Management Accounting Roles in Controlling Business Activities

The provided assignment content appears to be related to the role and importance of management accounting practices, particularly in the context of Mark & Spencer. The content includes excerpts from academic articles and online sources, as well as a series of statements seeking feedback on various aspects of management accounting. It seems that the objective is to evaluate the effectiveness of existing frameworks for management accounting and its potential applications in controlling expenses, making decisions, and preparing strategic plans.

DISSERTATION

ACKNOLEDGEMET
I am thankful to all those friends and relatives that help a lot in completing research study. Apart
from this, I am also thankful to my teacher who give me proper guidance regarding preparing a
research report. Without support of friends and teachers it was not possible to complete this
dissertation. It is there guidance and efforts that help me in understanding and completing
research study in systematic way. Finally, again I extend thanks to all those who support me in
completing research study.

ABSTRACT
Management accounting is the one of the most important discipline that helps managers in
costing accounting. There are varied tools and techniques in the mentioned discipline that are
used to control and curtail cost at the workplace. In this report different aspects of management
accounting are discussed ranging from their framework to varied technique’s and there
application in business. Data in respect to people views on relevant aspects of management
accounting are collected from the people. Same are analyzed by using thematic analysis.
Analyzed results are clearly revealing that management accounting tools greatly helps managers
in cost control and curtailment. Hence, it is very important to use these tools regularly with full
caution as business decisions are made on the basis of output of same.

TABLE OF CONTENTS
CHAPETER 1: INTRODUCTION..................................................................................................6
Research aims and objectives.................................................................................................6
Research questions.................................................................................................................7
Research Rationale.................................................................................................................7
Significance of research.........................................................................................................8
Structure of report...................................................................................................................8
CHAPTER 2: LITERATURE REVIEW.......................................................................................10
CHAPTER 3:RESEARCH METHODOLOGY............................................................................19
3.1 Research introduction and overview..............................................................................19
3.2 Research type..................................................................................................................19
3.3 Research design..............................................................................................................20
3.4 Research approach..........................................................................................................21
3.5 Research philosophy.......................................................................................................21
3.6 Data collection................................................................................................................22
3.7 Sampling method............................................................................................................22
3.8 Data analysis...................................................................................................................23
3.9 Research limitation.........................................................................................................23
CHAPTER 4: DATA ANALYSIS................................................................................................26
CHAPTER 5: CONCLUSION......................................................................................................41
APPENDIX..................................................................................................................................................48
Figure 1 Framework of management accounting..........................................................................24
Figure 2 Role of management accounting in helping managers in formation of plan in respect to
cost control and curtailment...........................................................................................................25
Figure 3 Role of management accounting in controlling expenses...............................................26
Figure 4 Respondents response on relationship between management accounting and inventory
management...................................................................................................................................27
Figure 5 people opinion on the extent to which management accounting play an important role in
the control of indirect expenses.....................................................................................................28

Figure 6 People opinion on the role that management accounting play in solving problems
related to varied business activities in the firm.............................................................................29
Figure 7 Score keeping as part of management accounting and decisions related to different
business activities..........................................................................................................................30
Figure 8 People response on extent to which it is very difficult to set standards for the budget. .31
Figure 9 People response on difficulty faced by managers in setting parameters in the budget and
performance of control function of management..........................................................................32
Figure 10People response on methods that can be adopted to reduce difficulties that are faced by
managers in preparing a budget.....................................................................................................33
Figure 11 Role of management accounting in attracting attention of managers towards sever
issues..............................................................................................................................................35
Figure 12 People response on role that management accounting play in providing useful inputs
that can be used to form corporate strategy...................................................................................36
Figure 13 People response of role of management accounting in forecast of different things by
making use of its techniques..........................................................................................................37
Figure 14People comment on modern and traditional method of accounting...............................38

CHAPETER 1: INTRODUCTION
Management accounting is one of the most important domain of the business
management. Currently, most of company's whose size is medium or large are appointing cost
accountants who perform varied operations related to management accounting. There are number
of techniques of management accounting that helps firm in evaluating different things. In present
time period competition is increasing at fast pace among the firms irrespective of industry to
which they belong. Price is one of the most important factor on which firms are in front of each
other in the market. Hence, it is very important to utilize resources efficiently along with
maintaining stiff control on cost. Thus, it is clear that management accounting affects or is
related to different business activities (Managerial accounting purpose and roles, 2015). Due to
all these things the role and function of management accounting is the main area on which this
research study will focus. In this report critical issues related to management accounting will also
discuss in detail. Some techniques and there use in respect to varied business activities will be
discussed in the report. Management accounting is one of the most important analytic tool that is
used for deep analysis of the firm business operations. The importance of management
accounting can be understand from the fact that by using information relevant to MA planning is
prepared by the managers. By preparing sound plan resources are used in efficient and effective
way. Budgeting is another important thing by using which business firms are controlling there
expenditures and measuring business performance. So, there are multiple techniques of
management accounting that play a significant role in assisting firm in performing its business
operations in the best way. It is very important to understand some issues that are associated with
use of management accounting techniques. By identifying relevant issues and addressing them
the best use of methods can be made by the business managers (Herman, 2011). It can be said
that this report will not only throw a light on the importance of management accounting but will
to some extent draw attention on issues related with same. Thus, it can be said that present study
will help reader in understanding different aspect of management accounting.
Research aims and objectives
Research aims and objectives are the two main elements or factors that give proper
direction to the specific research study. On the basis of determined direction in which research
must be carried out study can be conducted in better way. The aim of the present study is “To

evaluate the role of management accounting in the functioning of the business activities”.
Research objectives to achieve aim are as follows:
 To critically evaluate the model that is followed to perform all operations related to the
management accounting in real business world.
 To evaluate the functions of management accounting in respect to varied business
activities
 To examine the role of management accounting in growth and success of business
activities
Research questions
Research questions are one of the most important tool that helps in structuring the
research analysis to achieve best results from the study. It is a tool that helps firm in doing deep
analysis of issue that in respect to research topic is currently faced by relevant people. Research
questions related to current research study are as follows:
 What are the different functions of management accounting in service sector units?
 What is the role of management accounting in making effective business decisions?
 How management accounting does helps in business functioning for different
organizations?
Research Rationale
Management accounting is one of the most important effective tool that is used to
measure performance of the business firm from different sides. By using management
accounting methods areas where improvement needs to be made can be identified. Business
firms face multiple problems like elevation in expenses and decline in profitability (Bennett,
Schaltegger and Zvezdov, 2011). All these issues can be handled by using management
accounting methods. It was necessary to conduct research on management accounting so that the
scope of its use and effectiveness can be identified. Apart from this it was also very important to
identify and analyze the development aspects in accounting aspects of businesses which will help
the companies in analyzing the critical issues regarding management accounting discipline.

