Unit 5: Management Accounting Systems and Techniques Report

This report provides a comprehensive overview of management accounting systems and techniques, focusing on their application within Eymen Ltd. in the UK. It explores various management accounting systems, including cost accounting, inventory management, and price optimization, and their role in organizational processes. The report also examines different management accounting reports such as budgeting, performance, accounts payable/receivable, and inventory/manufacturing reports, highlighting their benefits. Furthermore, it discusses planning tools like master budget, cash flow budget, capital budgeting, and operating budget, evaluating their advantages and disadvantages. The report includes cost analysis, profitability measurement, and financial analysis to provide a holistic understanding of management accounting's role in decision-making and achieving organizational objectives.

MANAGEMENT ACCOUNTING 1
Management Accounting
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Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................4
Part 1.........................................................................................................................................4
Performance measurement.......................................................................................................4
Resource allocation..................................................................................................................5
Cost accounting system............................................................................................................5
Inventory management system.................................................................................................5
Budgeting report.......................................................................................................................6
Performance report...................................................................................................................6
Accounts payable and receivable report...................................................................................6
Inventory and manufacturing report.........................................................................................7
..................................................................................................................................................8
Inventory management system.................................................................................................8
Cost accounting system............................................................................................................8
Price optimizing system...........................................................................................................8
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Part 2..............................................................................................................................................10
................................................................................................................................................10
Master budget.........................................................................................................................10
Advantage...............................................................................................................................10
Disadvantage..........................................................................................................................11
Cash flow budget....................................................................................................................11
Advantages.............................................................................................................................11
Disadvantages.........................................................................................................................11
Capital budgeting...................................................................................................................11
Advantages.............................................................................................................................12
Disadvantages.........................................................................................................................12
Operating budget....................................................................................................................12
Advantages.............................................................................................................................12
Disadvantages.........................................................................................................................12
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TASK 2..........................................................................................................................................14
Part 1.......................................................................................................................................14
Measurement:.........................................................................................................................14
Profitability:............................................................................................................................14
Cost application:.....................................................................................................................14
Part 2.......................................................................................................................................16
................................................................................................................................................16
Financial analysis:..................................................................................................................16
................................................................................................................................................18
Analysis and interpretation.....................................................................................................18
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20
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Introduction
Nowadays, management accounting has become a critical task for the management of any
business. This covers all the financial and non- financial information which would ultimately
assist the business for gaining its pre-set targets. However, there is a strong need to appoint an
accounting officer who is qualified to handle all the managerial accounting things in the
business. This report is based on Eymen Ltd. which is the medium-sized production business
which is operated in the UK. This report covers all the management accounting systems along
with their reports. Various managerial tools are used in order to calculate the profits from the
given scenario. Various planning tools are used for making budgetary control. Financial
problems are resolved by using various management accounting tools in the business.
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TASK 1
Part 1
Management accounting
Management accounting is concerned with accounting information in such a manner to help the
management in strategy formulation which leads to management accountant in the decision-
making process for the organization. Accounting information is in the form of process data
which has been collected from cost accounting and financial accounting which helps the
management to take the proper decisions in the formulation of day to day business operations for
the company (Ax and Greve, 2017).
Management accounting applications in Eymen Ltd. company operating its business
operations in manufacturing the products or services in the UK, which are discussed
below:
Performance measurement
Performance measurement is the most effective tool by which the top management can easily
figure out the targets achieved by the employees as per the appropriate time assign to their work.
With the help of management accounting, management accountant can easily evaluate the
employees’ performance and overall department performance according to the assigned task
(Kaplan and Atkinson, 2015).
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Presentation of financial report or statement
In every financial year, the company has to record all the financial activities in the financial
statement which tells the financial position of the company. It generally includes the profit and
loss account and balance sheet. This report has been made by the process data and information
about the financial position which has been provided by the management accounting which
ultimately leads to the decision making (Booth, 2018).
