Strategic Management Accounting Research Analysis

This assignment delves into the realm of strategic management accounting by examining its role within integrated management systems (Khodzytska & Ivchenko, 2014). It explores industry-specific influences on management accounting practices (Messner, 2016) and their adoption and success in public sectors (Nuhu et al., 2017). Additionally, it reviews the contingency theory of management accounting (Otley, 2016) and proposes a model for strategic management accounting's mediating effect on performance (Soheilirad & Sofian, 2016). Furthermore, it discusses budget preparation steps (Agarwal, 2016), cash budget merits and demerits, the importance of managerial accounting in decision-making, job costing systems, balanced scorecards, and capital expenditure budgets.

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A) Explaining MA as well as its key requirements................................................................1
I. Difference among MA and financial accounting (FA).......................................................1
II. Significant of MA for making business decisions.............................................................2
III. Cost accounting systems...................................................................................................3
IV. Inventory management systems.......................................................................................3
V. Job costing systems...........................................................................................................3
Price optimisation system.......................................................................................................4
B) Presenting the financial information.................................................................................4
I. Various reports of managerial accounting..........................................................................4
II. Importance of presenting information in an understandable manner................................5
M1 Evaluating benefits of MA systems.................................................................................5
TASK 2............................................................................................................................................6
I. Statement of P&L on the basis of absorption costing.........................................................6
II. Statement of P&L on the basis of marginal costing..........................................................6
M2 Reconciliation statement..................................................................................................7
TASK 3............................................................................................................................................8
A) Various budgets and their merits as well as demerits.......................................................8
Financial budgets....................................................................................................................8
Operating budgets...................................................................................................................9
B) Procedure of budget preparation.....................................................................................11
Determination of pricing......................................................................................................12
Different costing system:......................................................................................................12
C) Significant of budget.......................................................................................................12
M3 Use of various planning tools and application to prepare and forecast budgets............13
TASK 4..........................................................................................................................................14
Ways through which BSC approach is used for responding financial shortfalls.................14
Connection of KPI with Tech Ltd's financial issues............................................................16

Comparing BSC used within another business organisation................................................16
M4 Ways through which MA helps to firm in sustainable success.....................................17
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
A system which is used in the firm for making financial plan, implementing, controlling,
monitoring as well as taking effective actions is known as management accounting (MA). The
present report is based on Tech Limited company which has presence in the electronic industry.
Main products offered by it are special mobile phone's charger as well as other carry-on gadgets.
The study reflects about the management accounting along with its essential needs within the
workplace of Tech Ltd in order to make internal financial decisions. Apart from this, various
systems involved in the MA like reporting etc. are explained. The current project focuses on
marginal and absorption costing which are supportive to frame income statements. In additional
to this, budgets, their benefits and limitations as well as importance within Tech Limited are
described. At the end of present assignment, BSC approach is explained which helps to eliminate
financial issues incurred in Tech Limited.
TASK 1
A) Explaining MA as well as its key requirements
A procedure of an entity which helps to make an effective schedule of financial expenses,
control and monitor them within workplace is considered as the management accounting (MA).
It is highly required for taking only internal decisions because not works at the external level.
When Tech Limited will consider this approach in proper and high manner then easily able to
fulfil and accomplish goals of the firm. Apart from this, it consists with wide range of systems
and methods due to which it is an essential part (Klemstine and Maher, 2014). Due to lack of
availability and proper use of MA, businesses cannot meet the objectives framed. The below
sections are giving information about different systems of MA and their basic needs.
I. Difference among MA and financial accounting (FA)
In the accounting branch of knowledge, basically two aspects involved which are like
management and financial. Both are used by the firms but in different level and criteria.
Therefore, distinguish of these both the systems i.e. MA and FA is mentioned below:
Management accounting Financial accounting
MA is a system used by the company in order
to make internal business only. It totally
On the other side, in order to make highly
effectual kind of external business decisions,
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ignored to the external information which
related to financial or non financial.
FA approach is considered. However, it not
focuses on the internal aspect of an entity.
When the firm makes reports under MA then
there are any specific strcutures or formates are
not available. Therefore, Tech Ltd able to
make reports as per its understanding and
suitability.
