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Management Accounting Systems and Techniques: Formal Report and Newsletter Article

The importance and application of management accounting systems

LO1: Demonstrate an understanding of management accounting systems
LO2: Apply a range of management accounting techniques.

You are a junior management accountant for a medium-sized enterprise in the manufacturing sector called Synergy Manufacturing Co. Ltd. You are one of the graduate management trainees that the company has recruited. As part of your probation your line manager has asked to carry out some activities to demonstrate your understanding of management accounting systems and practices. You line manager has asked you to prepare a formal report on the role and function of the management accounts department, covering the management accounting systems operating in the organisation as well as the range of methods and techniques used to report management accounting. You are also asked to
demonstrate your ability to apply management accounting techniques and carry out calculations. Your formal report should include the following:

  • A critical evaluation of how Management Accounting systems and Management Accounting reporting are integrated within the organisational processes of your enterprise.
  • An evaluation of the benefits of the Management Accounting systems and their application within an organisational context.
  • An explanation of the principles of management accounting and why it is important to integrate management accounting systems within an organisation. You are also asked to provide an explanation of different techniques and methods used for management accounting reporting.
  • Based on the details provided in the table below, prepare and interpret accurate income statements for the company using a range of management accounting techniques, such as marginal and absorption costs.

Synergy Manufacturing Co. Ltd. manufactures Product A and Product B. The following information is available for March 2020


Product A

Product B

Production (units)



Sales (units)



Opening inventory (units)



Financial data:

Product A

Product B

Unit selling price

£ 180.00

£ 150.00

Unit cost:



direct materials

£ 30.00

£ 24.00

direct labour

£ 36.00

£ 24.00

variable production overheads

£ 24.00

£ 16.00

fixed production overheads

£ 60.00

£ 40.00

variable selling overheads

£ 2.00

£ 2.00

Fixed production overheads for the period were £210,000 and fixed administration overheads were


Please note that fixed production overheads and fixed administration overheads are shared based on the number of production units for Product A and Product B.

How managers could use planning tools and respond to financial problems

LO3 Explain the use of planning tools used in management accounting.
LO4 Compare ways in which organisations could use management accounting to respond to financial problems.


Your line manager has also asked you to prepare an article to publish in the organisation’s quarterly newsletter. Your article should cover the use of planning tools by managers for management accounting and how managers respond to financial problems.

In the report you should evaluate the way that planning tools for accounting help to solve problems and support organisations in achieving sustainable financial success. You may refer to any organisation of your choice if you wish to give examples. Make sure you include the following in your report:

  • Explanation and analysis of the advantages and disadvantages of budgetary planning tools and how they are applied for preparing and forecasting budgets.
  • How managers respond to financial problems.
  • How good management accounting can help organisation achieve sustainable success.
  • Reference to more than one organisation for comparison of how they adapt management systems to respond to financial problems. 

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