Management Accounting Tools for Hungry House

This assignment explores the application of management accounting tools and techniques in analyzing and improving the financial performance of a hypothetical restaurant called Hungry House. The document examines key performance indicators (KPIs) such as employee performance and web traffic, employing ratio analysis to assess profit and liquidity positions, and variance analysis to identify cost discrepancies between actual and budgeted amounts. The aim is to provide actionable insights and recommendations for Hungry House to enhance its profitability and overall operational efficiency.

MANAGEMENT
ACCOUNTING

INTRODUCTION
Finance is essential ingredient for making success by coping with external market
obligation with proper management of business functions. Hungry house has been selected for tis
project report which includes the selection of management accounting systems and reports. This
report as talks about the preparation of income statements using marginal or absorption costing.
Planning tools and various types of approaches used in management accounting in meeting
financial problems.
P1 Explain management accounting and different types of management accounting system
Management accounting can be defined as one of the essential part of business units
which supports entities in allocation of resources effectively and managing cash flow in effective
manner. Management accounting plays significant role in the organization, it summarized
essential financial information in systematic manner so that manager can make policies and
practices improving performance of the company. Hungry house is one of the small online
platform which provides food services to its variety of clients located in the United Kingdom
(Ball, 2013). This venture has utilizes the latest technology factors in building their new business
who intends to grab higher web traffic towards their enterprise as their major objective is to earn
higher profit by catering their variety of services to its most of the customers. Foods is basic need
of every individual which generated into unique business idea in order to steal the attention of
most of the customers located in the external market. This is small scale entity who have applies
lesser initial investment as their main motive is to generate higher outcomes by offering their
variety of services. Common objective of current business is to employee less number of
employees as their focus is to cater all the services to the variety of customers by satisfying
various customers located in the external market. By implementing management accounting
techniques in the workplace Hungry house van improve its sales volumes and can make effective
control over its unnecessary expenditures. That may support in increasing overall revenues of the
cited firm.
The economic concept has applied by this entity which emphasizes on optimum
utilization of resources in which input used by an individual is less than compared to the
outcome generated by them is higher in order to get competitive advantages over its variety o
competitors (DRURY, 2013). This entity have maintained higher market share in the external

market by emphasises on the current skills and the capabilities of the business. The core
competencies of an entity will be identified which helps in applying all these in rehabbing higher
attention of its customers. This enterprise as ruled all across the United Kingdom as this is
renamed as Delivery hero who will delver food at the door step of customers at no additional
cost. This entity has maintained good brand image all over the world.
Various principles of management accounting would helpful for Hungry house in
analyzing their current business performance as their main motive is to manage all the business
activities. The business of an entrepreneur will get expanded after identify the current skills and
the capabilities of an entity which helps in grabbing higher market share by enhancing the
current business performance of an enterprise. There are various management systems that needs
to be adopted by Hungry house in analyzing its current market efficiency as an enterprise can sell
higher products by improving its existing business ability. There are various management
accounting system which will emphasises on different kinds of information involves in the
business such as both qualitative or quantitative method of information that will be helpful for an
enterprise are given as below:
Material management- Raw materials are purchased by hungry house such as breads,
vegetables, sauces will further transform into finished products such as burgers, french fries and
pizza will be sold among variety of consumers have higher value as compared to the raw
materials The proper management of all the inventories in the business is essential in order to
meet the higher expectations of various customers (Bebbington, Unerman and O'Dwyer, 2014).
Point of sale machine will be used which will emphasizes of the utilization of various stock of
vegetables and breads as their prior entry has made in the overall business systems. The entry in
the system will help in ensuring the higher market performance of an entity in order to get higher
competitive advantage over its variety of rivals who tries to suppress the current qualities of the
organization. Inventories are kept in the business should be physically observed in order to avoid
any forged maintenance of inventory vouchers.
Monthly review of all the inventories vouchers are cross checked with the physical
inventories which helps in generating higher competitive market advantage. FIFO and LIFO
methods are used to determine the value of inventory in the business that helps in generating
higher outcomes and sales and the revenue in the near future (Ball, 2013). This also helps in

