Management Accounting: -understanding Management Accounting systems, accounting techniques, planning tools, How management could respond to financial problems etc. TASK XXXXXXXXXXwords Submission...

Management Accounting
Table of Contents
1.0 Management Accounting Systems (P1)    3
What is Management accounting?    3
What is management accounting Systems?    3
Cost Accounting Systems    3
Inventory Management Systems    3
Job costing    3
Price-optimising systems    3
1.1 An evaluation of the benefits of management accounting systems and their application within an organisational context (M1)    3
1.2 Management Accounting Reporting Methods (P2)    4
Marginal Costing Method    4
Absorption Costing Method    4
Break-even point Analysis    4
Standard Costing (Variance Analysis)    4
1.3 A critical evaluation of how management accounting systems and management accounting reporting are integrated within organisational processes (D1)    4
2.0 Cost calculations and preparation of income statement (P3)    5
2.1 Application of management accounting techniques: Variances and BEP (M2)    5
i)    Material Price Variance    5
ii)    Material Usage Variance    5
iii)    Labour Rate Variance    5
iv)    Labour Efficiency Variance    5
v)    BEP in units    5
2.2 Analysis and interpretation of financial reports (D2)    5
3.0 Explanation of the advantages and disadvantages of different types of planning tools used for budgetary control (P4)    5
What is budgetary control?    5
Advantages of budgets as a budgetary control tool    5
Disadvantages of budgets as a budgetary control tool    5
Advantages of variance analysis as a budgetary control tool    6
Disadvantages of Variance Analysis as a budgetary control tool    6
Advantages of Responsibility Centres (responsibility accounting) as a budgetary control tool    6
Disadvantages of Responsibility Centres (responsibility accounting) as a budgetary control tool    6
3.1 Analysis of the use of planning tools and their application for preparing and forecasting budgets (M3).    6
4.0 An evaluation of how organisations are adapting management accounting systems to respond to financial problems (P5)    7
4.1 An analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success (M4)    7
4.2 An evaluation of how the use of management accounting planning tools can solve financial problems to lead organisations to sustainable success (D3)    7
REFERENCES    8
1.0 Management Accounting Systems (P1)
What is Management accounting?
Accounting has certain basic principles, which are used in management accounting for creating values for the stakeholders of an organisation, i
espective if it being private, public, for-profit or non-profit. Management accounting, as mentioned by Hiebl (2018), is a type of financial management that generates value through securing, optimising and managing the accounts in the best possible methods.
What is management accounting Systems?
The management accounting system is an evaluation and scaling method used for assessing the internal management processes on an organisation. As stated by Latan et al. (2018), in case of management accounting system, the internal performance as well as the financial accounts is considered for observation, collectively hinting at organisational benefit.
Cost Accounting Systems
Cost accounting as the name suggests is the internal evaluation process that considers the production cost of a provided service or a manufactured product. As assessed by Tang et al. (2048), cost accounting system observes the production line, inventory and additional cost aspects, helping in determining a profitable yet realistic selling price.
Inventory Management Systems
The inventory management system is cyclic system that tends to maintain the incoming of raw material used for making organisational product or developing services, while keeping in mind the flow of demand, needs of customer and the interest of the organisation altogether. As affirmed by Alawneh and Zhang (2018), inventory management tends to achieve optimum performance through careful consideration of the flow of unit its processing and cost effectiveness.
Job costing
In case of specific product manufacturing or personalised service providing, the use of raw materials, human resource and overhead costs are collectively incorporated to a single whole for per unit of the production and is termed as job costing. As supported by Kumar and Jagadeesan (2018), job costing shows the labour intensive expenditure that affects the final pricing of a product or service and the scope of profit margin.
Price-optimising systems
Price optimisation system focuses on the organisational profit through making customers react positively to pricing of products. As comprehended by Vogler-Finck et al. (2018), price optimisation system, amalgamates the data of production cost, inventory management expenses with public reaction to specific price points that help in determining the co
ect pricing for a product or service.
1.1 An evaluation of the benefits of management accounting systems and their application within an organisational context (M1)
Starting with the cost accounting system it is seen that it helps organisations to price their products in the best ways to retain profit. Cost accounting system has two variations – in one the value of a single unit is used for price determination, and in the other, the entire production cost all the units are considered in an average. Cost accounting system, as described by Ismail et al. (2018), helps in keeping the budget as well as production cost low and pricing profitable, however, the ways to optimise the taskforce for low coast production is not suggested by it. Inventory management system, generates the transparency among the inventory stages to reduce wastage or increase idle time at workplace, helping organisations to earn better profit margins with the help of proper strategy development. In inventory management system, the production line of a product is made as per the demand in the market, which reduces the chance of overstocking as well as production halt.
As observed by Alquist et al. (2018), job-costing system keeps organisational budgets within a determined boundary, reducing the chance of over budget. As example, it is seen that in case of premium car manufacturing, job costing keeps the pricing assessment of the product as per the cost of manufacturing, which remains exclusive to the customer’s choices. Lastly, in case of price optimising system, the organisations benefit from higher sales and easy acceptance of the products and services by the customers in the market, which again is the direct outcome of price optimising system. As example, it is seen that at the time of selling a smartphone companies consider production cost of each unit, however, price optimisation system makes product pricing less than company margin on each product and prices the product in the price category that customers prefer.
1.2 Management Accounting Reporting Methods (P2)
Marginal Costing Method
In the marginal costing method, the direct cost variables are considered important and influential in terms of assessing the total production cost of a product. As mentioned by Altawati et al. (2018), marginal costing system helps in evaluating the economic efficiency of a production line of an organisation.
Absorption Costing Method
Unlike marginal costing method, absorption-costing method incorporates both the material variable based costs and the indirect fixed costs to determine the actual cost of a product or service offered by an organisation. As stated by Kurniawan and Pribadi (2018), although the absorption-costing method considers the cost of the inventory management more precisely, it is found to confuse itself in determining the variable and fixed cause.
Break-even point Analysis
Break-even point analysis is the...