Management Accounting Research Review

This assignment explores recent advancements in management accounting research. It delves into various topics such as cost-volume-profit analysis, marginal cost concepts, research paradigms, and the influence of environmental factors. The analysis draws upon a selection of academic publications to highlight key trends and areas of future exploration within the field of management accounting.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...............................................................................................................3
TASK.1................................................................................................................................3
P.1 .......................................................................................................................................3
P.2 ..............................................................................................................................5
TASK.2................................................................................................................................7
P.3 ..............................................................................................................................7
TASK 3..............................................................................................................................12
P.4 ............................................................................................................................12
P.5 ............................................................................................................................15
CONCLUSION..................................................................................................................16
REFERENCES..................................................................................................................17

INTRODUCTION
Management accounting is a procedure through which company can report of
administration and financial statements which gives an entire explanation of the
company. All the material data that is essential for the shareholders which can influence
their decisions with respect to a business association are incorporated in the company's
financial statements. These days, it is fundamental to watch out all the data of the
business for sustainable advancement(Renz, 2016). Management Accounting is one the
most vital device by which organization would become acquainted with about the
organization's data and transform those information into sound decision making. A
qualified management accountant is the individual who make the organization to pick
cost leadership procedure in their business, so that an ever increasing number of results
can be allowed by the organization. With the help of management accounting, company
can easily makes an effective and efficient strategy that will also helps to make the
company to survive in the long run and also make the company to have the core
competence in the market.
TASK.1
P.1
Management accounting assist the firm to make the policies fro the attainment of
the pre set goals and objectives(Pipan and Czarniawska, 2010). Management accounting
deals in the inner management of the organization and also assist inner departments to
make the policy fro the effective run. With the help of management accounting,
company would able to make the company's operational process profitable. In the time of
modern era, each organization is deeply concerned in making the company more viable
and this could only be happened with the help of qualified management accountants.
Management accountants are the individuals who know how to run the company so that it
could generate the profits for the firm(Quinn, 2011). Management accountants assist the
the company to do research for the financial and non-financial data, so that the top level
authority can make the strategies or policies for the effective operations of the company.
Management accountants also helps to identify the risk within the organization and

makes effective policies to overcome those risks. Managerial accounting makes the
company so eligible so that the company can take the competitive advantage over the
competitors in the relevant market.
However, there are various kinds of management accounting techniques which
are required in the company (Nandan, 2010). Firms today face the issues of how to adjust
their techniques, plans of action, and practices to respond to social and natural difficulties
while making financial achievement and incentive for their shareholders.
The report proposes various ways management accountant can control their
associations towards economical business achievement:
 Price optimization system: It is considered as more effective system of
accounting which is used by the company to determine the price which is
applicable for the customer on which they are agree to buy there products.
 Costing accounting system: It is related with those costs which incurred during
production process. It is summarized with various costs such as normal,standard
and actual costing.
 Inventory accounting system: It is associated with management and controlling
of stock of the company from getting wastage. There are various methods and
techniques which a managers uses in order to maintain the stocks. Some of them
are EOQ and ABC costing.
 Job costing system: Under this system, each products are categories as individual
products rather than all products. It is based on timing of product which are
produce by the company during the time period.
There are various requirement which has been required for the different kinds of
management accounting. Some of them are mentioned below:
Traditional management accounting: through this accounting system company can
concentrates the cost by means of job order of techniques of of process costing. Unilever
plc can easily allocate the cost of the product which are linked to the direct labor, direct
material and other overheads which are related to the production of the goods.
Needs of traditional management accounting: job order costing methodology is applied in
the manufacturing sector(Macintosh and Quattrone, 2012).

