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Management Accounting

INTRODUCTION-Management Accounting

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The management accounting is related to the effectual usage of various provisions of accounting as like different tools and technique as it is processed to take right decision in order to advance working competency in accurate basis (Hariyati and et. al., 2019, p4(2)). It provides a strategic viewpoint to the business so that they are able to maximise its profit credibility and sustainability with suitability. The report below is based on Forever Living Products and it is a multi-level marketing company and manufacture bee-derived cosmetics and vera-based drinks, personal care and dairy based products to its customers. The organisation has promoted understanding in between department as in preparation of FIFA. Thus, the report below comprised of understanding of management accounting systems and techniques, used of planning tools within management accounting and various ways to respond financial problems.



P1 Explain management accounting and its essential requirements

Management accounting is basically referred to the management that is based on financial aspect and also being associated to advance return over investment and processed better return with adequate period of time. There are various tools and techniques has been used by Forever Living Products in this they are ability to manage and control the working flow of various goods and services in better manner with this they are able to make sustained preparation for FIFA. In this different accounting system has been used by business and it is as summarised below as:

Cost Accounting System- It is a system that has been used by management in order to make adequate control towards overhead cost that is processed within the working attribute of business as on direct basis. In this Forever Living Products assure to control the ration of profit and safes so that successful changes have been measured in timely frame. The essential requirement is that it assure about reduction of additional cost with this management is able to maximise its profit with suitability.

Inventory Management System­- It is a system of accounting in which management of Forever Living Products worked to ensure that inventory control is managed and processed with effectiveness. In this management worked to maintain balance in between the requirement of customers along with respective production so that cost gets controlled with waste minimisation (Kerzner, 2019, p1(4)). The essential requirement is that it provides balance in between tracking of order and its respective development of supply and demand both get managed perpetually.

Job Costing System- In this system of management accounting, Forever Living Products access and control the respective costing of all the different products and services. In this management of Forever Living Products ensure to manage effective supply in competitive marketplace so that success is perceived in timely frame. The essential requirement is manage the job order with efficiency in which customer satisfaction get prioritised with effectiveness.

Price Optimization System- It is a system that is being used to manage the effective utilisation of resource along with supply and demand in this management is able to provide respective services at adequate price so that ability to target wider customer base is advance on regular basis. The working proficiency and profitable earning both get enhance in effective manner. The essential requirement are as in this management of Forever Living Products is able to provide specific service at effective pricing so that wider customer base is targeted and higher profit is achieved with prominence.

P2 Explain methods used for management accounting reporting

The management accounting is being used within an organisation to analyse and interpret the change in relative manner and under this standardised change has been attained with relevance. In this management of Forever Living Products ensure that accurate focus and concern is maintained towards market attentiveness and with this respective need and requirement both get fulfilled with proficiency (van Erp and et. al., 2019, p6(4)). It also provides certain basis through which risk is analysed in controlled manner and induces positive impact towards advancement of working attribute and profit generation so that organisation is able to make effectual preparation for FIFA. There are various types of reporting in management accounting and it is as explained below as:

Budget Reports- It is a type of report that is used to maintain budget and it is process in business with respect of production of budget, cash budget and master budget (Dahlan, 2019, p8(2)). It induces accurate measure that is used to implement sustained ability under which working competency get enhance with suitability. The management of Forever Living Products uses this to collect suitable knowledge about previous working with this further processing of task is posses with relevance.

Accounts Receivables Aging Reports- In this report, Forever Living Products and its management make use of it to maintain tracking and respond towards receivables with this accounting is measured with attentiveness. In addition, it is also being used to maintain accurate tracking of debtors and payment with this effectual implementation of resource is processed with this accomplishment of goals and objective is developed in précised form.

