Strategies for Higher Customer Satisfaction

To achieve higher customer satisfaction, a business should focus on management accounting systems and reporting tools that provide qualitative and quantitative information. Nisa retail store, as a small-scale entity, must emphasize knowing its actual performance to take important financial decisions. The project highlights the use of various management accounting systems and reporting tools in supplying both qualitative and quantitative information. It also states that an entity has earned higher profit by preparing an income statement under marginal costing compared to absorption costing.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Explain management accounting and different types of management accounting................3
P2 Explain different methods used for management accounting reporting.................................5
P3 Prepare income statements using Absorption and marginal costing......................................7
P4 Explain the advantages and disadvantages of different types of
planning tools.......................................................................................................................10
P5 Compare how organizations should adapt management accounting
systems to respond to financial problems................................................................12
CONCLUSION.........................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting’s role has increases with the increasing business complexities of
an entity. Nisa retail store has been selected by an entity which is located in the United Kingdom
which is small scale enterprise deals in grocery business in generating higher business outcome
in the near future. This project is all about defining the concept of management accounting along
with the management accounting reporting systems in conveying important relations related to
the business enterprise. This report also stresses on preparing income statement using marginal
or absorption costing.
P1 Explain management accounting and different types of management accounting
Background
Nisa retail store is located in the United Kingdom which falls under the retail sector as it
is one of small scale entity. This entity operates at narrow level as the initial investment is less
their main motive is to capture the overall market share and various aims and the objectives of
the business. Aims and targets of the external market are imposes on an entity to be completed
within a given time frame as they held liable for achieving the goals to improve their
performance. Small scale entity has more enthusiasm as they are new in the industry who aspires
to accomplish all the tasks in fewer periods in order to get success (Kaplan and Atkinson, 2015).
The study has revealed that small entrepreneur who started their business from zero have gained
higher market share due to its current skills, talent and patience to stay for long time struggling in
the market. The challenges of small scale entity will be managed by using various techniques and
tools of the management accounting. Budgets used by an entity will help in predicting its future
performance after considering the current financial resources held in the business for longer
period.
Major concern of the management is to recognize ts current costs in the business as their
major objectives are cut down its available costs. Cost cutting strategies are prepared in order to
generate higher amount of sales and the revenue for an enterprise as this helps in improving
overall performance of an entity. Management accounting is regarded as on one of the important
process which includes several steps in improving the overall business performance with the
passage of time (Renz, 2016). It includes sourcing, analysis, communicating. The certain areas of
the business are identified which requires help in accomplishing the desired aim's and the

objectives of an enterprise. The information is classified into two major categories such as
financial as well as non-financial information analyses by the management accountants in an
enterprise which will be conveyed to the management. Top management is highly concerned in
knowing its financial condition along with the performance of all the employees working in an
organization.
Alignment among financial performance and all the employees will be created that helps
in reaching the final outcome in terms of reasons to rectify the current performance of an entity.
Employees working in an enterprise will accomplish desired tasks of the firm which helps to
generate higher sales and the revenue of an entity which indirectly increases the profit and
stabilize the financial performance of Nisa retail store Ltd located in the United Kingdom.
Types of management accounting systems
Cost accounting systems- Every business wants to earn profit as their basic aim of establishing
he business is profit element. Reducing cost in an enterprise in turn increases the income and
profit of the business. Cost reduction strategies are prepared by an entity in order to improve the
quality of the all the services delivered by an entity to end consumers. Cost can be ascertained by
an individual by using various techniques like marginal and absorption costing systems which
will consider all kinds of costs of an entity in improving the business practices. The focus of
these statements lies on ascertaining costs in order to generate higher sales and the revenue of an
enterprise (Otley and Emmanuel, 2013). Marginal costing stat will emphasize on only variable
cost in developing the price of product supplied by an entity to its variety of customers.
Absorption costing sheets on the other hand used to determine the actual cost incurred by the
business enterprise. This kind of costing considers both kinds of costs such as variable as well as
fixed costs while developing all the products or services of an entity. Being a small scale
enterprise, Nisa retail store is required to know its current level of costs in order to devise various
strategies in improving the quality of services offered by them to its different customers. Initial
investment made by an entity is less that shows its inability to handle the heavy pressure of all
kinds of costs in an enterprise.
Inventory management systems- Inventories are important part of an organization that needs to
be managed in order to achieve the desired aims and the objectives of an enterprise by utilizing
all inventories I the business in generating higher sales and the revenue for an entity. Current