increasing overall market performance of an entity. First in first out method focuses on selling ll
those items purchased in the initial phase and in last in first out method lastly purchase
inventories are sold first in the business. The valuation of al the inventories is essential in order
to apply lesser input costs to generate higher output in the near future as it is essential for the
business to know the costs of inventory as higher costs of inventory will in turn decreases the
overall profit of the business in the future that needs to be analyzed in the present to avoid future
market consequences.
Price optimization systems- Being a small scale entity Hungry house is required to link their
demand with the current prices of all of their products as this will directly impact on the business
performance (Bagliani and Martini, 2012). The current aim of the price optimization model is to
determine the market demand by charging the current price of their products as higher price will
decrease the demand and vice-versa. The control can be placed by the top management of hungry
house in order to analyses its impact on the overall business performance of an entity as it is
important in order to generate higher market share in the near future. This particular model will
combine different data set in improving overall business performance of an entity such as costs
currently incurred in the business enterprise which needs to be reduced wit the passage of time to
increase or decrease the overall inventory levels in the business. The business complexities are
decreases by enhancing the overall business strengths and decreases its weaknesses to cater all
the needs and higher market expectations.
Various pricing strategies are prepared by an entity in order enhancing the current market
share of an entity as their primary motive is to extend the vision of the business towards all
hidden business areas which needs to be identified in order to generate higher market revenues.
Business promotion gets easy by adopting the best suitable cervices of the external market users
who will help an entity in order to revise its current price structures in order to get higher market
advantage over external business users (Ball, 2013). The major objective of all the external
business users is to challenge the current skills of the business which needs to be improved to
beat all the market rivals whose existence in the external market is to suppress the capabilities of
an enterprise by maintaining their position. Revision of all the pricing strategies will help an
individual in order to control al the business inventories to gain higher level of customer
satisfaction level in the business. Getting higher customer satisfaction is the ultimate aim of the

business organizations. Adequate balance need to be maintained by an entity in order to achieve
all desire market goals ad the objectives within a give time frame as their main motive is to
enhance current market efficiency of all the financial resources kept by an entity owner for the
betterment of the business.
Traditional cost accounting system: It is traditional method which is used by entities in order to
calculates cost of their project. Management of Hungry house can calculated direct and indirect
cost of the project and can estimate total expenditures of the project. With the help of this
management system cited firm can be able to allocate resources effectively.
Lean accounting system: It is another management accounting system that supports in
controlling and measuring the accounting process of organization. With the help of this
technique Hungry house can save its huge time which is consumed to calculate costing. It is cost
effective and simple process.
Throughout accounting systematic: It is great tool that supports in identifying constrains in the
production process. With the help of this technique Hungry house can minimize problems related
with production, labour, material etc.
P2 Explain different methods of management accounting report
Performance reports- This particular reports prepared by an entity owner in order to increase
the current performance of all the individuals working in the business. The business activities
performed by all the employees will be ensured by keeping watch on all their activities attention
they are working for achieving goals or they have shifted their goal from accomplishing common
goal towards their own goal. Various interfaces to the business information will be restricted that
helps in enhancing overall performance of an entity in order to get higher market advantage in
the near future (Bovens, Goodin and Schillemans eds., 2014). The attendance of all individual
will be checked by the top management of the hungry house in order to ensure higher business
productivity of the business enterprise in the future. Login ID passwords are given to all the
employees working in the business to know who have entered in the system and at what time to
create a legal evidence again ts the person in case of default done by a person.
Product profitability report- Primary concern of the business enterprise is to reduce its costs
incurred in their business as their desired aims is to increase the current sales and the revenue to
generate higher amount of profit in the near future for the benefit of the business. It will include