When looking at the FA then reports must be
prepared in accordance to structure framed by
legal frameworks.
It is not necessary for the firms to frame all the
reports of MA. These are prepared for tracking
financials on an internal basis.
Those accounts involved under FA like P&L,
B/S, cash flows, disclosures etc. are mandatory
to prepare (Groot and Selto, 2013).
When looking at the users then MA is used by
internal stakeholders of Tech Ltd only which
include employees, managers, owner, CEO etc.
Accounts prepared under FA are used by
external stakeholders like customers,
government, shareholders etc.
Apart from these all, there is not any
requirement of publishing and auditing of the
management accounting reports.
In the financial accounting, Tech Limited must
need to go through auditing as well publishing
procedure in legal manner.
II. Significant of MA for making business decisions
Management accounting has a pivotal place in the workplace of Tech limited because it is
highly supportive for taking internal decisions. It helps to frame budgets which lead to forecast
about the future financial information. Under this, if has been estimated that revenue will decline
in the next period then decisions for enhancing is taken. Apart from this, data related to the stock
available in the working environment of Tech Limited also assessed through MA. Further, if it
finds that total inventory is higher, then corrective actions can be undertaken. In order to forecast
cash flows in the enterprise also management accounting is an important aspect. As the cash
flows will decline within every month under cash budget then strategies for boost up are framed
(The Importance of Managerial Accounting in Decision-Making, 2014). On the basis of this it
can be said that MA is significant for Tech Limited. Variance which is a tool of assessing
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business performance is also a part of MA. It helps to known that at which aspect like material,
labour, cost, profit etc. Tech Ltd not able to meet budgeted data. Therefore, an effective decision
to grab and eliminate the issues can be taken in the firm properly. Further, it comprises with
several systems and leads to generate reports of different financial transactions like cost,
receivables, budget etc. Therefore, performance of the firm within relevant industry cam be
assessed and effective decisions made accordingly.
III. Cost accounting systems
Expense or cost is a very sensitive aspect for each and every business entity. While
producing chargers and any electronic gadgets when costing enhanced over the years then
directly create negative impact on profit generation capacity. Further, in order to manage this
situation and boost up profitability, cost accounting system is used by the management. It is
taken into consideration in order to assess actual expenditures involved within working
environment of Tech Ltd firm. When looking at the requirements then, used for estimating costs
of production (Bryer, 2013). On the basis of total expenses, decisions for determining pricing
level of that product are made. For instance: if cost of special chargers is high at the end of year
then price will be charged as per the situation. In addition to this, in order to frame strategies for
managing and reducing costing this system is needed to cited entity. Along with this, profitability
analysis is also done by on the basis of cost accounting system in a proper direction.
IV. Inventory management systems
Stock is a big matter of concern for the company because when it remains in the
workplace with higher level then influence to the sales revenue. Therefore, inventory is required
to manage and reduce in proper way within Tech Limited. Apart from managing, it helps to cited
firm in order to track orders, deliveries as well as sales of the stock in the firm. On the basis of
this it can be easily identified that how much stock or products manufactured are sold at the end
of year. It is required for the organisation for assessing as well as tracking levels, sales, orders
and deliveries of stock. In addition to this, for creating order for specific work in the
manufacturing company as well as generate bill of materials also this is used (Soheilirad and
Sofian, 2016). Under this, valuation of stock level is also done by considering major three
methods like LIFO, FIFO and weighted average.
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V. Job costing systems
In the firm when products and services manufactured are different from each other in
sufficient way then job costing system is considered. In order to assess level of expenses
occurred at each job products it is highly used. In the present case study, Tech (UK) Limited
company is producing two goods in two batches like special charger and electronic gadgets.
Further, to known that in which batch, cost level incurred up to which extent the job costing
approach is used. It consists with basically three kinds of information which involve direct
material, direct labour as well as overhead expenses (The job costing system, 2015). When
production procedures is accomplished within workplace then implemented properly. The cost
accounting shows whole expenses of the products manufactured. On the other side, the present
explained system gives information about each product produced in every batch which leads to
support for taking profitable pricing decisions.
Price optimisation system
A system of MA by which an enterprise makes pricing decisions of goods and services is
known as price optimisation system. Further, it is generally used by Tech Ltd in order to opt an
attractive price of the special mobile chargers as well as electronic gadgets.
