffen Mark Ltd can use the Job Costing system when the product is similar to keep
track of the order expenditure. The essentials of job costing system includes the following;
a. Receiving enquiry of the customers regarding the quality of the material, price of
material and time taken to complete the order.
b. Estimation of the job price should be carried out by management accountant bearing
in mind the customer taste and preferences.
Price optimising system: The price optimization system is used to implement control on the
resource prices. The price optimization system helps in deciding the prices of the multiple
products on time (Cooper, Ezzamel and Qu 2017). The system helps in determining how the

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demand would fluctuate at the different level of price. Tuffen Mark Ltd can make use of the
price optimising system by tailoring the prices of customer segments by simulating their
responses to the different level of price. Tuffen Mark Ltd can use the price optimising system
as it is helpful for the organization in building the price structure for promotional pricing and
discount pricing.
Inventory management system: The inventory management system is associated with the
supervision and management of stock as well as non-capitalized assets of the enterprise
(Tappura et al. 2015). The organization procedure at Tuffen Mark Ltd can be integrated with
this form of system to attain the effective inventory flow inside the organization. The two
essentials of inventory management system are as follows;
a. Forecasting and replenishing strategies: This strategy would help in advancing the
management and planning of cost requirement inside the organization.
b. Physical and monetary management of inventory: Numerous benefits such as
reduction in cost and appropriate inventory management can be attained with this
system.
Explaining the different types of management accounting reports:
There are numerous types of management accounting reports that can help the
management in preparing the appropriate reports at Tuffen Mark Ltd that would count on the
company’s forecast of making critical business decisions. The below stated is the reports that
can be prepared by the management of Tuffen Mark Ltd;
a. Budgeting reports: The management of Tuffen Mark Ltd can prepare the budgetary
report as it would help in setting out the plan for analysing the performance of the
company at the time of making assessment regarding the department performance and
cost controls (Kihn and Ihantola 2015). The budget reports can be useful for Tuffen

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Mark Ltd in providing the incentives to the employees which would motivate them to
attain the desired objectives.
b. Accounts receivable ageing report: The accounts receivable ageing report is related
to the management of accounts receivables is essential for companies that offer their
creditors with the extended credit facilities (Wagenhofer 2016). In case of Tuffen
Mark Ltd, a proper analysis can be made regarding the credit policy of the company
and the need of tightening the credit policy. This helps in making sure that the old
debts are recovered and liquidity is maintained inside the company.
c. Job costing reports: The job costing report is associated to recognizing the expenses,
cost and profitability of every particular job (Lavia López and Hiebl 2014). An
assessment can be made by Tuffen Mark Ltd regarding the earning aspects of project.
This would enable Tuffen Mark Ltd to introduce its efforts on the concerned issues
while simultaneously reducing their effort on the less activities that are less profitable.
The job costing report would enable Tuffen Mark Ltd in evaluating the cost of project
that is in progress so that the waste areas can be addressed and the project can be
made profitable and workable as well.
d. Inventory manufacturing reports: Business that are engaged in the manufacturing
procedure can prepare these types of reports so that their manufacturing and process
of inventory can turn out to be more efficient (Coad, Jack and Kholeif 2015). The
inventory and manufacturing reports comprises of labour costs, per unit overhead
costs and wastage that is concerned with the inventory providing the managers with
the comparative view amid the different lines of assembly and opportunities for
improving the performance of numerous departments.
e. Performance reports: The differences that is computed by comparing the actual
outcomes with the budgetary performance is assessed and information relating to the