Significance of research
There is great significance of present study because it helps in analyzing different aspects
of the management accounting. In the present study different roles of mentioned sort of
accounting will be discussed in literature review section. Along with this, functions of same will
also be discussed in the mentioned section of the report. Data collected will be analyzed and
same will help readers in understanding extent to which management accounting helps managers
in performing different functions of the management. There are some issues that are associated
with use of management accounting methods. Same will also be addressed in systematic way in
the report. Hence, it can be said this research study have lots of significance because in same
management accounting will be analyzed from different sides in systematic way.
Structure of report Introduction- Current research is carried out on the management accounting and its use
in respect to different activities of the business. Introduction is the first section of the
report in which in relation to management accounting brief discussion will be carried out
in respect to function and role of same in respect to varied business activities. Literature review- It is second part of the report and in this different aspects that are
related to management accounting are described. Different author’s state varied things in
relation to management accounting. Same are considered to prepare literature review
section of the report. Critical analysis will be made in this section of report by comparing
thoughts of different scholars in respect to specific aspect of the management accounting. Research methodology- This is one of the most important part of the research study and
in this section of the report information is provided about the way in which research will
be conducted (Zimmerman and Yahya-Zadeh, 2011). In this section of the report, various
things related to approach that will be followed for conducting relevant study are
discussed in detail. Along with this, sample size of respondents and technique that will be
employed in respect to data analysis are also decided and described in this section of the
report. Data analysis- As mentioned above that in research methodology section data analysis
method is determined. In this part of the report data that is collected for research are
analyzed by using appropriate method. Facts that are collected in the research can be
analyzed by using statistical tool or thematic analysis. Out of these methods thematic

analysis will be done in the research by analyzing data that is obtained by distributing
questionnaires among the respondents.
 Conclusion and Recommendations- After completing data analysis section of the report
conclusion and recommendation section of the report will be prepared. In order to prepare
relevant part results of analyzed data and literature overview will be considered.

CHAPTER 2: LITERATURE REVIEW
Framework refers to the supporting structure of a system. In management accounting
there are number of employees that works at different level. A huge structure is placed in the
business firms and under same different process of management accounting are performed. It is
very important for the business firms to make sure that there framework related to management
accounting is flexible and is allowing employees to perform their operations very smoothly.
According to Bowen, Call and Rajgopal, (2010) management accounting basically contain a
specific procedure that is followed for creating and computing a cost. Apart from this, it is also
used to compute and gather data related to product quantity and time-based information in
relation to number of units produced in the firm and resources employed to produce same at the
workplace. There are different stages in the framework that are followed for gathering and
computing relevant data. There are specific number of employees of the firm that play an
important role in the organization in respect to collecting and processing relevant data. In the
large size framework it is internal audit department which is responsible to make sure that
control parameters that are determined in respect to varied business activities are strictly
followed by the firm. Under this framework there are experts like cost accountants that are
responsible to process relevant facts and figures that are made available by the junior accountant.
Cost accountant by using accounting tools and techniques generate meaningful tables that are
used to make business decisions.
As per views of Li and et.al., (2012) it is tax department experts in the framework that
also play a very important role in helping cost accountant in determining control parameters. Tax
department play a very significant role in ensuring that firm is following all relevant rules and
regulations related to tax. Employees that operate in the tax department take participation in
planning, control, and evaluation of processes and identify that if expenses will be made within
specific limit than what can be tax amount. It can be said that current framework that is used in
the business firms are focusing on segregation each and every work from each other. Moreover,
each task in framework is allotted to individual person.
Englund and Gerdin, (2011) claims that it is very important to make sure that framework
that is in the organization is very sound. This is because framework is nothing but a series of
steps that are usually followed in relation to management accounting at the workplace. In some

firms clear process for performance of each and every step in framework is not determined.
Hence, firm failed to achieve maximum benefit of framework that in respect to management
accounting at the workplace. Hence, it is very important for the firms to make sure that they not
only developed a framework but it is also effective and there are no issues in respect to same at
the workplace. Management accounting helps in preparing a plan regarding cost control and
curtailment.
Cost is the word today on which each and every firm of the world is focusing. This is
because competition between the firms is increasing. They cannot increase sales price every time
to increase their margin on sales. Hence, it is very important for the firm to maintain stiff control
on cost. Thus, it becomes very important to make sure that adequate data related to cost is
gathered and arranged in systematic way to evaluate cost of product. According to Richardson,
(2012) management accounting helps in preparing a plan that can be used in respect to cost
control and curtailment. This is because in management accounting each and every type of cost
is computed and by using same varied calculations are done. Techniques of management
accounting evaluate costs in different ways and give overview of cost of production and
expenses that are incurred by the firm in its business. Business managers on the basis of output
of calculations comes to know about costing of product and use same to craft business strategy to
control and curtail cost.
Contrary to this Malmi, (2010) state that mere preparation of accounts by using
management accounting concepts is not sufficient because by using same firm performance can
be measured. But it does not reflect that what sort of strategy in respect to cost control must be
formulated by the firm and in which direction. Hence, it can be said that merely by preparing and
analyzing accounts no one can prepare accurate cost control tactic. In this regard, managers
needs to evaluate lots of things. Like they need to evaluate probable changes that may occur in
the business environment and extent to which it may affect the cost of production. They also
need to evaluate their future production and sales related policy. By using same they can estimate
cost. Merely by evaluating a figure of management accounts managers can prepare a cost control
and curtailment strategy but they cannot justify that tactics on ground of probable changes that
may take place in the business environment. Hence, it can be said that use of management
accounting for preparing cost control and curtailment strategy is not sufficient.

Variance analysis is the one of most important technique of the management accounting
that is used to identify whether expenses made by the firm are greater or less than the determined
standard. In case expenses are more than standard value then it means that firm failed to give
good performance in its business. Arroyo, (2012) claims that management accounting play a
very important role in controlling expenses. This is because in variance analysis method standard
value of all expenses is determined by the cost accountant. By comparing actual and standard
value of expenses performance of the firm is measured. Thus, management accounting play a
very important role in controlling expense at the workplace. There is entire system that is placed
in the organization to maintain check on elevation in expenses. If this regard in some companies
for three month budget is prepared and value of all expenses is determined. Beyond determined
value expenses must not incurred. At end of each month or week evaluation is done and on that
basis tactics for upcoming time period is prepared. By doing so firm successfully maintain strong
control on its expenses.
As per views of Hopwood, Unerman and Fries, (2010) there is no doubt that management
accounting play a very important role in controlling expenses but no one can take guarantee that
it will be equal effective in controlling expenses. This is because variance analysis is prepared by
comparing actual expenses with standard value of expenses. In case if firm will determine wrong
amount as standard as variance analysis will product wrong results. It can be said that business
decisions if will be made on the basis of results then wrong business decisions will be made by
the managers. Thus, it is very important to consider number of factors while determining
standard value of expenses. In this regard, managers can evaluate pastime variance analysis
results and along with this detail study of likely changes that can happen in business environment
can also be done. By evaluating past and present better decisions can be made by the managers in
respect to determination of standard value of the expenses.
According to Caglio and Ditillo, (2012) by making use of management accounting
information decisions related to the inventory management are taken by the managers. This is
because on the basis of information provided by the accounts related to management accounting
managers come to know about the inventory that they purchase in earlier months. They also get
an information about the amount of inventory that remain unused at end of the month. Hence, on
the basis of entire information managers can determine that what quantity of raw material firm
must purchases in specific time period in order to meet its needs. Thus, by placing order for