Cost Accounting Managerial Reports- It is a report that provide adequate support to Forever Living Products as in order to analyse different costing, interpretation and implementing of different costing with this long term benefits has been attained with relevance. In this management of Forever Living Products get adequate support as they are able to reduce the overall cost of service and advance profitability with effectiveness (Kunnathuvalappil Hariharan, 2019, p7(2)). It also make an excessive costing as by process correct actions so that overhead get reduce and sustained profit is attained with relevance.

Performance Reports- It is a report management that is used to analyse and depict about overall working performance of Forever Living Products as with respect of both present and future so that sustainable profit is attained with prominence. In this management analyse the previous performance and advance margin of productivity with this sustained initiatives has been taken through which sustainable benefits has been attained with receptiveness.

The different system of management accounting basically provide sustained benefits under which working capability and its competency both get enhance in controlled manner. The Forever Living Products make used to inventory management system with this take advance change and develop strategies with this sustainable benefit are attained in better way. In addition, it also assist to track the possibility of market along with stock with this able to provide service without any hindrance and long term benefits are processed in balanced manner.

Advantages of management accounting, system, methods and reporting are as follows as:

Saves Time and Costs: The method is considered as time consuming basis as there are plenty of transactions and with respect of management accounting system all the procedure has been automated finished in quicker manner.

Increases Financial Visibility: The system make ease for all the stakeholders so as to monitor the position of finance as it is more comprehensive along with this management maintain track of revenue and expenses with respect of profit or loss.

Minimize errors: There are various calculations that have higher risk of error due to accuracy and its dependence with precision. Thus the process of accounting is automatic and assists to detect error such as duplicity.

Improvise asset and inventory management: The management accounting assure to advance its connection with respect of asset and inventory management. It enables to manage inventory and asset in automatic manner.

Provide real time data: The software allows to track overall financial information in real time as this type of data is much useful that furthermore assist to develop adequate strategies with precision.

Enhance process of decision making: The accounting and its management prevailed to perceive accurate and real time changes with this management is able to process effective decision as per requirement.

Provide highest flexibility: The web based accounting provides convenience so as to track the over financial information and performance of organization.

Planning: The management assist the business to execute and plan respective operations as per support of preparation of accounting principles and information.

Improvement in efficiency: The system of accounting lead to eliminate wastage production and defective from working so that working efficiency gets improvised on direct basis.

Maximisation of profit: The standard or fixed changes are improvised with respect of accurate measurement and in this reasonable and profitable changes are induced in timely frame.


P3 Calculate costs using appropriate techniques of cost analysis

The technique that is used by Forever Living Products as in order to analyse the cost is related to attain profitable change as with respect of higher revenue generation and for preparation for FIFA and it is as briefly explained below as:

Marginal Costing- It is a technique of costing that is used in order to charge marginal cost and to analyse the fixed cost too and it is processed in unit cost as it is favoured in return of respective contribution. It is a technique through which Forever Living Products and its management calculate about profit generation and sales maximisation with suitability.

Advantages- It is a simpler and easy technique that is used for cost implementation and in this Forever Living Products is able to adjust its profitable working with aptness. It aids the business to advance continuous growth as by analysing respective issues in timely frame and also being used to determine about profit margin and credibility in controlled manner (Gomez-Conde and et, al., 2019, p5(3)). In addition, it is also being helpful to take effective decision making as with respect of right approach through which certain interpretation is processed in order to advance stability along with fulfilling need and requirement of marketplace.

Disadvantages- It isn’t always required to have adequate assumption as it perfectly induce a shift within interpretation and calculation thus working attribute of business get affected on negative basis. Moreover, not all is able to manage the overhead with accurate basis as it is required that management has a specialisation for the same.

Absorption Costing- It is a costing technique that is used to identified and accept the incurred cost so that production get controlled in précised manner. In this management of Forever Living Products assure to enhance working proficiency with this proper acknowledges is processed in timely frame.

Advantages- It is related to a technique that is used to advance margin in between profit and sales so that direct based profit is pertained with respect of production and operation. In this management of Forever Living Products control its costing and allocation of funds so that profit is attained on regular basis. It is also being used to create and develop certain treatment with this certain accuracy is developed by making précised capitalisation of resource.