all the minute details about a particular product that helps in generating higher business outcome
in the near future with the passage of time. Major aim of these reports is to consider all the
variances incurred whether positive or negative in enhancing the overall sales and the revenue of
the business.
Budget Report: It is considered as one of the essential report that can help in identifying
financial performance of the organization. It can support in allocation of resources in effective
manner and minimizing gap between estimated budget and actual budget.
Cost report: Management of the company have to prepare the cost report in order to identify cost
related to raw material, labour etc. With the help of this report Hungry house can identify costs
of each task and can minimize unnecessary expenditures in the organization. By this way overall
revenue of the firm can be increased.
P3 Prepare income statements under absorption costing and marginal costing
Particulars Absorption costing Marginal costing
Direct Material 6 6
Direct Labor 5 5
Variable production overhead 2 2
Fixed production Overhead 3 0
Total cost per unit 16 13
Table 1: Income statement under absorption costing
Particulars Amount
Sales (35*600) 21000
Less: COGS
Opening inventory (700*16) 11200
- Closing inventory (100*16) (1600)
9600
- Over absorbed fixed overhead (500)
GP 11500
Less: absorbed costs
Sales overhead 600

Administration costs 700
Selling costs 600
Total absorbed costs (1900)
Profit 9600
Interpretations
Absorption costing is that technique in which all kind of costs are included in the
business such as fixed as well as variable costs incurred in the business. It is important to know
the current business performance of an entity by identifying all the costs incurred in the business
as it is essential to know the current costs in order to take higher competitive advantage over its
variety of customers located in the external market (Bozkurt, Dokur and Yildirim, 2014). This is
also known as full costing that considers both variable and fixed costs such as utility bills,
marketing costs, rent of premises, maintenance charges, construction charges, staff salary and
wages. The costs of the business will be classified into majorly three types of costs such as direct
material, direct labor and direct expenses as these costs are majorly incurred in the business.
The results of the business shows that an entity has earned higher profit of 9600 GBP
which is higher than compared to the marginal costing due to several reasons. It is essential to
know the current performance of an entity that helps in capturing higher market share by offering
their services to all the customers in the business.
Table 2: Income statement under Marginal costing
Particulars Amount
Sales (35*600) 21000
Less: COGS
Opening inventory (700*13)
9100
-Closing inventory (100*13) (1300)
Contribution 13200
Less: other costs
Sales Overhead 600
Fixed production overhead 2000
Administration cost 700

Selling costs 600
Net profit 9300
Working note
Calculation of over/under absorption of fixed production overhead
Actual fixed production overhead 2000
Absorbed fixed production overhead (700*3) 2100
Over absorbed overhead 100
Marginal costing is important tool of ascertainment of cost which is also known as
contribution costing technique. This particular used to determine the profit generated by an entity
in a particular financial year after considering variable costs as this gives greater preference to
only variable costing in an enterprise (Henttu-Aho and Järvinen, 2013). The sales mix will be
developed by an entity that is essential factor in devising the prices for all the products in the
business to attract variety of consumers towards the current business of an entity. Fixed cost s
considered as period cost in the marginal costing which will excluded from the total sales and the
revenue incurred by the business.
In the current case scenario, the profit generated by the hungry house is 9300 GBP which
is lesser than the absorption costing by 300 as this has not considered all the costs in preparing
the statements.
P4 Explain the advantages and disadvantages of different types of planning tools used for
budgetary control
Planning is an important function of management that helps in analyzing current
resources of the management such as human resources, financial resources, intellectual
resources, inventory resources (Braun and Tietz, 2013). Various kinds of materials used by the
business in generating higher business performance in order to grab higher market share as their
main motive is to enhance current skills and the capabilities of the business enterprise. Finance is
essential factor used in the business in order to generate business returns in the near future as
desired role of the business entity is to get higher market share by enhancing all current skill and
the capabilities of an organization. Planning is regarded as rough plans made by an entity like
hungry house as their overall market share gets shrink and contracted with the entry of new