purchase of raw material according to quantity that is estimated on the basis of management
Accounts Company can abstain from bearing inventory storage cost. Hence, it is clear fact that
management accounting play an important role in efficient inventory management at the
workplace.
As per view of Kachelmeier and Williamson, (2010) management accounting play a very
important role in controlling indirect expenses at the workplace. This is because in management
accounting facts related to direct and indirect expenses are recorded in systematic way. In case
indirect expenses are increasing at the workplace then management accounting information can
be used to make business decisions. This is because by using past months accounts it can be
identified that in which month’s expenses increases at rapid pace. Hence, managers after
detection of unusual trend identify the reasons due to which such a high increment in expenses
comes in existence. After identification of reason that is responsible for increase in expenses
solutions are identified that can be adopted to control traction in expenses in next time period.
Contrary to this Papaspyropoulos and et.al., (2012) states that it is not necessary that
always management accounting helps in controlling expenses. This is because by using accounts
it can be identified that which expenses are increasing at rapid pace but reasons cannot be
identified merely by evaluating a value. It is the knowledge of management accounting and his
understanding about the business that is used to identify reasons responsible for elevation in
expenses. It is possible that managers identify or estimate factors that are not actually responsible
for traction in expenses. In case if this really happen then business decisions in respect to control
on indirect expenses can be made in wrong direction. Hence, it is clear that only by using figures
of management account cost control decisions related to indirect expenses cannot be made by the
business firm.
It is well known fact that in management accounting record of each and every type of
expenses is kept by the firm. Managers by evaluating them can identify trend. As per views of
Cuganesan, Dunford and Palmer, (2012) it is trend that helps managers in making prediction. It
is very important to identify and analyze the actual trend that in the business. This is because by
doing so accurate prediction can be made in the business. It is well known fact that in
management accounting final value of each expense is recorded. By using varied analytic tools
the pattern in which specific expense value is increasing can be determined. Thus, by using same

prediction can be made about possible increase that can take place in direct and indirect
expenses. On the basis of prediction standard value can be determined for each and every
expense. Hence, it can be said that such kind of analysis can be used by the managers for making
business decisions in respect to varied business activities.
Contrary to this Håkansson, Kraus and Lind, (2010) there is no doubt that by making use
of management accounting information prediction about likely changes that may happen in the
expenses can be made. There is no guarantee that estimation made by the managers are accurate.
It is possible that expenses that are estimated by the firm cross the determined standard. It is not
necessary that always past repeat itself because new trends can also come in existence in to
business. Hence, managers with full confidence cannot rely on estimations that are made by them
in respect to expenses. Thus, it can be said that relevant entity must make use of past years
figures for making a prediction. Managers must also make an estimation about possible changes
that may happen in the business environment. By using both sort of information managers in
respect to different business activities can determine the standard value within which expenses
must be made in the business.
Setting a standard under budget is a very tough task. As per views of Setthasakko, (2010)
it is very difficult to determine appropriate value as standard in the budget. This is because year
by year situation get changes and it is not possible to make use of past data for preparing current
year budget. There are varied methods that can be followed to prepare a cash, sales and
production budget. Managers often consider past year figures to determine budget for current
time period which is not completely right approach. This is because it is the fact that present time
will be different from past but its degree will not be very high for the business firm. Hence, past
year budget figure can be taken in to consideration but only to some extent. Those who are
preparing a budget for the firm must have taken in to account past year figures and changes that
they think can take place in surrounding business environment. By using this approach difficulty
that managers face in determining the values of components of budget cannot be eliminated
completely but same can be reduced to some extent.
Merchant, (2012) claims that in order to reduce difficulty that managers face in
determining values for the budget zero based budgeting method can be used by the business
managers. The approach that is followed for preparing zero based budget is very different. This

is because in this approach managers of different departments prepare budget for same. On the
basis of all departments budget final statement of same is prepared for entire firm. Department
heads have to give valid logic to the top managers that they use for preparing a budget. Hence, it
can be said that in zero base budget a systematic approach is followed and by using same
difficulties that are faced in preparing same can be reduced to great extent.
According to Quinn, (2014) difficulties that managers faced in preparing budget is a big
issue that is related to the use of budget for performing control function of the management. This
is because it has been seen normally that some managers find it hard to determine values in the
budget by considering number of factors. In such a situation sometimes they set wrong values for
the components of the mentioned statement. It is well known fact that after preparation of budget
main objective of the firm is to make all expenses within limit that is determined in the budget.
By doing so control function is performed. In case if wrong value will be determined in the
budget then it is not possible to perform mentioned function in systematic way. This is because
in budget value of operating expenses is determined as 1, 00,000 which is not appropriate. Actual
expenses are 2, 00,000 and in this situation managers will make interpretation that firm give poor
performance. It was mistake of manager that he determine wrong value, he must at least set 1,
80,000 as value of operating expenses in the budget. Thus, it was the issue which is difficulty in
setting a value for the budget due to which relevant person failed to make accurate estimation of
operating expenses in the budget.
According to Bouten and Hoozée, (2013) in order to reduce difficulties that managers
faced in preparing a budget past year's growth rate can be considered. It is well known fact that
every year sales and expenses elevate at specific growth rate. Big change does not come in this
growth rate on yearly basis. Thus, by making use of growth rates to great extent accurate
prediction can be made in the business. In case most of the year’s sales grow at 5% then it can be
assumed that in upcoming year also same trend will continue and sales will grow at rapid pace.
Same concept can be applied on expenses. The plus point of this method is that expenses cannot
increase or decrease by high percentage suddenly. Hence, by using this method reasonable
values can be determined in the budget. By doing so issue of difficulty that management faced in
preparing a budget can be solved easily.

As per views of Kihn, (2010) managers in order to determine appropriate value for the
budget can evaluate the reasons that were responsible for variance in the budget. Along with
these managers can also evaluate the business situations that were prevalent in relevant time
period. After, evaluating all these things managers can make an estimation about changes that
may happen in the business environment. Hence, on the basis of estimation they can determine
the value for the budget. Hence, in this way issues that are associated with preparation of budget
in respect to performance of control function can be addressed in systematic way.
Management accounting has great importance for the business firms because by using
same performance of the firm is evaluated from different sides. According to Wu and Boateng,
(2010) some techniques of management accounting help firm in evaluating its performance like
budget and variance analysis. By using variance analysis managers identify the areas where firm
give poor performance. Some times by using this method those areas in which company
performance is worst and needs immediate action are identified. Hence, it can be said that
management accounting play a vital role in attracting attention of managers towards the areas
where immediate action need be taken from there side in order to handle specific situation.
As per views of Jinga and et.al., (2010) by taking action on business activities where
performance is the worst weak point can be converted in to strong point and core competency
can be developed in the business. It can be said that if statistics provided by the management
accounting will be used in right way than lots of positive changes can be bring in the business
and its growth rate can be accelerated. Thus, mere preparation of accounts under management
accounting is not sufficient. Decisions taken on the basis of management accounting information
matters for an organization.
Business process in respect to production and inventory management refers to the steps
that are performed in respect to production of goods and services. On other hand, in case of
inventory management business process refers to the steps that are followed from procurement of
raw material to storage of same. As per views of Wu and Boateng, (2010) management
accounting play a very important role in identifying areas that they need to evaluate in respect to
business process. This is because in case if material variance is negative then it means that firm
performance is poor. In order to prepare a strong strategy to ensure that such kind of variance
will not come in existence again it becomes important to evaluate material related business
operations. This is because if manager will evaluate entire operations related to material he will