Disadvantages- It is difficult to advance optimistic outcome and with this management of Forever Living Products face various problems under which appropriate calculations is being required in respect of sales and overhead. It is being used with respect of short term planning and not accepted for long term as it is hard to control fixed cost. It also ignores the market price as with absolute price in which management isn’t able to fulfil customer need with requirement.

 Both the technique are used for Forever Living Products as in order to prepare for FIFA as in this they are able to measure and control implementation sales and its investment in productive manner. Moreover, Forever Living Products is able to rectify the complex situation and take respective actions as in order to advance and interpret valuable change with appropriateness.


P4 Explain the advantages and disadvantages of different types of planning tools used for budgetary control.

The planning is being used to take preferred actions so that sustained benefits has been attained as in order to get over from complex situation as with ease and comfort. In this business is able to design and develop adequate strategies and take respective initiatives so that long term success is achieved in successful manner. Planning tools used for budgetary control process as it is sustainable to generate adequate strategies and take adequate initiatives so that profitable changes have been measured in systematic form (Maheshwari and et. al 2021, p7(1)). The planning tool that is used to budgeting and forecasting the months as it come with amidst preparation for FIFA. In addition, there are various tools that have been used by Forever Living Products as with purpose of budgetary control and it is as summarised below as:

 Cash Budget- It is a budget that is used to prepare by Forever Living Products and its management to design and develop an estimated form of working so that all the respective receipts and payment get processed in certain period of time or about mostly in a year. In this management of Forever Living Products take used by budget while preparing for FIFA so that ability to achieve and accomplish suitable goals and objective both get developed as per liquidity of business.


  • It is being used by Forever Living Products to advance liquidity and its maintenance so that management is able to take respective changes and alteration as in order to advance sustainable profit.
  • It advances the capability to manage and control business operation with adequateness as management is able to maintain balance in between respective inflow and outflow of business.


  • The cash budget didn’t provide accurate flexibility to Forever Living Products as in order to create and develop sustained benefits in précised manner.
  • The preparation of cash budget is a time consuming process along with this also being a costly process which isn’t easy for all to afford.

Production Budget- It is a budget that is being used by Forever Living Products in order to maintain forecasting with this various benefits has been altered in possible manner (Alabdullah, 2019, p10(1)). In this respective requirement and basis is processed with respect of production capability in future period of time. In this management of Forever Living Products assure o develop and maintain accuracy in working standards with regularity.


  • It is a budget that is used by Forever Living Products in order to identify various requirements and that is dependent over production of goods and services with adequateness. It is an essential aspect for business as in this future credibility and working capability both get cleared in responsive manner.
  • It is also being useful to maintain productive changes as it is related to time and respective requirement. It create and develop suitable basis so that management is able to advance decision making as per according to respective situation.


  • It is a budget that relieves over various assumptions and different purpose that is related to accurate forecasting of data and it might lead with unreliable outcome. It affects the working possibility and correspondence of Forever Living Products on direct basis.
  • It isn’t get adjust as per in response of future change as dynamic of demand and supply is completely related to business environment, customer preference and many others as well and it never be remain same. It leads to develop complex surround for business through which profit reliability also get affected.

Master Budget- It is a budget that is used within an organization as in form of comprehensive expression as with this financial planning and business operation both get affected in timely frame. It also induce direct impact over future working as it is related to a budget that reflect financial statement with clarity so that management receive utmost clarity and integrity about working standard and respective possibilities.


  • It is a budget that is helpful for Forever Living Products as in this comprehensive forecasting is prepared that is related to various department so that operational cost and respective benefits both get altered with prominence (Gonçalves and et. al., 2021, p8(3)).
  • It assists an organization to accomplish desirable goals and objectives so that both issues and problem get target with suitability. In this management have a clear understanding about ongoing attribute of business.