business in the online platform of providing the similar kinds of services offered by an entity to
its variety of users. The biggest competitors of hungry house is Just eat online who offers variety
of discounts in order to affect the overall business of Hungry house (DRURY, 2013). The
competitive practices adopted by Just eat will lower the overall market share of Hungry house
which needs to be revised.
There are various planing tools used by an entity owner in order to plan about all the
business activities of an entity as their main role is to increase the efficiency of the business in
order to gain higher market advantage over variety of competitors as they held liable for
emphasizing on the desired needs and higher market expectations of consumers with the business
and its operations. Some planning tools which can be utilized by Hungry house in uplifting their
current business conditions is given as below that helps in increasing higher market share of an
entity in the external market:
Statistical tools- Forecasting will be applied by an individual in enhancing the current
performance of an individual that helps in gaining higher market advantages in the near future.
Statistical approaches uses by an entity will help in analyzing each and every business
components of the business such as sales and the revenue, investment made by an entity. Trend
line charts will be prepared by an individual in order to gather important information related to
the business which helps in predicting its future performance as their major role is to increase its
current market share by grabbing higher number of customers (Sandalgaard, 2012). Sale charts
used by the business owner in order to ensure higher productivity of an entity to remove all
deficiencies in the business and identify all the reasons behind increasing or decreasing amount
of sales and the revenue to improve its overall business productivity in the near future.
Investment and portfolio analysis will be used y an entity owner to evaluate its current financial
resources and the external market risks in suggesting important investments to be made by an
individual to transform higher market risks into their biggest external market opportunities. The
risk's analysis will be performed using stock analysis technique in which minutes risks will be
evaluated by an individual in order to ensure its higher market performance. The stock analysis
chart will show the increasing or decreasing value of shares which is essential in order to invest
in the business for the betterment of the organization.
Advantages

The testing of products gets easy by using the statistical analysis in improving the overall
performance of an entity as products will not be launched in the market unless and until its gets
tested by using appropriate tools and techniques (Kaplan and Atkinson, 2015). This is essential
technique used in testing all the food products currently sells by hungry house by attracting wide
number of customers.
This approach is useful for conducting research study for the hungry house in analyzing the
needs and the expectations of various customers exists in the external market whose needs will
be fulfilled by catering variety of products or services. This statistical tool is highly useful for the
business management in testing all the hypothesis developed by an enterprise owner in a
particulate time.
Market trends and patterns will be identified using statistical tool which is essential requirements
of the business in order to define its future strategies based on the results generated by the
statistical parameters used in the business of hungry house. The business of this entity gets
improved with the passage of time as their main motive is to achieve all the desired aims and he
objectives currently develop by an entity owner of the betterment of overall organization.
Number of orders Frequency X Fx
10-20 10 15 150
20-30 8 25 200
30-40 21 35 735
40-50 12 45 540
50-60 57 55 3135
60-70 90 65 5850
70-80 95 75 7125
80-90 78 85 6630
90-100 85 95 8075
N 456 32440
Mean= Fx/N
32440/456
=71.14 GBP

This tool is useful for the hungry house in order to ascertain its financial performance by
analyzing its present financial resources and other sills and capabilities that will be essential in
order to create higher market share (Pani and Mukhopadhyay, 2013). The major aim of the
business is to create higher number of order as they held liable for improving current status of an
entity as higher the revenue higher will be the brand image of the business. This mean which is
one of the important measures of the central tendency used to reflect the average values to be
generated by the hungry house in their business entity within a particular time period.
The above results of this statistical figures shows that this much amount will be generated
by an entity from all of its customers by increasing their image in the external markets.
Increasing market competition gives rise to revising the current market structures to take higher
competitive advantage over its consumers (Otley and Emmanuel, 2013). The role of the business
entity gets increases with the passage of time as the business owner should emphasises on
improving their current set of skills in order to enhance their market share that is essential in
order to maintain its survival for the long time in the current field.
Disadvantages
Wrong estimates determined using statistical tools will deflate an entity's aims and the objectives
framed by an entity.
Inappropriate aim of the business will not generate rue outcomes to all the business problems as
this decreases the overall performance of an entity. Wrong results generated by an entity will not
contribute in generating higher outcomes in the future as an entity owner will emphasis on
Structure equation modeling- This technique is used by an entity in order to identify various
features of a particular product which is the final outcomes to be presented among variety of
customers to steal their interest. This technique is a collaboration of combination and multiple
regression analysis (Li and Choi, 2014). This technique is multivariate analysis that is highly
used to determine the future market rents which is essential in improving the overall business
performance of an entity in order to grab higher market opportunities. The major aim of the
current technique is to give emphasises on the current performance of an entity which is
important in order rectify all the weaknesses lies in the existing organization structure that needs
to be revised in time for the beneficial of an enterprise. This is regarded as one of the important
too used for the management accounting that are major part of the simulation theory. The