inventories of Nisa retail stores needs to be tracked as it helps an entity owner in order to utilize
their idle inventory without purchasing new one. Proper stock ledgers will be prepared which
will keep record of each and every inventories Sold or purchase by an entity. Wastage of
inventories will be avoided in order to increase the performance of an entity as customer
satisfaction will be improves with the passage of time.
Inventory management software will be used by an entity in which inventories are
prioritized according to their nature in an organization to help an individual to purchase the right
products according to their own choice and tastes and preferences of all the customers of Nisa
retail store Ltd (Otley and Emmanuel, 2013). FIFO method will be uses which stands for first in
first out method in which inventories purchased firstly in the firm are sold first in order to reduce
the warehousing cost of saving all the inventories in the organization for long time till gets sold.
Another method of evaluating the inventory's sis LIFO which stands for last in first out method
in which lastly purchased materials sold first to sells of the stock without piling up in the firm for
long term in order avoiding future consequences. Weighted average cost will be used as one of
the inventory's management software in managing the current inventory in which the sales price
will include the combination of all sale prices on the weighted average cost to be charged from
the customers.
P2 Explain different methods used for management accounting reporting
Top management keep track on all its business practices included in its firms in order to
achieve its desired aims and the objectives within a given time frame. Reports are supplied from
lower management employees to the top management in order to convey important
announcements or any kind of default occurred in the business. Managerial accounting reports
will be helpful for small business owners like Nisa retail stores which are small based retail store
located in the United Kingdom in order to fulfill desired needs of its regular as well as potential
customers on an enterprise (Yigitbasioglu, 2017.). Managerial reports are prepared in order to
keep track on all the activities takes places in an entity as this is regarded as the monitoring and
supervising tool in order to ensure higher productivity of the business organization.
Being a small scale entity Nisa retail store is required to give emphasize on all its
business activities in order to generate higher outcome within a given deadline as time sensitivity
will determine the success or failure of an entity which needs to be improved with the passage of

time. The performance of an entity will be determined by an entity owner in various time frame
such as monthly, quarterly and yearly in order to take advantage of its external market. There are
various kinds of management accounting reports prepared by an entity owner in its overall tenure
of a business:
Budgets- Traditional systems of an enterprise is budgets which will includes all kinds of
financial resources in these statements to predict the future performance of an enterprise. The
performance of Nisa retail store will be analyzed using various parameters such as quality,
services offered by an entity, customer satisfaction as all these parameters defined the nature of
the business in relation to external market aims and targets that needs to be completed in a given
time frame. The manager of Nisa retail state classify all heir store into various departments
which helps in keeping track on the individual performance of singular departments such as
product department, financial head, inventories ledger. All the components of an entity are
assessed at the year end according to the external market aims and objectives as their desired
motive is to accomplish all the tasks and duties in order to enhance the overall performance of an
entity (DRURY, 2013). There are various categories of budgets prepared in an entity like Nisa
retail store in order to improve its overall performance by recognizing all its weaknesses in a
given time period along with the application of various tools and techniques to rectify the
weaknesses of an entity. Budgets play dual role in the business as it is act like a forecasting too
as well as acting like a monitoring and controlling business function to keep track on all business
activities in order to identify the deficiency lies in the system. The recognized deficiency is
essential in order take corrective action in order to enhance the overall performance of an
enterprise.
Sale budget- It is prepared by an entity in order to ensure its higher productivity as in these
particular stage sales units are predicted by an entity owner along with specific sale price to
ensure its increased capabilities (DRURY, 2013). The decision taken in the budget is assessed on
the current market performance of an entity on this basis its future performance is evaluated by
determining the sales units. The sales units are decided after analysis the current capability of
Nisa retail store in order to think about it future sale.
Particulars Year 1 Year 2 Year 3
Sales units 1000 2000 3000