  • The master budget sometime didn’t provide the estimation of lower sales and higher expenses with this ability to establish adequate target and earn respective compensation get affect and for this it is considered as highly rigid.
  • The budget also lead towards provision of lesser flexibility with this complex situation get created as sustained confusion is created in between cash flow statement and it affects the financial planning of business.

Incremental budgeting: It is a budget that preferred the actual figures and used to produce current year’s budget along with this it is one of easiest budget to understanding. It has been used as in terms of primary drivers of cost that doesn’t get change over year to year. The advantage is that it is easiest method to use and resolve complicated calculations along with this used to use ease from complicated analysis. On the other hand, there is a disadvantage as well such as it required lack of incentives and didn’t provide stability to business management.

The various tools of planning the budgetary control are responsible towards effective and efficient utilisation of resource so that productive changes have been altered in systematic form. The Forever Living Products also able to maintain clear standards and objectives so that they are capable to prepare FIFA with suitability. In addition with respect of suitable planning business is able to take various benefits as by resolving respective queries and problem in timely frame. Moreover, it enhance the proper communication, co-ordination, delegation of authority, maximisation of profit, forecasting of credit need, control and enhance efficiency so that successful and beneficial changes has been measured in controlled manner.


P5 Compare how organisations are adapting management accounting systems to respond to financial problems.

Financial Problem- It is related to certain situation in which an organisation faces respective delay and complexities among completion of certain task or activity. In affects the ability of business to achieve desirable goals and objectives in timely frame as Forever Living Products worked on to prepare for FIFA that is caused by many organisations and process as in order to face economic slowdown. It is an aggravated financial problem that is arise due to pandemic however many businesses also tries to maintain sustained in profit consideration and reduce others aspects (Astuty and et. al., 2021, p(4)). The problems related to finance also lead in excessive flow of cost and it is developed due to improper treatment of overhead thus it also affect the profitability of business as well.

In this various techniques has been used to resolve the problems related to financial problems and that is as clearly explained below as:

  • KPIs- It is referred as key performance indicator that affect both financial and non-financial basis of business through which profit credibility also get affect on sustained manner. It has been used by Forever Living Products to rectify the adjusted deviations and variance that is presented in business and it also advance the estimation of suitable performance. The management of Forever Living Products is able to resolve the respective problems such as excessive cost through which adequate measurement has been taken in defined manner. In this effective resources get utilized in optimized manner and management take preferred changes as per according to standardized outcome.
  • Benchmarking- It is a technique that is used by business in order to attain and accomplish certain financial standards so that Forever Living Products is able to achieve its future credibility and objectives in respective manner (Black, 2019, p7(4)). In this the management of Forever Living Products make adequate usage of various techniques with this they are capable to resolve the issue related to excessive cost. In this adequate standards has been developed that could have been resolved as by taking respective initiatives and develop suitable strategies for the same.
  • Sustainable success: It is processed as per consideration of preferred reviewing of overall future capital needs of the department so that management is able to address anticipated growth and development. It has been processed so as to analyze and attain preferred balanced in between profitability of business, access to improvise the planning and reporting capabilities along with this used to evaluate and understand the purchasing process of customers.

Financial Governance- It is related to different types of measures that are usually being undertaken by Forever Living Products as in order to manage and process suitable financial discipline. It is supported with various techniques so that favourable benefits and success is achieved in beneficial manner and with cost efficiency.

In addition, in order to resolve the financial problem different management accounting systems has been adapted by organisation so that competency to manage and control working standards as per respective utilisation is processed with effectiveness. The below is a comparison in between the two organisation as one is Forever Living Products and another is its competition as Stanhome and it is as summarised as:

Comparison of organizations-


Forever Living Products


Financial Problem

Forever Living Products is having a financial problem to get over from the respective economic recession and for that maintain concern to attain future success in sustainable manner.

Stanhome face a financial problem that is associated with mismanagement of job orders.

