Management Accounting Assignment

Management Accounting Assignment


Management Accounting AssignmentManagement accounting is very important factors because it gives an entrepreneur of depth knowledge about different cost related to running the business. An entrepreneur does different types of cost when he/she does establish of new business in the market (Coulter, 2013). A student can know about different type’s management accounting, the different method that used of management accounting, advantages and disadvantages different type of planning tools by this assignment. This assignment also helps them take the different type of decision to related budgeting and costing.

Management accounting involves various concept and aspects that help to take effective decision for the company. The business entrepreneurs make the effective planning of use business resource. Costing refers to the cost of the production process. It also refers measuring cost. Budgeting refers to the process of company budget. It describes company future incomes and expenditures. This report chooses Ryanair. This report will discuss different site of management accounting on Ryanair. Ryanair is Airline Company in the UK. It offers low-cost airline service.

Task 1: Demonstrating an understanding of management accounting system

To: Line manager, Ryanair

From: Management Accountant, Ryanair

Subject: Discussion on management accounting system and the requirements that are crucial for several management accounting systems


This section is going to discuss different management accounting system and essential of management accounting system.

P1: Explaining management accounting and giving the essential requirements of different types of management accounting system


Management accounting system is the process of making management accounting report. Management accounting is the essential part of any organization because it provides very important information to managers about financial and non-financial. The manager takes the good decision by getting this type of information (Jones and Hill, 2013). The manager of Ryanair uses management accounting. So manager prepares good planning, minimize cost, and provide good budget and offers good service to their passengers.

Management accounting

Management accounting is the process of calculating financial and non-financial activities in the organization. It is the key factor for any organization. It helps to managers to take the good decision of the business organization. Management accounting provides different types of information such as sale, cost, production, customer service of the organization. Managers get all types of information when they need by the management accounting system (Manual of Accounting, 2011).  Manager of Ryanair can calculate the cost per flight low or high according to their budget by the management accounting. Management accounting helps to minimize organization cost.

Management accounting system

Management accounting system is very important part of management accounting. It is the process of analysis and show of financial and non-financial information and provides this information to organization managers so that they can take the effective decision. Management accounting task is collect information about organization financial and non-financial information and management accounting system task is analysis this information (Libby, Libby and Short, 2014). Management accounting system of Ryanair helps to collect cost related information that helps to managers forecasting about cost per fright of Ryanair.

Difference between management accounting and financial accounting system

Management accounting and financial accounting is same one site of both have accounting but management accounting system and financial accounting system is not same, it has major different.  However both are provide information to organization.

PointsManagement accountingFinancial accounting
UsersManagement accounting users are internal parties in the organization. Organization managers are the user of management accounting.Financial accounting users are external parties in the organization. Organization shareholders are the user of management accounting.
Content and scopeManagement accounting provides details information about the specific department in the business organization.Financial accounting provides summarize information about entire in the business organization.
RepresentManagement accounting represents the efficiency of the business organization.Generally financial accounting represents profitability of the business organization.
DataManagement accounting provides resent data of the business organization.Financial accounting provides historical data of the business organization.
TransactionManagement accounting helps to do transaction of financial data in the organizationFinancial accounting helps to do transaction of asset data in the organization


Different management accounting system

Manager of Ryanair uses various types of management accounting system. It is discussed in below:

Cost accounting system:

The cost accounting system is collect, analysis and shows all types of cost related information of the business organization, so that organization manager takes the good decision about organization cost. This type of accounting system main objective is decreased by the business organization cost. It also helps to increase organization sale and to reduce production cost in the business organization. It increases organization efficiency level (Hill, 2014). Ryanair Airline company cost structure involves different direct cost such as labours and manufacturing overhead. It involves indirect cost such as selling and administrative expenses. Managers get all cost related data from cost accounting report.  Managers can minimize their organization all cost from this cost accounting report.

Inventory management system:

Inventory management system is collect, analysis and represents all types of inventory related information the business organization, so that organization manger prepare effective decision about organization inventory.  This type management system main purpose is minimizing the cost maintaining and inventory in the organization. Ryanair Airline Company manager uses inventory management report so that manager can determine the net realizable value of inventory. This report helps to do maintain the cost of inventory in the business organization. The business organization has different types of inventory such as spare parts of aircraft in its inventory.

Job order costing system:

Sometimes manager of Ryanair Airline Company offers customized service for its valuable passenger. This time Ryanair uses job order costing system. This type’s management system helps to identify each service as a job. When it provides customize service to its valuable customers, then it compares with revenues from service.

P2: Different methods uses for management accounting reporting

Manager of Ryanair Airline Company uses different methods for management accounting reporting.  The reports are discussed in below:

Inventory management report: Inventory management report is used to collect information about the inventory of the business organization. This report is the present amount of the business organization inventory that the business organization has at the end of year (Stead, 2014). Manager of Ryanair Company does analysis inventory management report time to time because this report also helps to do calculate the cost of managing inventory of every year.

Performance report: This report represents employee’s performance of the business organization. Manager of Ryanair Airline Company does regular monitoring employees performance report. This report helps to increase employee’s performance in the business organization.  Manager of Ryanair is very conscious about employee’s performance so that they provide good service for employees.

Account receivable ageing report:. This report represents information of account payable. Account receivable shows organization total earn from other parties. It id asset for the organization.

Accounts payable report: This report represents information of account payable. Accountant receivable shows organization total debt from other parties. Manager of Ryanair Airline Company gives the email to make their payment. It is liablilities for the organzition.

The different organization uses different types of methods of management accounting. These methods are discussed in below:

Job costing method: Job costing method is very important method of management accounting system because this method does recognize the cost and revenue each specific job in the business organization. It also does determine the profitability of a job. A job may be different such as a batch of product, product or serving of customers.  Ryanair Airline Company is the service related job to passengers (Olivas-Lujan and Bondarouk, 2013). The total revenue of Ryanair Airline Company is added due to the passenger’s service is higher that its cost.  This Airline Company job is very profitable.

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