B) Presenting the financial information
I. Various reports of managerial accounting
In order to present information related to financials there are some reports prepared by
the management. The reason is that it helps to make all the financial statements and publish in
the market properly. Under the part of managerial accounting, various reports involved which are
explained below:
 Account receivables report: The Tech limited firm selling its special chargers and other
electronic gadgets on credit. Further, amount will be received in the future which known
as credit sales. Further, under this report, those products which are sold at the credit to
consumers, that amount is recorded. At the end of an accounting period, total credits are
recorded in the account receivables reports which transacted in liabilities side of balance
sheet.
 Budget report: Another system of reporting which is budget helps to estimate financial
information for next year. There is different kind of data forecasted under budget which
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include sales, cash position, production, material, direct labour etc (Khodzytska and
Ivchenko, 2014). It is used in the firm for framing strategies for achieving desired
objectives in an appropriate manner. Base taken for preparing different budgets is past
financial statements like P&L, B/S, cash flows etc.
 Sales revenue report: According to this reporting system, company able to know that
how much amount generated by the firm excluding all the costs. Further, it shows
capabilities of the Tech Limited company in order to know level of financials. Under this,
those amounts included which are earned from selling the chargers and gadgets. In the
accounting it is known as turnover as well. Total of the sales is recorded in the profit and
loss account and considered as a base for assessing profitability position.
 Production report: Apart from the above, a report in which level or units included
which are manufactured at the end of year is known as production report (Joshi and Li,
2016). On the basis of this, Tech Limited able to assess that, company is how much
capable for producing products utilising required resources as well as raw materials.
II. Importance of presenting information in an understandable manner
In order to analyse financial performance of a particular organisation, statements and
accounts related to financial transactions are considered by people and stakeholders. When these
are proper and easily understandable by the local communities then they can make decisions for
this. On the other hand, if financials of the business entity like Tech Limited are not presented
appropriately then they cannot analyse its performance. Apart from this, in order to make
investment in Tech Limited firm shareholders or investors always consider to the profitability
position. At the time of making investment decisions if overall financials are not properly
presented then unable to know that whether it will be profitable or not. In addition to this, a
candidate when going to apply in the firm for job then also consider various financials. The
reason is that, higher the level of profit at the end of year leads to provide more salary and
allowances (Bertz and Quinn, 2014). Henceforth, it can be said that to present financial
statements in proper structure is supportive for stakeholders for making suitable decisions
towards the Tech firm.
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M1 Evaluating benefits of MA systems
Systems of MA like cost accounting and job costing are beneficial for the Tech (UK)
Limited enterprise for analysing total cost of the production and expenses associated to
manufacture each product under job or batch. Price optimisation is supportive to select one
particular price at which huge number of the customers give response for purchasing goods and
services. Furthermore, the stock management system is highly advantageous for the selected
company to manage inventory level and boost up stock turnover ratio.
TASK 2
I. Statement of P&L on the basis of absorption costing
Particulars Amount (in GBP) Amount (in GBP)
Sales 1500*35 52500
Less:
COGS 1500*20 30000
Adjustment for over absorption 2500
Gross profit 25000
Less:
Sales & Admin
((10000+(15% of 52500)
7875)) 17875
Net profit 7125
A method of assessing net income of the firm in which all the costs involved like fixed or
variable or any other is known as absorption costing. It can be visualised from the above
statement that Tech (UK) Limited firm generated net profit of worth of 7125 GBP at the end of
September 2010. The reason is that, it is not able to manage and decline indirect expenses which
create financial burden on it. Apart from this, it shows clear picture or scenario about the
profitability position of selected firm. On the other side, if Tech Limited not considers absorption
method then some costs will not cover in the profit. As the above account indicates net loss, the
company will charge higher prices in order to recover loss or total expenses incurred in the firm.