be able to identify the reasons due to which negative variance come in existence. Reason of
negative variance may be high storage cost which originate due to presence of heavy amount of
unused inventory in warehouse. Apart from this high transportation cost may be another reason
responsible for high amount of negative variance. It is evaluation of business process that help
firm in identifying the areas that are chiefly responsible for negative variance in the business.
Jinga and et.al., (2010) claims that management accounting can provide a very useful
input in respect to preparation of company cost related strategy. There are many companies all
around the world that are known for their cost leadership like Lidl and Aldi. It is well known fact
that in management accounting information related to expenses which are direct, indirect, fixed
and variable in nature are recorded. Budgets and performance of the firm against them is the one
of the most important input that can be used by the firms to prepare their corporate strategy in
respect to the sales, profit and expenditures. This is because business health is normally affected
by these three factors. In case any company will improve its condition on these factors its
performance will become good to great extent. By using variance analysis results areas where
firm performance was very poor can be identified easily. Thereafter, reasons due to which such
variance comes in existence can be find out by the managers. Corporate strategy can be prepared
in relation to those reasons that are responsible for such a high negative variance. This surely
help firm in improving its performance.
Managers can forecast number of things by making use of management accounting
techniques. According to Coyne and et.al., (2010) firms can make use of multiple techniques to
forecast different things. In this regard use of data related to variance analysis is common. Apart
from this there are multiple methods whose output can be used by the firm to make forecast.
These methods are absorption costing method and activity based costing. In absorption costing
method specific cost is divided among different products that are produced by the firm. By using
data of absorption costing that is related to pastime period it can be identified that with small
change in the specific cost to what extent variation comes in cost for each product. It can be said
that by analyzing old data related to absorption costing sensitivity of same in terms of impact of
small change in cost on individual product can be identified. Thus, by understanding trend and
relationship prediction can be made by the manager about likely changes that can be observed on
specific cost product wise.

As per views of Bennett, Schaltegger and Zvezdov, (2011) budget play a very important
role in controlling and monitoring different business activities. This is because main purpose of
budget is to control expenses. There is a specific mechanism that is followed in order to perform
control function in the business by making use of budget. In this regard budget is prepared for
three months. Managers of the firm evaluate firm performance at end of each month. By
evaluating performance month wise managers identify whether firm expenses are in line to
determined expenses or extravagance is made in the business. In this way budget play a very
important role in controlling and monitoring performance of varied business activities.
As per views of Herman, (2011) modern approach of management accounting is more
effective than traditional method accounting related to costing. This is because in modern costing
system each and every thing in respect to recording and calculation of expenses is determined in
systematic way and logic wise. Whereas, in traditional accounting system things and process
were not clearly structured as seen in case of modern approach of management accounting.
Hence, it can be said that modern approach of management accounting is better than traditional
approach. There is great difference between new approaches to management accounting.
According to Zimmerman and Yahya-Zadeh, (2011) the prevailing view of management
accounting history was that it originate because there was need for inventory valuation. It can be
said that earlier business firms face a lot of problems in inventory valuation. Management
accounting was specifically developed to keep detail information about inventory and its value.
In old days fixed cost of many industrial organizations was large enough and this makes it
necessary to develop a systematic accounting allocation procedure. In traditional management
accounting there was absence of such kind of procedure because at the time management
accountant often believes that Management accounting is only a periphery results of financial
reporting process that was followed in the organization at the workplace. In modern approach of
management accounting changes comes and systematic process was designed in respect to
allocation of expenses among different business activity.

CHAPTER 3: RESEARCH METHODOLOGY
3.1 Research introduction and overview
Present research is carried on management accounting in terms of its varied functions and
role it plays in effective business decisions. Cost is the one of the most important factor in which
most of the firms of the world are focusing in current time period. The focus of companies are on
controlling cost and enhancing profitability of the business. In this regard management
accounting tools are widely used by the business firms in their business operations. This is
because it is a discipline which measure cost of product from different sides (Libby and Lindsay,
2010). Some techniques like variance analysis, budget and marginal costing as well as break
even analysis are widely used by the managers in their business practice in order to control costs.
It is clear that management accounting as a discipline have great importance for the business
firms. In this report the way in which management accounting supports effective decision
making at the workplace are identified. Managers time to time make use of varied management
accounting methods in order to measure firm performance. In this regard commonly used
methods are variance analysis which are used to determine the performance of the company. It
can be said that current research pay due attention on analysis of functions and role of
management accounting in respect to varied business activities. Along with this, varied
frameworks that are related to the mentioned discipline will also be discussed in the report.
Additionally, extensive analysis of functions of management accounting will be done to develop
broad understanding about mentioned discipline. Traditional accounting system will also be
reviewed in the report and its comparison to modern accounting system will be made. Hence, it
can be said that this research work is focusing on understanding multiple dimensions of the
relevant discipline.
3.2 Research type
Research can be conducted in different ways. In order to carry out research work two
sorts of data are collected by the researcher namely primary and secondary data. Primary
research is conducted by collecting data through questionnaires and observing research subjects.
Contrary to this, secondary research is conducted under which data is collected from books,
journals and magazines. Same is analyzed to arrive at specific conclusion. It is necessary to
conduct both sort of research whether it is primary and secondary research. If researcher will

conduct one specific research out of both he cannot get reliable or sufficient results. It is
necessary to understand the reasons that makes it inevitable for individual to carry out secondary
research. For conducting study on present it is necessary to understand past conditions. Focus of
present research is on management accounting functions and extent to which it can be used to
make business decisions. In order to do detail investigation on this it is necessary to understand
that in past years what were the functions of the management accounting to what limit its
techniques were employed by managers to take business decisions (Agoglia, Doupnik and
Tsakumis, 2011). This is part of secondary research. In secondary research also answer of same
questions will be identified but in relation to current time period. The gap between current and
pastime period in respect to research topic will help researcher in identifying the direction in
which he must conduct his primary research. This revealed that it was very important to conduct
secondary research in current study. Primary research will also be carried out and under this
questionnaire will be distributed among the 10 respondents. These respondents are the
employees of the Marks & Spencer that are acting as manager of finance department. Apart from
managers there will be other employees that are working in finance and accounts department of
an organization.
3.3 Research design
Research design refers to the varied methods that can be adopted by the managers in
terms of data collection. There are four types of research designs namely exploratory, descriptive
and experimental and case study research design. There is huge difference between these
methods in terms of their use in the specific situation. Exploratory research design is the method
that is adopted by the researcher when he does not have any knowledge about the research topic
and he intends to develop his understanding about same. There are various methods that comes
under exploratory research design method. Contrary to this, there is experimental research design
which is used when one is carrying out scientific research. Apart from this, other research design
is descriptive research design and it is used when one have somewhat knowledge about the
research topic but he further intends to increase his knowledge on same (Plumlee and Yohn,
2010). Last and most important method is case study research design which is used in research
when it is not possible to collect facts and figures in respect to specific topic. On the basis of
analysis of case study conclusion is prepared. In the present study exploratory research design
will be used. This is because the scenario related to management accounting was different in past

