Management Accounting Techniques : Assignment

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 & M1 Explanation on management accounting and essential requirements of different
types of management accounting................................................................................................1
P2 & D1 Different methods used for management accounting reporting...................................3
TASK 2............................................................................................................................................4
P3 Income statements as per marginal and absorption costing...................................................4
M2 Range of management accounting techniques and appropriate financial reporting
documents...................................................................................................................................7
D2 Financial report of Unicorn Grocery.....................................................................................8
TASK 3 ...........................................................................................................................................8
P4: Advantages and Disadvantages of different types of planning tools that is being used for
budgetary control for given situation..........................................................................................8
M3 & D3 Analysis and evaluation of planning tools and their application that is used to
prepare and forecast the budget.................................................................................................10
P5 compare how management accounting methods are utilized by organisations to respond
towards financial issues.............................................................................................................12
M4 Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success..........................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................14

INTRODUCTION
Management accounting can be considered as a mix of various techniques of managerial
theories and methods of financial accounting through which an entity can generate a better
output so that they will not get distracted off from their targets which includes better productivity
and supreme leadership in targeted market. The techniques and methods which are there in
management accounting can be utilized to penetrate the targeted market and to enhance revenue
which can be earned by business entity(Baldvinsdottir, Mitchell and Nørreklit, 2010). Financial
resources are very important hence its utilization should be made with proper planning and
effective strategies with collective efforts of managers and accountants. In this report,
organisation which have less than 50 employees in its organisation structure with annual net
turnover less than £500,000 has been taken and Unicorn Grocery is meeting that criteria. It is a
cooperative retail or grocery store which deals sale of grocery products. As it is a workers co-op
hence it is managed and controlled by its member or the owners of it. As it combines various
aspects of business entity which are related with finance, management and accounting
procedures. Through it managers and leaders of cited entity can forecast that how much amount
of investment they require to meet the level of expectations from any project.
TASK 1
P1 & M1 Explanation on management accounting and essential requirements of different types
of management accounting
Management accounting can be explained as a combination of techniques of financial
accounting and principles of management and various theories. Through the methods which are
there in management accounting Unicorn Grocery can utilize its limited funds in way so that
they can give the maximum returns. Through this entity can grow without any loss to revenue
and they can get better development rate(Bennett, Schaltegger and Zvezdov, 2013). Budgeting is
the technique which supports this phenomena as through this they can easily estimate the fact
that what they require for any certain future operation and through which method they can get
the results out of such operations(Busco and Scapens, 2011). They can decide the amount of
input for getting a certain output. Marginal costing techniques provides information regarding
the contribution by deducting variable cost out of the sale proceed and after deducting the fixed
cost which never gets changed due to the change in level of production. Absorption costing
method provides the facts through which over as well as under absorption of certain overheads
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can be identified. There are some other cost analysis process which are there in management
accounting through which any company can make a detailed analysis over the cost structure of
enterprise. Through this evaluation they can control over the expenditure by reducing cost of
goods which are produced by any entity(Christ and Burritt, 2013). Unicorn Grocery and its
managerial team can respond towards uncertainties in a better way if they use these methods
which are discussed above. As through it they can frame better strategies by collecting
informations through research and analysis. This process makes the decisions taken by the
owners and managers more credible and reliable.
Essential requirements of different types of management accounting
There are certain essential requirements of management accounting techniques which
managers have to ensure that they are fulfilled or not. These requirements are mentioned below:
 Traditional accounting techniques: This technique is all about management of cost
structure through allocation of cost associated with total production among different
departments who are accountable for such production(Cinquini and Tenucci, 2010). In
this expenditures are allocated on some reliable basis. It is used by any entity to predict
the future revenue and profits from any process. In this method cause and effect
techniques are used which have inclusion of direct as well as indirect cost. It is generally
used by small and medium sized entities which have less financial resources and small
projects(Contrafatto and Burns, 2013). Hence it is useful for Unicorn Grocery to attain
its objectives and targets through this method.
 There are certain requirements of traditional management accounting through which
they can use such method in their organisational structure. Mostly job order costing is
utilized by companies for some large projects through which they can easily trace the
cost which is associated with such project. Hence it gets easy to trace the cost through
better utilization of traditional costing techniques.
 Lean accounting: It is a general term which is used by any entity when they are required
to make any changes there in their accounting procedure(Dillard and Roslender, 2011).
If there is any change in control measurement and process of management then also lean
accounting techniques are used(Why lean accounting?. 2017).
 The requirement to use lean can be classified in two ways. First one is to apply some
lean accounting methods to the accounting and managerial process of any enterprise.
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