This is the methodology by which company can easily trace the various kinds of
costs associated to the manufacturing of the goods. Along with this tool, company also
need to make the strategy so that the cost of the products can be minimized. On the other
way, process costing is the technique which is used to determine the cost of different
manufacturing processes.
Lean accounting: this is the new concept in management accounting. Lean
accounting technique emerged in the new this era. This accounting does not concentrates
to cost of the products only. But also it helps for framing the strategy for the business in
order to achieve the goals and long term objectives.
Requirement of lean accounting: with the help of lean accounting, unilever plc’s
management accountants can make the strategy for the cost reduction of the products. It
is evaluated that if all the employees have idea about the lean accounting then they could
understand how to bifurcate cost in different department in systematic manner. This type
of accounting information provides wide range of data to top management to make
strategic decisions. In addition to this, Leann accounting also make effective changes in
value chain activities of organizations which provides absorption of cost in different
working department of Unilever plc. Management of organizations use this information
to make strategic decisions and also provides wide range of information to auditors of
company to audit internal and external functions of organizations.
P.2
There are various tools to report the management accounting. These methods can be used
to make for the company’s future projects of the company. These tools are mentioned
here under:
Financial management is truly vital for Unilevr plc as getting ready for planning
factors. Primary target for any entity is profitability. They need to build their benefit by
diminishing cost and keeping up quality in their products and management. Financial
planning can be considered as an important device for the accomplishment of different
business targets. Arranging of different variables identified with fund through financials
can help partner of Unilever plc to settle on better decision making related with the

company. Then again management accounting can make the financial statements which
could fulfil the need of the firm.
Analysis of financial statements: There are a few financial statements which are
required to be frame by the Unilever plc. Unilever plc is required to make the income
statements, statement of changes in financial position. Such kind of financial statements
of the company display the mirror the financial position. Administration of Unilever plc
can analyze these announcements for various time frame with the goal that they can get
data about their current financial position via such analysis.
Cost Accounting: Cost accounting is a strategy through which association can
assign its cost and it can exhibit its cost figures according to the unit of item. Cost
accounting also helps the organization to understand the cost related issues and try to
solve them with the help of cost accountants within the firm (Lukka and Modell, 2010).
Cost accounting is basically is needed in the manufacturing firm and company also
makes the process related strategy for the reduction of the cost of goods with the help of
cost accountants. Through a superior cost allocation framework, Unilever plc and its
administration can execute better procedures which can help them in the cost decrease.
Fund Flow Analysis: fund flow analysis assist the company to understand the
movement of funds for the certain period. Management accountants also assess the fund
flow information with the past data and then compare them so that the effective and
efficient policies can frame.
Cash Flow Analysis: Cash flow analysis assist the company to know the entire
cash out flow and inflow information and on the basis of such information company
would able to make their plans and strategy(Jansen, 2011). Management of Unilever plc
can utilize cash flow analysis investigate the stream of cash during financial year.
movement of cash and its following can help an organization to utilize available funds in
the needy area. As a cash flow is isolated into three areas i.e. cash flow from working,
contributing and financing exercises. Therefore, investigation of cash flow helps the
company to provide the detailed information with the relevant information to know the
exact cash needed in the particular future projects.

Budget report: It help the small scale business owners to determine their
company's performance and if the business is enough to manage there operations the
managers are analyses the performance of the company.
Accounts receivable aging: It is crucial tool used for managing cash flows for
the company that extend credit to its customers. It help to divide the customer balances
by how long they have been owned.
Inventory and manufacturing: By using the companies physical stocks can use
management accounting reports to make their process more effective.
Job costing report: It shows the expenses for a particular project. They mostly
matched with the projects estimation of the total revenues so that company can analyze
the jobs profitability.
TASK.2
P.3
There are so many ways by which company can compute the net profits.
Management accounting tools assist the company to calculate the net profits of the firm.
Via absorption costing and marginal costing, Unilever plc can calculate the net profits.
Absorption costing: it is the methodology which is used to extract the different costs
which are linked to the various manufacturing processes. Additionally, this methodology
also assist the company to assess the stock of a firm (Luft and Shields, 2010). Forecasting
is also the chief components of the association. Through this techniques entire
manufacturing expenses are ascertained when they actually occurred, budget expenses
could vary from the actual one. Via absorption costing, over and under absorption could
be treated accordingly.
Income Statement as per absorption costing :
Selling price £35
Unit costs
Direct materials £6
Direct Labour £5