and current time period. Hence, exploratory research design method best suits to the present
study. Appropriate technique that comes in exploratory research design method will be used in
the present study.
3.4 Research approach
Research approaches refers to the method that will be followed in order to conduct a
research. In research mainly two sort of approaches are followed inductive and deductive
approach. Both approaches vary from each other because they works in different direction.
Inductive approach refers to the process of research when first of all hypothesis is prepared and
in order to test same data is collected. By doing detail analysis of same results are derived and
new theory is prepared (Albelda, 2011). The special thing of the inductive approach is that it
reflects the pattern in which specific things are occurring and on that basis theory is prepared. It
can be said that in this method lots of things are considered to form theory by analyzing a data in
relation to hypothesis. On other hand, there is another approach that is known as deductive
approach under which theory is already prepared and it is tested by using specific techniques. In
the present study inductive approach will be followed because in this first of all data will be
gathered from varied primary and secondary resources. Thereafter same will be analyzed to
arrive at specific conclusion. It depends on the researcher that what research topic he choose. On
the basis of research topic and direction in which one intends to carry out research work
appropriate research approach must be used. In case if wrong method for carrying out research
will be selected then it will not produce appropriate results.
3.5 Research philosophy
Research philosophy is one of the main tool that is adopted to do clear analysis of issues
that are related to the research subject. It is the research philosophy that assist one in choosing
best out of different methods that are available to him. Research philosophy also help researcher
in selecting most suitable approach that can be used to conduct a research. There are basically
two types of research philosophies in the research namely interpretivism and positivism. Both
these philosophies are inverse of each other (Smith, 2014). This is because interpretivism
philosophy is used when is conducting a non-scientific research. Contrary to this, positivism
philosophy is one which is used when researcher intends to conduct scientific research. Present
study is related to management accounting and in this its various aspects are evaluated. Apart

from this thematic analysis method will be employed in the research. Hence, interpretivism
philosophy is better for the present study.
3.6 Data collection
It is the one of the most important part of research methodology because in this section of
the chapter, the data that will be collected is determined. In order to carry out present study some
facts and figures will be collected from secondary source of information. Review of such kind of
information will develop broad understanding about past conditions in respect to management
accounting functions and extent to which it was used for making business decisions. Such kind
of data will be collected from books, journals and magazines. In data collection process special
importance will be given to journals. This is because in this source of information valid and
reliable information is easily available (Qu and Dumay, 2011). Hence, by making use of single
journal vast data or facts and figures about management accounting can be collected. This will
lead to saving of time which will be used elsewhere. Such kind of strategy will help in
completing research on time. Primary data will also be collected from the people that are
employees of Mark & Spencer. As mentioned in introduction section sample of 10 people will be
taken that are working in finance and accounts department of an organization. Such a small
sample of respondents is taken because in single firm it is not possible to collect data from large
number of employees. Moreover, employees that works in departments other than finance and
accounts does not have much knowledge about the management accounting. Hence, primary
research will be collected by distributing questionnaire among 10 people that are employees of
mentioned departments.
3.7 Sampling method
In research there are different methods that are related to sampling and are used in the
research. Some sampling methods are simple random sampling, stratified random sampling,
cluster sampling and convenience sampling. All these sampling methods are different from each
other. Simple random sampling method is a technique under which sample units are taken on
random basis from population (Sisaye and Birnberg, 2010). It can be said that it is the method
under which there is no specific criteria that is considered by the researcher to pick a sample
units from the population. Contrary to this, other method is stratified sampling technique under
which specific criteria is determined by the researcher and he follow same in order to select
individuals as sample unit for the research. In this method first of all entire population is divided

in to multiple parts and from different strata sample units are taken by the researcher. Other
method is cluster sampling under which specific geographic area is divided in to multiple parts.
From these divided geographic areas respondents are choose by scholar. This method of
sampling is appropriate for research when one intends to study specific thing about specific
geographic area. The last sampling method is convenience sampling under which one at his own
discretion picked up respondents from population (Fan and et.al., 2010). Out of all these methods
stratified sampling method will be used in study. This is because in present case workforce of
Mark & Spencer is the population and from same sample needs to be taken. Different
departments of the mentioned firm are strata and from same sample of individuals will be taken
from whom in next phase data will be collected. Few employees from accounts and finance
department will be selected in the sample. Hence, it can be said that stratified sampling method
best suits to the present study. This is because by using same relevant individuals can be easily
selected as sample units in the research.
3.8 Data analysis
Data analysis is the one of the most important section of the report. In this section
appropriate method for analysis of data is determined by the researcher. There are varied
methods that are adopted for analyzing a data namely SPSS and thematic analysis. In this report
thematic analysis method will be used to conduct research. This is because present study is not
scientific. Moreover, questionnaire is distributed among the respondents. Data that is collected
from the respondents will be analyzed separately for each theme. Charts for each theme will be
prepared. By viewing charts one will be able to easily identify the direction in which most of
respondents give their response. After preparing charts interpretation of same will be done. In
this information will be provided about the number of respondents that choose specific option.
Further, the specific direction in which most of respondents give their response will be identified
(Song, Thomas and Yi, 2010). Additionally, the probable reasons due to which respondents
choose specific option will also be determined. In this way entire thematic analysis will be done
in the research report.
3.9 Research limitation
Every research have some limitations because in respect to study decisions are taken in
respect to number of factors. Limitations that are related to research may affect research results.

Thus, it is very important to identify research limitations so that it can be identified that to what
extent research results may be reliable. Some limitations of present study are as follows. Limitation of time- In order to conduct this research lots of time was required. Present
research is performed in short time period which is its major limitation. In case if more
time would be given in secondary data collection the broad understanding about same can
be developed. Apart from this if more time will be allocated for primary data then it was
possible to gather facts and figures from more people. Due to availability of limited time
period it was not possible to spend more time for data collection (Carcello, Hermanson
and Ye, 2011). However, every attempt is made to make sure that research is producing
reliable results. In this regard stratified sampling method is used and appropriate
employees of the Mark & Spencer are selected as sample units in the research. Apart
from this, reliable and well known journals are taken in to consideration for collecting
required secondary data for the research.
 Low availability of information- Like researches are available on other topics too much
information is not available on the management accounting. Hence, it was very difficult
to collect appropriate information from journals. Thus, lots of time was spend in
obtaining relevant information from journals. While collecting data it is ensured that
reliable journals are used. Hence, there is reliability of the results that are produced by the
research.
3.10 Ethical considerations
In every research there are some specific ethics. Whether, profession is doctor or any
other for each of them ethics are determined. In same way ethics are determined with the
research. It is ethical responsibility of the researcher to make sure that he keep personal
information of individuals safe. Researcher needs to make sure that any person other than him is
not able to access data that is collected for the research (Libby and Lindsay, 2010). It is also
ethical responsibility of an individual to make sure that he is taking only relevant information
from varied sources to conduct research. This is because if wrong information will be taken from
any source and same will be used then research will also produce wrong results. In current time
period when one prepare a paper then he review other scholar research paper. Hence, if present
study will produce wrong results and other one will use it for reference purpose then it is

possible that he will also carry out his research in wrong direction. Hence, it is ethical
responsibility of individual to take only reliable facts and information for conducting a research.