Resource allocation
With the help of the Management Accounting, one can know the resources allocated to each
department or sector. Which disinformation company can know the capability of each
department or division and the efficiency of the work as per the assign task particular time.
Efficiently and effectively allocation of resources can help to minimize the waste of the raw
material which helps to achieve long-term sustainability (Armitage, et. al., 2016).
There are different types of Management Accounting system and the role with the
organizational process in Eymen Ltd Company is explained below
Cost accounting system
The cost accounting system helps Eymen Ltd. Company to guesstimate the cost of products or
services in advance which helps the management accountant to find out how much profits and
expenses involved in the manufacturing the products or services for the customers. It also helps
the cited company to reduce unwanted expenses in the manufacturing units and also reduce the
wastages in raw materials and other related expenses. With the help of this system the cited
company can prepare the budget for future production (Maynard, 2017).
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Inventory management system
This system has been made to look out the number of things in the organization such as the
availability of the stock, to measure the overstock and understock problem and flow of inventory
in an appropriate manner. This system helps the organization by reducing the cost and increasing
the profit over a product by knowing in advance the inventory needs in future manufacturing of
the products (Drury, 2013).
Price optimizing system
This system helps the management of a company to set a price of the product by considering the
cost and profit of the product. Price should be set according to the competitor and customers who
are willing to pay on that product. This can be evaluated by setting a different price level and
different demand in the future of the product (Hill, 2017).
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Differ
ent Management Accounting reports help inaccurate report preparation which shows each
department performances and provides information which is reliable to the manager in the
organizations. The management prepares different types of reports and their advantages
are explained as under:
Budgeting report
It analyses each department performances and set sound organizations plan. Past reports have
been analyzed and utilized in an appropriate manner by the management of the organization for
the budget preparation which helps the organization to evaluate objectives are achieved on time
and also to make the analysis of the department's performances. Based on these reports future
budget has been forecasted which leads to combining the various departments or divisions efforts
towards the organization’s objectives (Dale & Plunkett, 2017).
Performance report
At the end of the financial year, these reports are to be prepared which record overall
organization performance. In this report, the comparison has been made between the actual
performances and the planned performance which gives assistant it is small or medium
organizations to record performances of each department and evaluate them as well
(Vanderbeck, 2012).
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Accounts payable and receivable report
This report mainly provides information about how much amount of money is going to be
received from the debtor and how much money has to be payable to the creditor. It also gives
assistance to the small and medium-sized organization about the debtor and creditor in the
company and also cited how much debtors going to become bad debts (Kaplan and Atkinson,
2015).
Inventory and manufacturing report
This record the information about every variable cost concerned with the manufacturing and
inventory such as wastage overhead expenses labor cost extra. This report also helps the small
and medium-sized organization to determine how much inventory level is required in the
business at present and in the future. This also gives information about how much inventory is
going to you be used for the manufacturing of the product efficiently and effectively (Maynard,
2017).
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In the context of Eymen Ltd. Company, management accounting system offers various useful
benefits to the management accountant and these benefits are discussed as below:
Inventory management system
This system improves the efficiency of the inventory used for the manufacturing of the product
which ultimately helps in reducing the cost and saving the time. It also helps to maintain the
inventory level match leads to minimize the wastage of the inventory. This system gives
information about the understock and overstock level of inventory in the manufacturing
department (Muller, 2019).
Cost accounting system
This system assists the management accountant in fixing of the price of the product or services
and also minimizes the wastage in the manufacturing process of the product. It also makes the
process effective and efficient which leads to the improvement in the manufacturing process.
This also gives information which is useful for the future planning of the product to the
Management Accountant (de Kok, 2018).
Price optimizing system
This system helps to the management of Eymen Ltd. to determine the price of the product which
is willing to pay a by the customer. This system also helps to determine customers attitude based
on the availability of the same product in the market at different prices. With the help of this
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system the company can prepare pricing policies for their product which will be introduce in
future (Weygandt, et. al., 2015).
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