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II. Statement of P&L on the basis of marginal costing
Particulars Amount (in GBP) Amount (in GBP)
Sales 1500*35 52500
Less:
COGS 1500*15 22500
Gross profit 30000
Variable sales & Admin cost 7875
Variable contribution margin 22125
Less:
Fixed S&A cost 10000
Fixed production overhead cost
(5*1500) 7500
Net profit 4625
Another approach used by the company for making calculation of net income generated
at the end of month is marginal costing. According to this, only variable expenses which incurred
in the firm are involved. When making comparison with the above stated method then it is little
or very sometimes used by majority of the entities. The reason is that it not helps to cover all the
expenses and create burden on the entire workplace (Hald and Thrane, 2016). It has been found
from the marginal costing method that, Tech Limited earned net income i.e. worth of 4625 GBP
at the month ending September 2010. As per this, the cited firm performs well in electronic
industry as compared to absorption method.
Calculation for over/under absorption
Particulars Amount (in GBP) Amount (in GBP)
Fixed overhead absorption 15000
Actual fixed production overhead 1500*5 7500
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Over absorbed 2500
M2 Reconciliation statement
Reconciliation statement
Particulars Amount (in GBP) Amount (in GBP)
Profit under absorption 7125
Difference in units: closing stock (500*5) 2500
Profit under marginal costing 4625
TASK 3
A) Various budgets and their merits as well as demerits
Budget is a statement which prepares by most of the firms in order to estimate financial
information for the next accounting year. There are different types of such statements framed
which are such as cash, sales, production, material required, direct labour overhead and many
more. Some important budgets like sales and cash are explained along with pros and cons below:
Financial budgets
Cash Budget:
The budget which leads to estimate cash position of the firm for upcoming year by
considering receipts and payments bis called as cash budget. In order to frame it past financial
statements are used by the management of Tech UK Limited. Further, some pros as well as cons
of cash budget are mentioned below:
Pros:
 It helps to the company for knowing about cash incomes as well as payments of the next
fiscal year.
 It leads to create an effective coordination among various organisational functions or
departments within Tech Limited firm.
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 Apart from this, to assess that in upcoming times how much level of cash will be
available with the entity, cash budget is useful tool.
 It is a helpful technique for the management in order to think for upcoming situation and
make the entire company highly efficient (Merits and Demerits of Cash Budget, 2016). Further, for minimising costing aspect as well as maximising level of profitability the
cash budget considered by Tech Limited.
Cons:
 On the other side, if various functions of the firm are not coordinated with each other
properly then budgeted data cannot achieved.
 It totally focused on the subjective estimations only and ignores to other aspects.
 In order to frame and operate cash budget in Tech Limited firm, creates high financial
burden. Hence, it is costly or expensive method for the businesses.
 Moreover, in order to meet estimated cash position high time frame required which affect
productivity of Tech Limited entity.
Capital expenditure budget:
A budget which reflects amounts as well as timing of the fixed assets in order to purchase
by a company is known as capital expenditure budget. It is usually considered to make expenses
on long term or fixed assets like plant, machinery, equipments etc. On the basis of this the firm
easily able to analyse rate of return at the end of completing the whole project. It helps to the
Tech Ltd for making decisions of the long-term strategic investments at the workplace (Capital
expenditure budget, 2017.).
However, it is not helpful to cited company in order to make short-term investment
judgements at the workplace. It takes huge time for preparing budget along with applying in the
firm which create negative impact on the efficiency and productivity of the Tech Ltd.
Balance sheet budget:
A report which is used by the management accountants in order to forecast assets,
liabilities and shareholder's equity for the next year is known as balance sheet budget. On the
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basis of this, Tech Ltd able to know that in the upcoming period how much level of assets and
liabilities will be remained with it. It helps to measure liquidity and financial position of the firm
at previous year through which overall management can make decisions for making expenses at
the working environment. Moreover, it shows asset and stock turnover rates along with capital
structure of the Tech (UK) Ltd.
In contrary to this, it is one kind of overview of financial position for particular time only
where most of the times figures mislead up to the higher level. Further, only few data or balance
sheet budget are not adequate to analyse future scenario of the entity in appropriate manner.
Many times some items of B/S budget i.e. fixed assets etc. are recorded on the basis of historical
cost where effective judgements cannot to be made.