Variable Production overhead £2
Variable sales overhead £1
Budgeted production for the period is 600 units
Fixed costs for the month are given below
Budgeted cost Actual cost
Production overhead £1,800 £2,000
Administration cost £800 £700
Selling cost £400 £600
Absorption costing
Working 1: Calculate full production cost
Direct material £6
Direct labour £5
Variable cost £3
Fixed cost £5
Total £19
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*19 = £13300 100*19 = £1900
Working 3: under/ over absorbed fixed production overhead
Actual fixed production: £3300
Fixed overhead: £3500
Total £200(over absorbed)
Net profit using absorption costing £ £
Sales 21000
(-) Cost of Sales:
Opening inventory 0
Production 13300
Closing inventory (1900) (11400)

(Under)/ Over absorbed fixed prod. O/h 200
Gross Profit 9800
Less Expenses
Variable sales 1800
Fixed administration 700
Fixed selling 600 (3100)
Net Profit 6700
Marginal costing: This methodology is used for making the inner decisions in the firm for
the short run. A various stages of activities, aim of marginal costing is identified about
the stage at which contribution can be earned(Hiebl, 2014). On the other mean, marginal
costing is the technique through which vary in cost of opportunity which changes due to
vary in production. Vary in the opportunity cost due to enhanced production by unit over
the certain level can be identified as marginal cost for the company. Marginal costing
deals with the marginal cost of producing that extra unit.
Income statement as per marginal costing :
Working 1: Calculate variable production cost £
Direct material 6
Direct labour 5
Variable production o/h 3
Variable production cost 14
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*14 = 9800 100*14 = 1400
Net profit using marginal costing £ £
Sales 21000
Less Variable costs
Opening inventory 0
Production 9800
Closing inventory (1400) (8400)
Variable sales (1800)
Contribution 10800

Less Fixed costs
Fixed Production overhead 2000
Administration cost 700
Selling cost 600 3300
Net Profit 7500
Difference between absorption and marginal costing techniques :
Marginal Costing Absorption Costing
 In marginal costing, variable costs
linked with production are exclusively
apportioned.
 Costs linked with products covers only
variable cost.
 In this, overheads are divided into two
categories, i.e. fixed and variable
overheads.
 revenue in marginal costing could be
identified via profit-volume ration (PV
Ratio)
 In Absorption costing all types
of costs are absorbed on a
certain basis and then that cost
is apportioned to various
products.
 Absorption costing assist to
absorbs and allocate both fixed
and variable costs in
production.
 Absorption costing bifercates
overheads into three categories,
i.e. production, management
and overheads linked with
selling and distribution.
 In absorption costing, net profit
according to income statement
is considered as a profit under
absorption costing.
Utilization of management accounting methods if there should arise an occurrence of
Unilever plc :

Unilever plc is a company which has so many employees in its hierarchical
structure. it can be seen that the income of the company is high when contrasted with
different organizations working in a similar segment and performing same operations.
Management accounting and its strategies are used in the firm for better operational
business. They organize with each other in helping management of the Unilever plc for
accomplishment of its destinations and goals. Presently business condition administrative
work forces needs to track for execution of Unilever plc so that they can follow that
business association and its improvement is going in the correct direction and also helps
to attaining the set targets(Herbert and Seal, 2012). There are a few procedures of
management accounting which can be utilized by administration of Unilever plc , these
methods are said beneath :
Cost Volume Profit Analysis(CVP Analysis): Cost volume profit analysis is a
strategy which is utilized by administration of association for deciding the effect of
change in cost of item and its volume on Unilever plc's working income and net income.
Company is required to create an assumption that selling price will stay consistent amid
course of business, assurance of CVP analysis relies on upon the way that cost of
manufacturing is settled amid a given time (Weißenberger and Angelkort, 2011). In given
period actual production overhead, selling cost and administration expense is more than
the planned cost, as aggregate budgeted total cost of these three component was £ 2600
however actual cost is £ 3300.On the other hand Budgeted selection of candidates
through Unilever plc was 600 competitors during a specific era yet the real populace of
enrollment was 700 applicants amid a specific period. Subsequently management
accountant can break down through cost volume profit analysis that how volume of
enlisted applicants impacts the total cost.
Absorption Costing : From the above income statement which is set up according
to strategy for absorption costing all out manufacturing cost per unit of Unilever plc was
£ 19 which incorporates £ 6 for direct material, £ 5 for direct work, £ 3 is for variable
cost and £ 5 reflects to fixed cost allocated on certain basis. As per absorption costing,