Sale price 35 35 35
Sales in value 350000 70000 105000
Inventory and manufacturing- Inventory plays a significant role in the business as raw
materials are transformed into finished goods which will be sold to all the customers in the
external market. An entity owner is required to keep track on all its business activities in order to
generate higher market returns in the future as current inventories kept in the business for
utilizing overall business functions. Alignment is formed among available inventories in the
organization with the tasks and duties of an entity that helps in improving the quality of all the
inventories in an entity. Physical inventories are checked by an entity owner by observing all the
inventories in order to ensure its idleness in a firm as without utilizing current resources an entity
will not able to use newly purchased resources which increases the overall expenditure for an
enterprise. The inventory's management software is used by an entity which will be monitored by
an employee appointed in the organization to analyze the effectiveness of all the inventories
included in the business (Ball, Kothari and Robin, 2000). All these inventories included in the
firm are further utilized by an enterprise with the passage of time in accomplishing various tasks
and duties. For Nisa retail store inventories are regarded as input which will be processed in
order to generate higher outcome for an entity owner. Inputs are sold to customers using various
marketing tools and technique which helps in generating higher outcome for an enterprise in
terms of increased profits of an enterprise.
Labor efficiency reports- Workers and employees are appointed in an organization in order to
accomplish the desired aims and the objectives of an enterprise in less period as compared to all
the competitors of the business. The performance of all the labors are assessed in various factors
such as hourly wages, units wages as the efficiency of all the labor is regarded as the important
factor in generating higher revenue for an entity like Nisa retail store which are small scale entity
operating in the external market needs to improve their overall business. Costs given to all the
labors are analyzed in relation with its contribution in selling all the products in the business.
P3 Prepare income statements using Absorption and marginal costing
Marginal costing- This costing is renowned as variable costing which consider each and every
changes takes places in the external market in the current business of an enterprise. Variable

costs are only considered by an entity which is the reason behind increasing profit of an entity.
This costing are considered only variable costs that helps in enhancing the current market share
enjoyed by the firm by offering variety of products or services in the external market. Marketing
costs incurred in the business is falls under the category of variable costs as it is done to increase
the sales and the revenue of the firm as in these approach customers are attracted towards the
business in order to generate higher outcome for the business entity.
It is usually preferred by this entity owner who gives more emphasizes on the variable
cost of an entity which is affecting overall performance of the corporation. Variable cots are
highly related with the sales and the revenue of the organization which needs to be reduces in
order to enhance the current sales and the revenue of an entity (DRURY, 2013). This is one of
the important concepts of managerial accounting technique that enhances the role of current
business in relation to the external market aims and the objectives. Manufacturing overheads are
considered in the current statements in which production overheads are used by the business in
utilizing all the concepts that suits the certain business areas. In this costing the efficiency of e
overall business will be increases by following all the hidden aspects of organizations.
Illustration 1: Income statements under marginal costing

Absorption costing- It is that kind of costing system in which both kinds of cost will be
considered by an entity such as fixed as well as variable cost in order to determine the actual cost
incurred in the business. The ascertainment of actual cost is essential as this helps in improving
overall business of an entity as main motive of an enterprise is to reduce its overall costs by
increasing income of the business.
Illustration 2: Calculation of per unit cost
Illustration 3: Income statement under absorption costing

