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Management Accounting Systems - Tech Ltd.

University: UK College of Business and Computing

  • Unit No: 9
  • Level: Undergraduate/College
  • Pages: 10 / Words 2396
  • Paper Type: Assignment
  • Course Code: K/508/0856
  • Downloads: 514
Question :

The scenario of this report determines that director of finance in Tech ltd has asked their trainee management accountant to construct a report that determine all the functions and activities relevant to accounting functions.

  • Provide an explanation over management accounting system and its essential requirements in Tech (UK) Ltd.
  • Construct an income statement by considering marginal and absorption cost.
  • Discuss different types of budget by discussing its advantages and disadvantages.
  • Analyze different ways of management accounting that can assist to resolve financial issues of Tech Limited.
Answer :
Organization Selected : Tech Limited


Management Accounting is the process which prepares the reports related to the management and accounts to meet the basic need of the company. It help in short as well as long term decisions . As Tech limited company is leading producing the special charger for the mobile and other gadgets . In this report Tech Limited help in management accounting and how it help in business firm to achieve the need of the company . In this tech limited present the budget report and how it help to categories the fund to each department and another method is also used i.e. balance score card approach which is used to solve the financial problem. It also depicts different budget system and approaches which help in making the business run too long


1 Presenting difference between management and financial accounting


Management accounting

Financial accounting


To plan the information and set goals and then execute them for future needs.

To show the end result and show the financial position of the the business.


Information produce by the internal parties like managers and organization

Information produced by the external parties like shareholders


It is not legally required by the company

It is legally required or mandatory.


Main focus is on present and future (Difference between management and financial accounting,2018)

Main focus is on the past history

Time phrase

Made daily,weekly, or monthly

Made at the end of the financial year or semi-annually too


Format may be informal and assigned by the managers

Need some specialized formats

2.Significance of MA in decision making

Management accounting help in decision making as it provide the basic criteria for the future goals to achieve the management funda . As Tech Limited need to increased the sales according to the need of the consumers then it is must to maintain the management accounting . Management Accounting help to control the system of the organization and this control needs a contraction between the planned activities and unplanned activities (Ward, 2012). Overall the complete and detailed information is needed by the managers and is not possible in the case of the financial accounting and through the management accounting only we can conclude what is the basic need assign to the employees. The management accounting plays an important role in forecasting and budgeting process also. As management accounting provide complete information and help to take better decision for a company. Using management accounting tech limited can easily enhance the performance level and identify the exact inventory available in the company. Whatever the information is present by accounting process this help Tech limited to take relevant decision. Various techniques are used such as marginal costing, absorption costing are helpful to know the current situation of material. To decide pricing, it is necessary to take information from management accounting and this will help to take better decision for the customers

3. Cost Accounting System

A cost accounting system is a process which is used by the Tech Limited to knowing the price of the product for their comparison purpose as well as to check the stock valuation and controlling the prices of the product. For using the cost accounting system a business should must know whether the product is going to earn profit or not. As Tech Limited know the actual price of the product is quite crucial for the owners and managers also. Cost accounting is mainly used by the firms to know the rates and help to show the profit and stock valuation of those product (Parker 2012). A cost accounting help to track all the raw material which goes through all the production level of stages and after some time it converted into output. This accounting help to suddenly credit all the raw material and debit the goods which are in process account. It involves the creation of the estimated cost of the product in all activity.

Presenting advantages and disadvantages of cost accounting system:


  • identifies the valid reason of profit and loss .
  • Help in decision making power of the business
  • managing the cost accounting help in preventing the fraud system


  • only past records are available for decision making power.
  • The calculated cost is always not correct during the final reports.
  • It is quite rigid form and not allow to solve all the purpose of the project.

4. Inventory Management System :

As Tech Limited also use the inventory management system and it is the process which records the moving products into and out during the marketing purpose and it see whether the product is in exact location or not and can figure out the exact location during shipping. Earlier the inventory system is done by the cardex system but now a days the whole system is based on the system software. This is done to improvement in communication power and technology updated and use of extra technology Atkinson and et.al., 2012). Earlier the registers are made to records the system in and out but now the system entry is needed to know what is available in the stock. By the help of inventory management system the manufacturers will easily know about the material and shortage of the product can also be identifies .

For example: using FIFO method, tech company will able to determine the exact inventory on hand at the end of accounting period. This inventory method will assumes that the first inventory which is manufactures by the company should be sold first and new product remain unsold. Through this, the cost of old inventory is assign first then the newer inventory

5. Job Costing System

Tech Limited company use the job costing system and it divide the manufacturing cost into the overhead, direct material and the labor . Every business need to make more money and earn more profit and job costing is the best way for earning more profit. Job costing uses the various types like direct material, direct labor and overheads incurred during the pricing of the product (Wickramasinghe and Alawattage, 2012). At last the job profitability report is made to see the overall profit and loss statement of the firm, but it is possible in specific or particular job field only, as it doesn't show the whole scenario of the product. When the products of firm are not identical, then using job costing is the best tool to allocate the cost of every product and it also help to keep tracking the order of expenses and now in modern times Tech limites uses computerizes job costing system in order to improve cost control and help to maximizes its profit

B). 1. Presenting Different types of Managerial Accounting Reports

  1. Budget Report : budget report is made just to tell how much money is allotted to each department and what is basic need of the department . It shows the company's cash flow and the expenses side to the managers and the owners . Tech Limited uses budget report in order to identify whether the company had enough budget to spend or not. This report can be made weekly or monthly it depends on the requirement of managers.
  2. Financial Report : this report shows the exact position of the company and show the financial status of the company . It is the overall sum up of the whole reports and give us the net figure of our profit or the loss. Tech Limited also uses this report in order to know the exact turnover during a year. This report help are generally made at the end of the year. This report show all the head in summarize form and number of categories shown in profit and loss account.
  3. Inventory and Manufacturing reports: it shows the stock valuation of the firm and show the in and out of the product (Merchant, 2012). The shortage of the product can also be identify using this report . Tech Limited also uses this report in order to check the presence of stock in a company. The report help to determine the exact amount of transaction done during a particular time.

2. Importance Of Presenting The Information :

There is the need to present the reports in prescribed manner because making the reports in complex manner can creates wrong impact on consumer and other business field. By making the reports in the prescribed manner help to understand it in good way and once a person can read this can clearly suggest their own views too (Hofstede, 2012The calculation should also be so fast and in readable form so that user can also be calculate it and solve the query. The user should have the knowledge of the accounting and then only he can serve a good output for the business. By making the reports more complex will slows down the reputation of the company . By making the reports in simple form can enhance the reputation and knowledge too .

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