company discovers under and over absorption so that the better cost management should
be possible by it
TASK 3
P.4
Budgetary control is the process through which cost control in the organization is
done for maximizing the profit. The process of budgetary control system helps the
management to take maximum use of their available resources by effectively allocating
them. Through budgetary control system the management gets the declaration of of the
policies of the organization therefore it also act as a means of communication between
the employees. This help in increasing coordination's among the different departments of
the organization. Through this system the adverse effects of the changes that take place
are minimized as budget is prepared after analyzing all the relevant factors(Ward, 2012).
There are different planning tools which can be used for sating the different budgets. One
is the cash budget. It is a forecast done on the receipts and cash disbursements. It breaks
down the cash flow of the organization into different time periods like weekly monthly or
yearly. It helps in maintaining control in the organization shows the present cash status of
the company which help in taking the investment decisions to the company.
After knowing the cash capacity long term decisions can be taken which may give
long term benefits to the organization(Fullerton, Kennedy and Widener, 2014). In this
capital expenditure and balance sheet budget is prepared. In this the budgets are related to
to the machinery, short and long term bonds etc. it gives the expected balance sheet that
what will be the balance sheet of the organization if the budget is followed properly. It
has its own disadvantage also which can not be avoided. Once the budget is prepared it is
followed very rigidly which effects the flexibility of the organization. Therefore there are
very few cases when the budget is revised.
Another planning tool is used in the operating budgets. In this planning is done
for making the budgets for sales expense project or the revenues. In this planning is done

for a particular time period and than budgets are prepared for short term projects. There is
an advantage to this planning tool as they set the targets for different departments and
therefore each department work with a clear vision of what is expected out of them this is
an effective tool but not always. Any change in the external environment like change in
the policies, entrance of new competitor etc. will lead to the failure of this budget.
Therefore it will lead to wastage of time as the budget will be than of no use (Håkansson,
Kraus and Lind, 2010).
Though planning facilitates budgets with effective control it becomes difficult to
practically follow them as thy are made on the assumptions about the future which is not
totally predictable. These tools of but control hampers the development of the
organization by removing the factors of innovations and new techniques. Therefore
effective planning tools should be adopted so that if any changes are required in the
monitory or non monitory budgets they can be implemented at the same time which will
help in saving more time and also the cost of making different budgets.
There can be two kind of control, i.e. budgetary control and financial control in
management accounting. Financial plan can be characterized as an announcement for
anticipating of costs over a project. Through it Unilever plc and its administrative group
can choose that the amount of reserve is to be utilized on a specific venture. Budgetary
control help a firm and its area of expertise to organize with each other. It is really a
system through which the planned or anticipated statistical data points are compared with
the actual figures. Through such examination variances, if any, can be controlled
effortlessly and effectively. The distinctive kind of budgetary techniques are specified
beneath :
Master Budget: This is an exhaustive projection through which it can be clarified
that in which way company needs to conduct its business operations for budgeted period.
With the help of budgeted plan, company can identified the money need to be invested in
the certain project. Company requires to relate different spending plans of various
branches of company for planning for preparing the master plan(Dillard and Roslender,
2011).