In absorption costing fixed costs are absorbed on the basis of sales unit included in the
firm in order to bring the true effect on the financial performance of an entity in relation to the
external market threats and challenges faced by an entity currently (Chiarini and Vagnoni,
2015). This is also regarded as the complete and full costing systems which are highly efficient
method in developing the prices of goods or services of an entity. The pricing of all the products
or services of an entity are developed by using appropriate technique helps in improving the
current performance of an entity in order to grab larger market share by enhancing the overall
customer satisfaction. Various factors that increases the customer satisfaction are utilizes in
designing the prices to create good brand image of the business in the external market. The profit
generated by an entity under absorption method is less than compared to the marginal costing.
The reason behind less profit is inclusion of both kinds of costs considered by an entity in the
development of prices of products or services.
P4 Explain the advantages and disadvantages of different types of planning
tools
One of the important functions of the management is planning in which all the existing
financial resources are analyses in order to generate higher outcome by an entity owner.
Management accounting tools and techniques are used by an entity owner in order analyses its
current resources by predicting future performance of the business. The future performance of an
entity is important to know in advance as this would help in generating higher outcome in the
future by enhancing the existing skills and the capabilities of an organization. Planning is rough
plan prepared by an entity in order to guides their actions in moving ahead in the near future to
facilitate its variety of users (Chiarini and Vagnoni, 2015). There are various planning tool and
techniques adopted by an entity owner in management accounting especially used for planning
purpose:
Financial statements analysis
This regarded as one of the important planning tools which is a particular tool used to
review and analyze the financial statements of an entity. An entity determines its financial
performance in a particular year by preparing particular financial statements. Standard limits of
the financial statements include income statements, balance sheet and cash flow statements of an

entity to determine the financial performance of the business organization to maintain good
financial position in an enterprise.
Advantages
Evaluating financial risks-Financial risks will be ascertained by an entity as it helps in getting
good position in the external market.
Assessing financial position- Business health of an enterprise can be improves with the passage
of time by adopting two important techniques such as horizontal as well as vertical analysis of all
kinds of financial statements of the business. In this particular method each and every
components are compared with the previous year of an entity.
Disadvantages
Historical information- Financial statements prepared using historical information will deflate
an entity's actual performance
Standard costing- The focus of an entity is on framing new standard which are used to compare
the actual performance of an entity. This is kind of costing is highly similar with the important
function of the management that is controlling function of the management of Nisa retail store.
Being a small scale entity Nisa retail controlling of all business activities is essential as without
controlling activities conflicts will be created in an entity that creates lots of problems for an
enterprise (Chow and Van, 2006). It is regarded as one of the important process under which
standards are prepared by an entity owner in order top judge its current business performance. It
has various categories such as materials, labor and overheads that are common aspects of an
organization. The efficiency of each and every components of the business in order to get
competitive advantage over its variety of competitors takes places in the external market. The
benefit of using standard costing is to recognize the capabilities of an entity in advance in order
to improve the overall performance of an entity. This technique is also useful in formulating
price of all the products or services offered by an entity to its variety of customers located in the
external market.
Marginal costing- It can be also regarded as another name as performance costing as this give
more emphasizes on the performance of an entity. This kind of costing is useful approach for
ascertaining marginal cost incurred in an entity for using additional unit in the business.
Advantages

