The aim of this report is to provide brief information about the management accounting systems which the organizations utilize for the decision making the process. In the report of the case of high Max, the organization is analyzed and management accounting systems are proposed which help the organization in improving the liquidity and profitability position. The management accounting is different from financial accounting because management accounting is for internal use purposes and does not have to follow the format for recording information like in financial accounting.

Understanding of Management Accounting Systems

Managerial accounting provides detail information to the management of the organization about the financial position of the organization. The managerial accounting information is used by the management of the organization to take various financial; decisions. The management accounting is different from financial accounting because management accounting is for internal use purposes and does not have to follow the format for recording information like in financial accounting. Management accounting does not need to follow the standards which financial accounting follows like IFRS or GAAP (Crosson & Needles, 2010).

Different types of Management accounting Systems

There are different types of management accounting systems that the managerial accountants used for recording the financial information. The following are some of the key management accounting systems which High Max Corporation can utilize for improving their liquidity & profitability position.

Job Order Costing of Understanding of Management Accounting Systems

In the job order coting the manufacturing costs are allocated to the individual unit. This type of costing is used when different items in which the organization manufactures are different from each other and have their own cost. When there is variation in the product produced, in the job order costing separate record is kept for each job. The job order records work as the subsidiary ledger for recording finished goods inventory, cost of goods sold and work in process inventory. The job order costing is good for those organizations who create custom made machines 0r high-end machines. As High Max creates high-end Laptops Job order costing can provide detail information about the finished goods inventory & work in process inventory. In other words, the inventory can be managed appropriately with this accounting system (Davis & Davis, 2010).

Activity-Based Costing of Understanding of Management Accounting Systems

The activity-based costing is a costing technique in which different activities are identified in the organization and then cost are allocated to each activity according to the amount of consumption of each. The activity-based costing provides detail information about each cost or in other words, accurate product cost can be identified from activity-based costing. The overhead costs can be traced more accurately from activity-based costing. High Max manufactures high-end laptops. ABC costing can provide accurate cost data to the organization and through this, the organization can manage its profitability & liquidity more efficiently (Crosson & Needles, 2010).

Process Costing of Understanding of Management Accounting Systems

Process costing is the exact opposite of job order costing. The job order costing is preferred when the organization manufacture goods that are different from each other. The process costing is preferred by the manufacturing concern who create similar products in huge quantities. Process costing report can be utilized by the High Max organization for recording various costs efficiently.

Methods Used for management Accounting Reporting

Job Cost Report

The job cost reports can be utilized for improving the profitability and liquidity of the organization. High Max can use the job cost reports for evaluating the profitability of the Job. Through job cost report the organization can focus on those jobs which provide high profitability and reject those jobs which not only waste money but also provide low profitability. This report can also be used for evaluating the expenses (Warren, et al., 2016).

Budget Reports of Understanding of Management Accounting Systems

High Max organization can create a budget that will help the business to mitigate costs up to a lot of extents. With budget reports, the organization can evaluate the business performance and the management can know about the actual expenses which are occurring in the organization. With budget reports, the organization can trim the costs which will definitely improve the profitability of the organization (Davis & Davis, 2010).

Account Receivable Ageing Report

The account reliable aging report has huge significance for the High Max organization and the management should definitely create this report so that the organization can know about aging account receivables. With this report, the organization can speed up the collection of cash which will improve the liquidity position of the organization. Through this report, the manager will keep a record regarding its receivables and tracking account receivable become quite easy.

Benefits of Management Accounting systems

The key benefit of job order costing is that it keeps the record of all the materials & labor used. Through job order coasting the management can track the efficiency, productivity and profitability of various jobs performed. With ABC Costing better decision making can be performed because the management has detail information about the costs which have incurred in the manufacturing process. The Process costing key advantage is that it is not complex as ABC costing and implementing this costing technique is less expensive than ABC costing. High Max organization can implement any of these management accounting systems for improving the profitability & liquidity of the organization (Crosson & Needles, 2010).

How Management Accounting Systems integrate within Organizational Processes

The management accounting systems are for internal purposes and the management uses the management accounting systems to get deep insights about the costs. The management accounting systems are used for taking various important decisions and help the management to perform various activities. So it can be said that in the decision-making process of the organization management accounting has a key role (Davis & Davis, 2010).

Conclusion of Understanding of Management Accounting Systems

It is concluded that the key benefit of job order costing is that it keeps the record of all the materials & labor used. Through job order coasting the management can track the efficiency, productivity and profitability of various jobs performed. With ABC Costing better decision making can be performed because the management has detail information about the costs which have incurred in the manufacturing process. The Process costing key advantage is that it is not complex as ABC costing and implementing this costing technique is less expensive than ABC costing.

References of Understanding of Management Accounting Systems

Crosson, S. V. & Needles, B. E., 2010. Managerial Accounting. s.l.:Cengage Learning.

Davis, C. E. & Davis, E. B., 2010. Managerial Accounting for Strategic Decision Making, Preliminary Edition. s.l.:John Wiley & Sons.

Warren, C., Reeve, J. M. & Duchac, J., 2016. Financial & Managerial Accounting. 14 ed. s.l.:Cengage Learning.