Operational Budget: It manages income and costs which are connected with
working activities. Continues from sales action is considered as income and the costs
which happened in this procedure are considered as operational costs. These financial
plans are normally separated into different little detailing periods.
Cash Flow Budget: A cash flow budget is prepared in order to handle the cash
flows comes through operational process of business. Management accountants are the
individuals who prepared the cash flow budget to get data with respect to deficit if any in
sales and expenses. With the help of cash flow budget a company can monitor the
movement of money and administration can use such accessible cash better ventures
which can develop better outcomes.
Financial Budget: Financial budget gives a vast view over how Unilever plc gets
supports and where it utilizes such available funds(Van Helden and et. al., 2010).. It
likewise gives data about revenue from fundamental business action and come back from
other capital expenditure. Management of hierarchical resources like building and other
property where a company has contributed its reserve should be overlooked with the goal
that they can give better profit for investment. Management accountants of Unilever plc
can oversee resources and other investments through they can prepare the financial
budget.
Static Budget: A static budget plan contains such components which are not
changed according to the level of sales. cost related with overheads demonstrates a kind
of static budget(Lee, 2011). Unilever plc has certain division which has fixed budget plan
therefore head of such division needs to structure such techniques so that the costs of
department won't go over budget plan. Static budget plans are generally utilized by non
profit organizations and independent company as they have less funds available therefore
they allot a constrained budget plan having a restricted use limit.

P.5
Management accounting gives a few instruments which can help company and its
administration to battle with a few issues which may unfavorably influence. Unilever plc
is dealing with its day by day operations by which there are a few systems of
management accounting can be utilized by management accountant of Unilever plc. It
has been demonstrated that how methods of management accounting which depends on
financial accounting, cost accounting, scientific methods etc. are utilized by
administration of Unilever plc and it has been compared with implications with
management accounting strategies:
On the basis of financial accounting : Management accounting assist the
management if the information uses from the company’s financial statement. Although,
There are certain methods which can be utilized by administration of Unilever plc in
taking right decisions against different obstacles which can influence sustainable
development(Contrafatto and Burns, 2013).
Methodologies which can be utilized by Unilever plc are as per the following :
1.Ratio Analysis: ratio analysis assist the shareholders of the company to
understand the simple statements of various complex numerical financial data. It will
also helps the potential investors for making decisions for investment purpose.
2.Analysis through comparative financial statement : Company can frame better
strategy techniques and effective decisions by contrasting figures of one period and the
figures of other period through which they can explore over any fluctuation so that
explanation behind such changes can be discover and treated appropriately (van der
Meer-Kooistra and Vosselman, 2012).
3.Fund flow analysis and cash flow analysis : fund flow analysis and cash flow
analysis assist the company to know the entire cash movement within the firm and also
make the effective decisions so that the cosh can be managed with most effective way
(Kaplan and Atkinson, 2015).
There are various tools which are used to solve financial problems:

 Key performance indicators: In most of the business concern problem of
financial recording are arises because of inappropriate systems which are used by
the company. The company's performances as well as employees are analyze with
using KPI techniques in its operations.
 Bench-marking: It is another techniques which is used to compare the
performance of one company with the other by applying different accounting
systems. In this process a categories of ranges are set as per the stability of
company during the year.
 Financial governance: It is based on the government rule and regulations which
are set by the legal authorities in relation to industry prospective. Every
organization need to follows according to the rules which are set by the
government.
CONCLUSION
From the above mentioned facts and figure, it has been found that the Unilever
plc can managed their operations thorough various management accounting techniques.
Noe the company follow the lean accounting system which does not only deal with the
cost of production but also assist the management to make the effective strategy. There
are so many tools which had been described. These are marginal costing, absorption
costing and cost volume profit analysis tools assist the Unilever to make the strategy and
according to it make the effective decision for the benefits of the company. It also has
been observed that the company also make effective strategies with the help of
management accounting techniques. These management accounting techniques provides
the reliable information for the company and outsiders as well.

REFERENCES
Books and Journals:
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Online
Cost-Volume Profit Analysis. 2017. [online]. Available through
:<http://www.investopedia.com/terms/c/cost-volume-profit-analysis.asp>.
Accessed on [13th March 2017]
marginal cost. 2017. [online]. Available through
:<http://www.businessdictionary.com/definition/marginal-cost.html>.Accessed
on [13th March 2017]