CHAPTER 4: DATA ANALYSIS
Do you think that existing framework that is used in relation to management accounting is best?
Yes 6
No 4
Figure 1 Framework of management accounting
Interpretation
On question that is asked about framework of management accounting to employees of
Marks & Spencer it has been observed that 6 out of 10 respondents think that existing one that is
employed in respect to mentioned discipline is best. Apart from this, 4 respondents state that they
think that current framework in respect to management accounting that is implemented at the
workplace is not best. The research results revealed that even Marks & Spencer accounting
system in respect to mentioned discipline is good. However, it needs to make many new changes
in the existing framework in the organization in respect to performance of management
accounting operations. By doing so cost can be managed in better way and good control will be
maintained on the production cost. Hence, mentioned firm must make some big amendments in
existing framework of management accounting.
Management accounting helps in preparing a plan regarding cost control and curtailment in
Mark & Spencer.
Highly agree 4

Agree 3
Somewhat agree 2
Disagree 1
Highly disagree 0
Figure 2 Role of management accounting in helping managers in formation of plan in respect to
cost control and curtailment
Interpretation
Research results shows that majority of respondents think that management accounting
helps managers in preparing a plan related to cost control and curtailment. 4 respondents out of
10 are highly agree with the above mentioned statement followed by 3 individual’s that are agree
on same statement.2 respondents are somewhat agree on the fact that management accounting
play a very important role in cost control at the workplace. One sample unit is disagree and no
one is highly disagree with the relevant statement. Management accounting play a significant
role in helping in controlling its expenses at Mark & Spencer. Variance analysis is the one of the
most important technique of the management accounting. It is the tool that reflects the extent to
which extravagance is made in specific expense and control in made in other. If specific expense
is in control then there is no problem. Contrary to this, if it is identified that expense like material
purchase is increased and consistently breached the determined standard then top manager
receive a warning signal. Thereafter, relevant employees of the organization evaluate relevant
operations and conditions related to area of cost where firm is currently facing a problem in

terms of its control at the workplace. This help managers in identifying the reasons due to which
consistent elevation happened in specific expense. Thus, on this basis plan is prepared in such a
way that eliminate factors that are responsible for elevation in expenses from the workplace.
Hence, management accounting play a very important role in helping managers in formation of
cost control plan at the workplace.
Highly agree 3
Agree 4
Somewhat agree 2
Disagree 1
Highly disagree 0
Figure 3 Role of management accounting in controlling expenses
Interpretation
Above chart clearly revealed that most of respondents assume that management
accounting is playing a very important role in controlling expenses at the workplace. Out of 10
respondents 3 are highly agree with this statement followed by 4 respondents that are agree on
same statement. Other than this 2 respondents are somewhat agree and 1 is disagree with the
asked line “Management accounting play a significant role in helping in controlling its expenses
at Mark & Spencer”. It is clear from the results that management accounting is on large scale
used by the business firm to frame its cost control and curtailment strategy. This is because in
management accounting facts and figures related to expenses are collected at regular interval. By

analyzing these facts one comes to know about areas where extravagance are made by the
company. Managers by preparing cost control and curtailment strategy limits the elevation in
relevant expense. Hence, it can be said that it is management accounting that provide useful
information that is used for curbing enhancement in expenses.
Decisions related to inventory management can be taken on the basis information provided by
the management accounting.
Highly agree 3
Agree 3
Somewhat agree 2
Disagree 1
Highly disagree 1
Figure 4 Respondents response on relationship between management accounting and inventory
management
Interpretation
On statement management accounting can be used to make decisions related to inventory
management most of respondents give positive response. It can be seen from the graph that is
above the line that 3 respondents are highly agree and they think that management accounting
helps managers in taking decision related to inventory. Same number of respondents are agree
with same statement. 2 respondents are somewhat agree and they surely does not know
mentioned discipline is used to make inventory related business decisions at the ground level. 1

respondent is disagree and same number of respondent is highly disagree with asked statement. It
is clear from analyzed data that Marks & Spencer is using mentioned discipline on large scale to
make inventory related decisions. Firm maintain a complete record that on which date it
purchase specific material and when it place order for same. Records also provide an information
about unused inventory that is in warehouse and lead to blockage of cash. On the basis of results
that originate due to systematic analysis of inventory data by making use of management
accounting tools managers decide that in upcoming time period when they must place an order
for purchase of materials and in what quantity. Thus, in this way management accounting help
managers in making business decisions related to inventory management.
In case indirect expenses are increasing then can we make use of management accounting to
control it?
Yes 6
No 4
Figure 5 people opinion on the extent to which management accounting play an important role in
the control of indirect expenses
Interpretation
It is very important to identify that to what extent management accounting is proving an
effective tool in curbing elevation in indirect expenses. It has been observed that most of people
think that in management accounting data related to production are mainly considered and

analyzed. Hence, question in respect to role of management accounting in controlling an indirect
expenses was asked to the respondents. It is identified on the basis of analysis of data that out of
10 respondents 6 think that it is an important and very effective tool that helps firm in controlling
traction in indirect expenses. Only 4 respondents think that management accounting does not
play a significant role in curbing traction in indirect expenses. All these research results are
clearly revealing that there are number of employees at the workplace that associate management
accounting with production expenses only. It can be said that because in costing most of the
firms give due importance to production cost and related expenses. Hence, this is the reason due
to which number of employees think that management accounting is specifically linked to the
production expenses. However, in data analysis it is identified that 60% of total sample units
believed that MA is the one of the important discipline that is playing equal and important role in
curbing elevation in indirect expenses.
Management accounting provide information to solve the problem in respect to different
business activities at Mark & Spencer.
Yes 4
No 6
Figure 6 People opinion on the role that management accounting play in solving problems
related to varied business activities in the firm
Interpretation

On statement that management accounting play a very important role in solving problem
related to business activities majority of respondents show that are not agree with asked line. Out
of 10 respondents 4 are agree with the statement and 6 are disagree with same. Most of
respondents give this statement because management accounting deals with the financial figures.
Business activities problems may be non-financial in nature. Apart from this, management
accounting is basically related to costing and due to this reason it can solve problems related to
same in respect to any department of the firm. If there is problem other than cost related to
production or other department then management accounting cannot solve it. If there is any issue
related to costing of Human resource, Marketing, Finance, Production, Inventory, Electricity and
Security department then management accounting can be used to control cost without affecting
these departments productivity. Thus, management accounting play a very important role solving
problems related to varied business activities but pre condition is that same must be related to
cost.
Management accounting helps in score keeping by using which trend in which expenses are
made can be analyzed. Do you think such kind of analysis can help managers in making decision
related to different business activities?
Yes 9
No 1
Figure 7 Score keeping as part of management accounting and decisions related to different
business activities