Management Accounting System Used

Forever Living Products make use of Inventory Management System and with this manage and control its stock exchange so that beneficial change is measured with effectiveness.

Stanhome make supported usage of Job Costing System.

Application of the system

Inventory Management System is used by Forever Living Products so that they are able to resolve all the respective issues related to inventory and in this adequate flow is maintain about inflow and outflow. It is also used to reduce the probability of mismanagement so that stock provision and demand both get managed perpetually.

Job Costing System is being used by Stanhome as in order to align the respective queries and issue related to mismanagement in job order. In addition to this manage and track the respective record so as to fulfil the working suitability in favourable basis and timely constrained.

As by analysing the financial problems and issues on time Forever Living Products make appropriate usage of various techniques to resolve the same in prominent manner. In this sustained target is maintain to achieve and advance working suitability through which goal and objective to prepare for FIFA and to induce positive impact over economic recession also get processed in beneficial manner. In addition, in this Forever Living Products assure to maintain strategic edge in productive manner under which suitable solution has been detect to maintain focus and concern to advance working standards with suitability.

There are various planning tools has been used by company to address budgetary control and in this management of Forever Living Products assure to make suitable profit as with adequate manner and achieve long term profit with ease. There is a process to achieve successful modification of goals and objective and it is related to accomplishment of both short and long term profit with perfection. The Forever Living Products also able to maximised its profit credibility as with concern of management accounting with this sustainable success is perceived with consideration of FIFA preparation. It also provides adequate guidance and advance critical thinking so that it drives strong success and development towards business performance and productivity. The management accounting and financial solution is a combination of business acumen so that sustainable benefits have been attained in beneficial frame.


It has been concluded from the above report that management accounting is a fundamental basis of an organisation under which business is able to make adequate control towards relative selling and attainment of profit in précised form. In this various techniques has been used by management through which accounting get processed with appropriate relevance and under this business is able to control the working competency with aptness. In addition, the reporting has been performed by business to control the future working standards as by analysing the past and present working scenario as in this sustainable benefit has been enhance with usefulness. The management is able to ensure that maximised efficiency and effectiveness get developed so that long term sustainability and stability is access in timely frame. It also advances the productivity of business as management is able to control its debt and equity along with this induces respective measure to manage the same.


Books and Journals

H Hariyati, B Tjahjadi, N and Soewarno, 2019. The mediating effect of intellectual capital, management accounting information systems, internal process performance, and customer performance. International journal of productivity and performance management.

H Kerzner, 2019. Using the project management maturity model: strategic planning for project management. John Wiley & Sons.

M Dahlan, 2019. Analysis of interrelationship between usefulness of management accounting systems, interactive budget use and job performance. Management Science Letters, 9(7), pp.967-972.

N Kunnathuvalappil Hariharan, 2019. Elements and success factors for an Efficient Budgeting.

R Gomez-Conde, Lunkes, and F Rosa, 2019. Environmental innovation practices and operational performance: The joint effects of management accounting and control systems and environmental training. Accounting, Auditing & Accountability Journal.

S Maheshwari, S Maheshwari, and M Maheshwari, 2021. Principles of Management Accounting. Sultan Chand & Sons.

T Alabdullah, 2019. Management accounting and service companies' performance: Research in emerging economies. Australasian Accounting, Business and Finance Journal, 13(4), pp.100-118.

T Gonçalves, and C Gaio, 2021. The role of management accounting systems in global value strategies. Journal of Business Research, 124, pp.603-609.

W Astuty, and F Pasaribu, 2021. The Impact of Business Environment and Organizational Culture on The Implementation of Management Accounting Information System in Some Hotels. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 4(3), pp.6251-6262.

W Black, 2019. The budget as a planning tool. In Catalysts for Change (pp. 171-188). Routledge.

W van Erp, F Roozen, and E Vosselman, 2019. The performativity of a management accounting and control system: Exploring the dynamic relational consequences of a design. Scandinavian Journal of Management, 35(4), p.101077.

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