Ascertaining marginal cost- Marginal cost in an economic concept that shows that how an
additional unit manufactured by an entity can affect its overall performance of an enterprise in
affecting overall sales and the revenue of the business.
Value generation- The focus of an entity is on the value generated by an enterprise by
increasing current sales volume.
Showing cost relationship with final outcome- This kind of costing reflect the different two
important costs that is both fixed and variable cost incurred in an enterprise in order to determine
the final outcome generated by every entity to earn higher profit of the business enterprise.
Disadvantages
Over dependence on assumptions- Marginal costing depends on several assumptions in order
to achieve the desired aims and the objectives of the corporate determine in the initial phase of
the business (Chow and Van, 2006). These assumptions include total variable cost directly
proportion to the sales units of an enterprise. Selling price per unit remains the same and things
produced by the firm will fully sold by them in a particular financial year.
Budgetary control- Budgets are prepared by an entity in order to predict the future performance
of an entity after analyzing all the current financial resources held in the business for long time
as one of the asset of the business. Budgetary control need to be emphasized by an entity owner
in regulating the current financial resources of an enterprise that helps in generating higher
outcome of the corporation within a given time frame. Budgets are prepared by middle managers
in order to ensure higher productivity of an organization as this would help in generating higher
outcome in the near future. Budgeting is on of the important tool used by an entity owner in
order to monitor the current financial resources of an enterprise which are controlled in the
business in order to ensure higher performance of an enterprise. All cost and income are
enhanced by an entity as major aim of an entity is reduce current cost incurred in the business by
increasing the available income of an enterprise (Chow and Van, 2006). Various ways of income
are increases by predicting the future performance of the corporation such as quality of services,
higher level of customer satisfaction gained by an entity in the future by delivering its variety of
products or services.
Cash budget- It is that particular statements prepared y an entity in order to determine the
position of cash in the business to meet all kinds of short term market obligations.

Advantages
Liquidity- It helps in maintaining higher level of liquidity by using various sources of cash in
improving overall performance of an entity.
Increasing investments- Higher surplus generated in cash in an enterprise will be invested into
business in order to generate higher outcomes in the near future.
Disadvantages
Data manipulation- Cash budgets prepared in an entity can be manipulated as mangers will do
not want to reflect its negative performance in front of ll the shareholder's in the external market.
P5 Compare how organizations should adapt management accounting
systems to respond to financial problems.
Financial problems of an entity is the biggest threat for an entity that creates lots of
problems for an enterprise that needs to be improved with the passage of time as it is essential to
keep on track on the current business activities. There are various ways used by the management
in order to rectify the financial problems of an entity which is given as below:
Benchmarking- It is regarded as one of the important performance metrics used by an entity in
order to overcome all the financial problems currently faced by an entity like Nisa Retail store.
This particular process is used to improved the performance of an entity as this approach higher
standards of the overall retail industry is used to compare the overall performance of all the
employees of an entity (Choi, Kulick and Mayer, 2009). This kind of method gives preferences
to several parameters such as quality, time factor and cost incurred in the business. In this kind of
tool the singular productivity of an employee are improved by aligning their performance with
the best retail sector companies who have performed better in the tough times which inspires all
the employees working in a same industry to reach that status and tries to surpass that level in
order to maintain their own record.
BPR- It is an acronym that stands for Business process re-engineering in which whole process
has demolish from beginning till the end of the process in order to improve the current
weaknesses lies in the process. The consent of all the employees working in an entity are taken in
order to realize the problems faced by them while working and then owner will decide to
radically re-redesign the overall process by considering each and every problem currently faces

by an entity in the business in rectifying all the weaknesses to generate higher sales and the
revenue for an enterprise.
KPI- Key performance indicators used by an entity owner in considering all the weaknesses of
the business as targets to be achieved in order to secure a strong position in the external market
to capture higher customer’s base and competitive position among all the market rivalries (Choi,
Kulick and Mayer, 2009). Customers are given more preference by meeting their desired aims
and targets which is the major outcome of the business in getting higher customer satisfaction.
CONCLUSION
It can be concluded from the above assignment that an entity need to give emphasize on
various tools and techniques of the management accounting. Nisa retail store being a small scale
entity give more emphasize on knowing its actual performance in order to take important
financial decisions in the business such as rectifying all the variances incurred in the business
activities. This project is all about explaining various management accounting systems and
reporting are used in supplying both qualitative as well as quantitative information included in
the business enterprise. This states that an entity has earned higher profit by preparing income
statement under marginal costing as compared to the statement prepared under absorption
costing.

REFERENCES
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Online
Sales Volume Variance, 2013. Available through: <
http://accountingexplained.com/managerial/standard-costing/sales-volume-variance> [Accessed
on 8th April 2017].