Interpretation
Research results are clearly showing that management accounting helps in keeping record
of each and every expenses. If trend of same will be analyzed then prediction about same can be
done and direction can be identified in which proper planning need to be done in order to control
cost. 9 respondents out of 10 think that by analyzing trend decisions in respect to cost of varied
business activities can be made. Only 1 respondents is not agree with this statement. Trend is the
one of the most important and widely used tool that is often used to predict upcoming movement
in the specific variables. There are many tools and techniques that are related to trend analysis.
Hence, by making use of score keeping that is done in management accounting trends can be
analyzed and business decisions can be made in respect to different business activities.
Do you think that it is very difficult to set standards under budget for measuring firm
performance?
Yes 7
No 3
Figure 8 People response on extent to which it is very difficult to set standards for the budget
Interpretation
Budget is the one of the most important tool that is used by the business firms to maintain
stiff control on their expenses. In these budgets standards are determined and actual figures are
compared with same to measure firm performance. Most of the employee’s at Mark & Spencer

think that it is very difficult to set standards in the budget. 7 out of 10 respondents are agree with
the above mentioned line. Only 3 respondents are disagree with the asked statement. It can be
said that results are specifically indicating that it is hard to determine parameters for specific
component of the budget. This is because budget is the statement in which projection about
future time period is done. No one knows the situations that will arise in upcoming time period.
Hence, it is the uncertainty that make it difficult to make prediction about components of the
budget.
Is it big issue that is associated with preparation of budget for performing control function of
management?
Yes 7
No 3
Figure 9 People response on difficulty faced by managers in setting parameters in the budget and
performance of control function of management
Interpretation
7 out of 10 respondents think that problems that managers face in setting a parameters for
budget affects the performance of control of the management. This is because performance of
control function in proper manner depends on the setting of parameter. If criteria that are
determined in the budget will be very high in comparison to reasonable level then in that case
control function will not reveal true picture of the employee’s performance at the workplace.

Hence, it is very important to make sure that criteria that are set in the budget are reasonable and
realistic in nature. There are only 3 respondents who think that even managers are facing
problems in setting a values in the budget as parameter it will not affect the performance of
control function of the management. Thus, managers while preparing a budget and determining
values for same as parameter must consider number of factors. Like managers can make an
estimation of likely economic conditions in the future time period. Along with this, they can
evaluate past year budgets and the extent to which same was realistic in relation to economic
conditions that exists in that time period to which budget belongs. Such kind of evaluation can to
great extent help firm preparing budget in proper manner and performing control function in
systematic way.
Which of below given measures can be used to address above mentioned issue in systematic way.
Measuring difference between budgeted and actual results in past
years 4
Considering previous year's growth rate in budget value 3
Will prepare zero based budget 3
Figure 10People response on methods that can be adopted to reduce difficulties that are faced by
managers in preparing a budget

Interpretation
People give mixed response on question “Which measures can be used to reduce issues
that are faced by managers in preparing a budget”. 4 out of 10 respondents think that if Mark &
Spencer will evaluate difference between budgeted and actual figures in past year budget then
issues that managers faced in preparing same can be reduced to great extent. Apart from this, 3
out 10 assume that by considering growth rate in value of previous year budgets same for current
year can be prepared and issue can be resolved. Same number of respondents think that by
preparing a zero based budget problem can be sort out by the managers at the workplace. If
managers will evaluate the difference between actual and budgeted values then they will also
investigate the reasons due to which big difference was observed in both sort of values. If same
comes in existence due to determination of unrealistic value that same factor can be considered
while preparing budget for current time period. Growth rate of components of budget does not
changed substantially year by year. Due to this reason some respondents think it the best way
that can be adopted to resolve the issue. Hence, it depends on the management that which option
they think is best for preparing a budget.
Management accounting play an important role in attracting attention of managers towards
different activities when quick response is required to get performance in line to expectations.
Yes 9
No 1

Figure 11 Role of management accounting in attracting attention of managers towards sever
issues
Interpretation
Research results shows that management accounting play a very important role in
attracting attention of the managers towards serious issues. In some areas business firms
consistently face a lots of problems. It is management accounting which can draw attention of
manager’s towards the areas where currently they are not giving much attention. Only one
respondent was disagree with this statement. 9 out of 10 respondent’s state that management
accounting is the important tool and it play an important role in attracting attention of managers
towards different activities when quick response is required to get performance in line to
expectations.
Do you think management accounting can play any role in providing very useful input in respect
to preparation of company strategy?
Yes 7
No 3

Figure 12 People response on role that management accounting play in providing useful inputs
that can be used to form corporate strategy
Interpretation
7 out of 10 respondents think that management accounting is playing a very important
role in helping managers in identifying the inputs that they can use to form corporate strategy.
Only 3 out of 10 state that there is no use of management accounting in formation of corporate
strategy. By using MA areas can be identified that have strategic importance but cost of same is
high. On the basis of inputs provided by the variance analysis corporate strategy in terms of cost
control can be formed in specific direction.
Managers can forecast different things by making use of management accounting techniques.
Highly agree 2
Agree 3
Somewhat agree 2
Disagree 1
Highly disagree 1

Figure 13 People response of role of management accounting in forecast of different things by
making use of its techniques.
Interpretation
Most of the respondents are agree on the fact that by making use of management
accounting methods varied things can be forecast. 2 out of 10 are highly agree with this
statement followed by 3 respondents that are agree on same statement. 2 respondents are
somewhat agree followed by 1 disagree and same number of respondent highly disagree on
same. Managers on the basis of past year budgets and cost related data as well as market
conditions can make prediction about the budget that they are going to prepare for upcoming
time period. Hence, to some extent managers can make forecast by making use of management
accounting techniques.
Do you think that modern approach of management accounting is more effective than traditional
accounting system and help in doing costing of activities in systematic way?
Yes 9
No 1

Figure 14People comment on modern and traditional method of accounting
Interpretation
On statement that modern approach of management accounting is more effective than
traditional accounting system and help in doing costing of activities in systematic way most of
respondents are agree. As can be seen in the chart given above that 9 out of 10 respondents
believes that current methods of costing are much better than traditional method of same. There
is only 1 respondent who think that modern methods of cost accounting are not better than
traditional one. Hence, it can be concluded on the basis of chart that in comparison to old
methods of management accounting current approaches compute cost of production and material
more accurately.

CHAPTER 5: CONCLUSION
On the basis of above discussion it is concluded that management accounting is the one of the
most important discipline that include lots of concepts and technique’s that are used to control
cost. There are number of methods in the management accounting like variance analysis etc that
are used to evaluate cost and making business decisions. Cost is the one of the most important
domain where most of the firms are focusing in order to elevate their profitability and making
available products at reasonable price. Thus, in recent years most of the companies start making
use of management accounting at large scale. Existing framework that is used in respect to
management accounting is well organized in nature in most of large sized firms. Managers of the
companies on daily basis record each and every thing related to cost in their business. There is a
systematic procedure in which cost of different types are recorded in the firm accounting
systems. Apart from this, different employees are engaged in the performing operations that are
related to management accounting. Jobs roles an accountabilities of these employees is clearly
defined and is different from each other. Hence, activities are not overlapped and operations
related to management accounting are performed in systematic way in the firms. Apart from
these cost centers are established in the company’s which makes managers accountable for every
negative results that can be seen at the workplace due to their wrong decisions. Hence, it can be
said that structure or framework in companies are good.
It is also concluded that management accounting play a very important role in helping
managers in crafting a plan for cost control and curtailment. As mentioned earlier, that cost is the
one of the most important areas most of the firms are focusing. This is because it is the cost
which will if remain in firm control will help it in maintaining its market leadership in the
industry. By using management accounting tools cost or expenses are evaluated in different
manner. The results of these tools helps managers in evaluating cost in varied ways. Thus,
managers quickly identify the direction in which they needs to work in terms of cost control and
curtailment at the workplace. By identifying the direction in which managers require to work
plan about same is prepared. In this regard facts and figures that are collected by performing
operations related to management accounting are used to make business decisions. For example
past year variance analysis results can be used to estimate likely elevation that can be observed in
the expenses. Managers on the basis of estimate may prepare a plant in respect to curbing a cost
up to level that does not negatively affects business production and profitability substantially.