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comparative outcomes is stated in the performance reports (Helden and Uddin 2016).
The performance report can be prepared by Tuffen Mark Ltd on yearly basis but the
same can be prepared in either monthly or quarterly basis as well.
f. Order information report: The order information report would provide assistance to
the management of Tuffen Mark Ltd in observing the trends in the business
effectively and efficiently. Under the order information report the numerous types of
report that is prepared in this type of reporting would help in integrating the
management operations to attain low cost of placing orders.
g. Opportunity reports: The opportunity report is prepared by the management as they
can be completely aware of the occurrence for a particular event (Shields 2015).
Preparing the well drafted situation or opportunity would help the management of
Tuffen Mark Ltd to take important business decision with respect to the events and
their understanding.
Benefits of the management accounting system and its application on Tuffen Mark Ltd:
Management accounting system has numerous advantage. With the help of
management accounting system, it is possible to improve the overall performance of the
company. The benefits of the management accounting system are as follows;
Increase in efficiency: Business that choses management accounting system increases the
efficiency of the company in conducting their operations. The management accounting
systems is beneficial in striving for better performance by assessing and comparing the
operations (Collis and Hussey 2017). The management accounting system makes it easy to
attain numerous results. Therefore, the management accounting system helps in indirectly
improving the efficiency of the company.

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Increase in Profitability: Management accounting comprises of budgetary control and
capital budgeting. The use of this method makes it easy for the company to reduce the added
expenses for carrying out the noteworthy operations (Eldenburg et al. 2016). This ultimately
increases the profitability bar for the company.
Simplification of financial decision making: The management decision and other activities
of management requires simplified report of financial statement for the company (Vaidya and
Alur 2017). The management accounting is beneficial in creating reports that has simpler
interpretation. This allows the managerial officers to take up the suitable verdict for better
management of the business.
Benefits of management accounting system in context of the Tuffen Mark Ltd
System Benefits
Job Costing System  It would help Tuffen Mark Ltd in
making an estimation of every type
of costs all through the
manufacturing procedure.
 The job costing system would help
Tuffen Mark Ltd in preventing the
duplication of efforts as the similar
would be reflected.
 The job costing system would help
Tuffen Mark Ltd in assessing the
quality of work done.
Price Optimizing System  The price optimization system
would help the Tuffen Mark Ltd in

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determining the attitude of
customers on the basis of different
prices.
 The price optimization system is
helpful for Tuffen Mark Ltd in
increasing the operating profit with
best available prices.
 This system would help the business
in making a segmentation of its
customers.
Cost Accounting System  The cost accounting system would
help Tuffen Mark Ltd in measuring
the process efficiency as well as it
would later help in making
improvements depending upon the
usage of the system.
 The system is helpful for Tuffen
Mark Ltd in fixing and lowering
prices.
 The cost accounting system would
provide the Tuffen Mark Ltd with
essential information needed for
planning.
Inventory Management System  With the help of the inventory
management system Tuffen Mark

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Ltd can enhance the accuracy of its
inventory ordering system.
 The inventory management system
is helpful for Tuffen Mark Ltd in
improving the efficiency and
effectiveness by saving both time
and money.
Critical evaluation of how management accounting system and management reporting
is integrated into Tuffen Mark Ltd organization procedure:
Types of reporting Integration with organizational procedure
Budgeting Reports The integration amid the organizational
procedure associated to Tuffen Mark Ltd
and budgeting reports creates a path for the
organizational activities in order to focus on
the targeted results and objectives in better
manner.
Accounts receivable aging report The integration amid the organization
activities of Tuffen Mark Ltd and the
accounts receivable report can be attained
with the help of collecting accounts on time
and creating satisfactory collection policy
that can keep track of the accuracy and
flexibility.
Job costing reports The activities of Tuffen Mark Ltd should be

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such that it attains the objectives of cost and
cost reports. This would make easily
facilitate the strategic pricing for the
company and lowering the cost of product
as well.
Inventory and manufacturing report The integration between the Tuffen Mark
Ltd and report offers management with
better inventory control. This report would
help in estimating the required level of
purchase order to be placed.
Performance reports Integrating the performance report and
Tuffen Mark Ltd activities would assist the
managers in planning for the future
production and cost. This may ultimately
result in reduction of cost and higher
profitability.
Opportunity Reports Integrating the Tuffen Mark Ltd business
procedure with the opportunity reports
would enable the company management to
critically assess the circumstances and act in
a required manner for making decision.
Order Information Report Integrating the Tuffen Mark Ltd business
procedure with the order information reports
would enable the company management to
assess the information relating to sales order