theories of the simulation are adopted by the business in order to crate a virtual environment in
order to face the complex challenges that may incurred in the business enterprise (Pani and
Mukhopadhyay, 2013). The quality of all the services or products currently offered by the
hungry house should be increases in order to grab higher market opportunities by eliminating
external market competition. The customer's satisfaction is the major outcome of an enterprise
dealing their services to the external market. Different variables are tested using various
parameters as the major responsibilities of the business is to accomplish all the goals and the
objectives of the business within a given time period. There are various advantages and
disadvantages of the structural modeling currently used by Hungry house in accomplishing
desired aims and the objectives framed by an entity is given as below:
Advantages
It is essential for the management in order to create relationship among all the variables used for
the analysis that helps in enhancing overall performance of an entity in order to achieve the
desired aims and targets of an entity as accomplishing small tasks will help in increasing overall
productivity of the business (Pani and Mukhopadhyay, 2013). The relationship will be tested
among two variables used for the analysis purpose by aligning the performance of an entity with
all the tasks and duties allocated by an entity to its various business users.
This is one of the important technique used in conducting research study in which sampling will
be used in which size of samples is important as this gives right direction to an entity in order
grabbing higher tasks and duties in limited time period. The time factor will be used as major
component in improving overall performance of an entity in order to maintain strong market
position in the external market.
This model is focuses on increasing quality of all the services or products offered by an entity in
order to gather higher audiences towards the products or services of an entity.
Disadvantages
Parameters used in the method in order to test the relationship among variables will deflate an
entity's aims and objectives if any impurities are there in the estimates (Sandalgaard, 2012). The
current business performance of the business needs to be improved as traditional estimates will
not able to generate higher outcomes for the business in the near future.

This product helps in identifying features of the product in order to generate higher outcomes for
the business in the near future but inappropriate features of a product is inherent limitation that
can't be removed in order to produce higher returns for the business in the future.
P5 Compare how organizations are adapting management accounting systems to respond to
financial problems
Key performance indicators
This is regarded as important tool used in enhancing overall performance of an entity in
order to grab higher market share. This is regarded as performance measurement tool that
identifies various aspects in the business after analyzing overall performance of an entity by
using two kinds of KPI such as financial and non-financial KPI. The business targets of an entity
will be linked with all the tasks of an enterprise in order to enhance their overall performance of
the business (Ward, 2012). The different attributes of this particular technique states that
performance of an enterprise can be controlled by using appropriate controls in management of
all the business activities currently used by an entity owner. This is also used to define various
objectives such as SMART objectives which includes specific, achievable, reliable and timely
completion of each and every goal in the business.
KPI Target performance Action plan
Employee performance Increase by 5% by the end of
quarter
Provide training to all
individuals in order to improve
their overall performance,
Web traffic Increase by 50% by the year
end
Uses internet marketing
approaches such as social
media marketing in order to
gain the attention of most of
the customers towards the
business.
Ratio analysis: It is the great approach that supports in analyzing financial performance of the
organization. These ratios can assist in identifying profit, liquidity position of the entity. By this
way Hungry house can make effective strategies to increase profit and to reduce debts.
Variance analysis: Difference between actual and budgeted cost is called variance. If this gap is
high then companies have to face huge trouble because due to this they become unable to run

their business effectively. Negative cost variance is the serious financial issue in the organization
but cost variance analysis can be beneficial in improving condition of the Hungry house and
minimizing this difference.
CONCLUSION
It can be concluded from the above work that management accounting tools and
techniques is important in the business for enhancing overall performance of the organization.
This project states that the profit is higher from the income statements prepared under absorption
costing as it consider fixed cost period cost not period cost. This project report is all about
elimination of the financial problems of hungry house by using key performance indicators that
helps in analyzing the current behavior of an entity in order to grab higher market share in the
near future. This report alps talks about various management accounting systems and
management accounting reports prepared by an entity in meeting external market obligations
efficiently.