Unit 5 Management Accounting (GC01350)

Table of Contents

Introduction.

Q1: Explaining management accounting and the importance of integrating management accounting systems within an organization (P1)

M1 Benefits and application of management accounting systems.

Q2 Explaining different techniques and methods used for management accounting reporting (P2)

D1 Critically evaluating the integration of management accounting systems and reporting within organizational processes.

Q3: Calculating costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costs (P3)

M2 Application of Management Accounting techniques to produce financial reporting documents

D2 Interpretation of complex business activities based on financial reports.

Q4: Explaining the advantages and disadvantages of different types of planning tools used for budgetary control (P4)

M3 Analysis of the use and application of the planning tools in preparing and forecasting budgets

D3 Evaluating how the planning tools respond to financial problems.

Q5: Evaluating ways of management accounting in response to financial problems and effectiveness of management accounting to prevent financial problems (P5)

M4 Analysis of how management accounting responds to financial problems.

D3 Evaluating how management accounting planning tools solve financial problems.

Conclusion.

References.

Introduction

Management accounting is the study of planning and preparing estimates of costs and revenues and developing budgets for effective comparison with actual results. This report shows the importance of integrating management accounting systems in an organization. Besides, the report also shows different techniques such as- job cost reports and budget reports etc. for management accounting reporting. Using both marginal costing and absorption costing, the income statement for Eastern Ltd. has been developed. Besides, different planning tools are evaluated for budgeted control. The report also shows different ways of management accounting such as- standard costing, CVP analysis and capital budgeting techniques to solve financial problems.

Q1: Explaining management accounting and the importance of integrating management accounting systems within an organization (P1)

Management accounting deals with the preparation and presentation of statistical and financial information to the managers of an organization for making viable managerial decisions (Drury 2013). Management accounting is different from financial accounting as it prepares reports for the internal stakeholders of the company. So, the purpose of management accounting is to prepare periodic reports of the company and provide these reports to the managers.

Management accounting systems are of many types- decision support system, expert system, payroll system, information processing system and executive support system etc. An organization needs to integrate these management accounting systems for making viable results for the stakeholders (Jaber 2016). Integration is important in many ways. By integrating these management accounting systems, the managers can ensure determine costs of productions, allocate resources for necessary productions, reduce waste, make valid decisions regarding the purchase of raw materials, schedule the activities of employees and solve different financial problems (Daken et al 2014).

M1 Benefits and application of management accounting systems

Eastern Ltd. needs to use different management accounting systems. By applying these systems, the managers of Eastern Ltd. can potentially optimize the financial outlook of the company.

Decision Support System

The decision support system helps managers of Eastern Ltd. in developing insights into the company and making decisions at the strategic and operational levels (Drury 2013). It serves the managerial role by developing data analysis that is helpful for decision making. To integrate this system, the organization needs to input a limited number of data or databases, set analytical tools and models.

Expert System

The expert system saves both time and cost of the organization by playing the role of experts. It is used anytime and anywhere in the organization. Besides, the expert system provides more intelligent results than the human experts. It clarifies the reasons for each decision (Ismail and King 2014). To integrate the system effectively, the engineers need to input facts rather than opinions.

Information Processing System

Information processing system uses the factual information to process or transforms into statistical form by applying algorithmic process. It is an efficient system that requires an input of factual information (Megannon et al 2016). By integrating this system, the managers of Eastern Ltd. can develop statistical models and make relevant decisions.

Payroll System

The payroll system organizes all payment information of the organization and adjusts corporate taxes to determine the final payment to employees (Ismail and King 2014). It saves lots of time for the managers and employees. By integrating this system, the organization can keep track records of hours performed, calculate wages, withhold taxes, print and deliver checks.

Executive Support System

The executive support system is designed to facilitate senior executives by providing crucial information to make relevant decisions. This system provides safe access to external and internal information congruent with the goals of the organization (Megannon et al 2016). By integrating this system, managers can easily develop statistical graphs and models.

Q2 Explaining different techniques and methods used for management accounting reporting (P2)

D1 Critically evaluating the integration of management accounting systems and reporting within organizational processes

Managers use different types of management accounting reporting techniques such as- Budget reports, Variance analyses, Job cost reports, Accounts Receivable Aging Reports and Inventory and, Manufacturing reports. All of these methods are explained below:

Budget Reports

Budget reports are used to analyze the performance of a specific depart or the whole organization and control and monitor costs. Budget reports are developed based on the actual costs that occurred in the previous years. Based on these prior results, the managers forecast the future performance of the company and estimate costing based on the recent changes (Megannon et al 2016). Based on the information through Decision Support System, the budget report shows how efficiently the managers have controlled costs and forecast future profits of the firm…………………………….

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