Management accounting plays very important role in controlling expenses and in this regard
managers use budget and variance analysis techniques. By preparing a budget relevant
employees of an organization determine the limit up to specific variable value must appear in the
business. Variance analysis is the method that is used by the company to identify the extent to
which firm successfully control its cost. The results of this analysis reflects the area where
managers cautiously needs to work in order to control cost and enhancing profitability in the
business. It must be noted that even if cost is increasing its product price cannot be enhanced by
the firm. This means that impact of elevation of cost cannot be pass to the customers. This makes
it inevitable for the firm to control cost at initial stage in the business. It is the variance analysis
that indicate areas where firm gives very poor performance. Hence, it can be said that
management accounting plays a vital role in controlling expenses in the business.
It is concluded that decision in respect to inventory management can also be taken by
using management accounting tools and techniques. By using appropriate methods managers can
easily identify the extent to which specific material is consumed in different product lines at the
workplace. It is the management accounting tools that helps managers in identifying the
proportion of material that is used in varied product lines. On the basis of relevant data managers
can easily estimate the likely consumption of material that can be done in the production of
varied varieties of products. On the basis of mentioned sort of estimation order for purchase of
raw material are placed by the firm. Moreover, exact quantity of raw material that must be
purchased by considering other factors can also be easily determined by using management
accounting tools. For example it is common problem in the firms that material is purchased and
it remain unused in warehouse. In such a situation again firm place an order for purchase of same
and heavy amount of cash get blocked in same. By using facts and figures management
accounting tools it can be identify the amount of material that was purchased and consumed in
previous months. Production and sales figures can also be considered in this analysis. On the
basis of estimation of sales and target production units that firm intends to produce and available
quantity of raw material manager can easily determine the quantity of material that they must
buy to manufacture specific number of units.
Management accounting is not only a tool that is used to control direct or production
expenses. It can also be used to control indirect expenses like sales and office expenses etc. It is
well known fact that in budget projection for each and every element of cash inflow and outflow

is made. Thus by using variance analysis the extent to which actual indirect expenses deviate
from traditional one can be easily identified by the firm. By taking corrective action for next time
elevation in indirect expenses can be controlled by the firm. Hence, it can be said that
management accounting can be used to control both direct and indirect expenses of the business.
Management accounting is the one of the main discipline because it is used to handle business
problems that are related to varied departments. Cost is associated with each and every activity
of different departments. There are varied business problems across the departments that are
related to cost. For HR department and marketing department elevation in administrative
expenses may be issue. It is the management accounting by using which cost of varied business
activities are measured and areas where improvements needs to be made are identified.
Estimation about likely changes that can occur in cost due to change in the operations of specific
business activity are identified. On the basis of estimated costs computation of overall business
activity can be done again. By doing so answers of question can be identified that changes that
are made in the business activity bring expected changes in costing of that specific task or not.
Hence, in such kind of ways management accounting directly or indirectly helps in solving
business problems.
In management accounting complete record of varied costs are kept. By using trend
analysis methods analysis of same can be done and prediction about likely changes that may
takes place in same can be made. Hence, even facts and figures that are collected in management
accounting have significant importance and by using same accurate estimate about likely surge
in cost can be made by the managers. This revealed that management accounting as a discipline
have a significant importance for the firm. Variance analysis is the one of the most important
tool of management accounting. The major challenge that managers face is that there is very high
possibility that mentioned tool may prove ineffective for the firm. This is because in variance
analysis standard value is determined for the specific variables and by comparing actual value
with set parameter performance is measured. The main challenge that managers face is that it is
very difficult to set standard values accurately. This is because it is very difficult to make
prediction. Hence, if wrong criteria will be determined then variance analysis will show wrong
results. Thus, business decisions will be made in wrong direction. So, overall conclusion is that
there are multiple benefits that can be derived by the firm by making use of management

accounting tools at the workplace. Hence, managers must try to make more and more use of
management accounting tools.

REFERENCES
Books & journals
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accounting standards: The influence of standard precision and audit committee strength
on financial reporting decisions. The Accounting Review. 86(3). Pp.747-767.
Albelda, E., 2011. The role of management accounting practices as facilitators of the
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APPENDIX
Name: ____________
Age: ______________
Do you think that existing framework that is used in relation to management accounting is best?
 Yes
 No
Management accounting helps in preparing a plan regarding cost control and curtailment in Mark
& Spencer.
 Highly agree
 Agree
 Somewhat agree
 Disagree
 Highly disagree
Management accounting play a significant role in helping in controlling its expenses at Mark &
Spencer.
 Highly agree
 Agree
 Somewhat agree
 Disagree
 Highly disagree
Decisions related to inventory management can be taken on the basis information provided by
the management accounting.
 Highly agree
 Agree
 Somewhat agree

 Disagree
 Highly disagree
In case indirect expenses are increasing then can we make use of management accounting.
 Yes
 No
Management accounting provide information to solve the problem in respect to different
business activities at Mark & Spencer.
 Yes
 No
Management helps in score keeping by using which trend in which expenses are made can be
analyzed. Do you think such kind of analysis can help managers in making decision related to
different business activities?
 Yes
 No
Do you think that it is very difficult to set standards under budget for measuring firm
performance?
 Yes
 No
Is it big issue that is associated with preparation of budget for performing control function of
management?
 Yes
 No
Which of below given measures can be used to address above mentioned issue in systematic
way.
 Measuring difference between budgeted and actual results in past years.
 Considering previous year's growth rate in budget value.

 Will prepare zero based budget.
Management accounting play an important role in attracting attention of managers towards
different activities when quick response is required to get performance in line to expectations.
 Yes
 No
Management accounting play an important role in identifying areas that they need to evaluate in
respect to business process at Mark & Spencer.
 Highly agree
 Agree
 Somewhat agree
 Disagree
 Highly disagree
Do you think management accounting can play any role in providing very useful input in respect
to preparation of company strategy?
 Yes
 No
Managers can forecast different things by making use of management accounting techniques.
 Highly agree
 Agree
 Somewhat agree
 Disagree
 Highly disagree
Do you think that budget play a very important role in controlling and monitoring different
business activities.
 Yes

 No
Do you think that modern approach of management accounting is more effective than traditional
accounting system and help in doing costing of activities in systematic way?
 Yes
 No