Operating budgets
Sales Budget:
A statement which reflects amount of sales which needs to generate by the firm at the end
of next year is known as sales budget. In this firstly sales units are estimated on the basis of
market research. Further, by considering such units and selling price, sales for next year is
predetermined. Some benefits as well as drawbacks of sales budget are stated below:
Pros:
 The present mentioned budget is supportive in order to predetermine sales revenue
position. Further, proper and effective strategies can be made by managers considering
amount of estimated revenue.
 Furthermore, it is supportive to decline level of total expenses within workplace and
enhance profitability.
 For making effective allocation of financial resources also, sales budget is the best tool
for the Tech Limited organisation (Messner, 2016). Besides these, for framing sales programming also it is useful where targets can be
properly achieved.
Cons:
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 Key loophole of sales budget is related to the estimations in which, if researcher unable to
identify demand of people properly then estimated revenue cannot be generated by the
firm.
 In the organisation it is not possible that all members accept it and work upon desired
sales value.
 It takes more time of the managers and related employees which create negative impact
on efficiency of them directly.
Expense budget:
A statement where all the data and transactions related to expenditures are forecasted for
the next accounting period is known as expenses budget. Various costs for which this kind of
budget formulated are like production, selling and distribution, administrative etc. It is highly
supportive to know total financial burden on the firm. If expenses seem huge or unproductive
then Tech Ltd able to make strategies to reduce it and achieve objectives properly.
On the other side, if the assumptions are not made properly then Tech (UK) Ltd unable to
prepare the expense budget in an effectual direction. Apart from this, if market research is poor
and on the basis of this production expenses are forecasted then it will not able to generate sales.
Therefore, expenses will become additional burden for it where firm unable to meet objectives.
Project budget:
Apart from this, a plan which shows costs and financial resources required for completing
specific task is known as project budget. When the Tech Ltd company uses this particular kind of
statement then easily able to manage the whole project in an effectual direction. Further, through
this, Tech Limited become supportive to decline total cost by implementing some effectual
strategies. It supports to manage delivery of the goods and services in the future period.
However, if the initial plan of the whole project is not made properly then lead to incur
chances of failure. Along with this, chances for incurring huge costs and expenses can be arisen.
Further, to use this budget, more time and lot of information needed.
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B) Procedure of budget preparation
In order to frame budget statements, particular procedures is followed by the Tech
Limited entity. Further, steps considered in this aspect are stated below: Obtaining estimates: At the initial step, data required to prepare such objectives are
estimated on the basis of past performance and market research. In this stage,
departmental managers and heads playing role. Coordinating estimates: At the second stage, the above all estimations are coordinated
with relevant managers (Agarwal, 2016). When anyone not having problem or issues
with this particular plan then move for next phase. Communicating budget: Once plan is coordinated then communicated with the top
managers or assigned authorities in an appropriate way. At this step, when any issues
identified then resolved under the proposed plan. Implementation: At the second last phase, the above communicated budget is
implemented in the Tech Limited company.
 Reporting: At the end of budget preparation process, implemented budget is reported to
the authorised manager. In this, it is evaluated that whether budgeted objectives are
achieved or not. Therefore, corrective actions are taken by the firm.
Determination of pricing
Price is one of the highly sensitive and important aspect for every company because it is
one kind of attraction point of the customers. In order to derive price of specific products and
services, there are several methods used by Tech Ltd company. Such strategies to determine
price are like cost led, market led, competition based, cost plus pricing, market penetration,
skimming, marginal, absorption etc. Using these all, an attractive and profitable price of mobile
chargers as well as electronic gadgets can be determined.
Different costing system: Process costing: An aspect of cost accounting where expenses related to one particular
process like production, selling etc. are determined or analysed is known as process
costing. In this generally, direct materials and conversion costs are included.
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 Job costing: A method through which cost associated with each job product like
electronic gadget and special mobile charger are analysed is considered as job costing. Marginal costing: It is a tool of costing where only variables kinds of the expenses
involved to assess cost of product and net income generated at the end of year. Absorption costing: A system of costing under which variable and non-variable or fixed
expenditures included for assessing cost of production is called as absorption costing.
 Activity based costing: On the basis of the present stated technique, cost incurred in each
activity of the particular business process at the workplace of Tech Limited firm can be
analysed in an appropriate manner.
C) Significant of budget Planning: Budget is an important tool for the company in order to forecast financial
information for the next fiscal period. It helps to clear desired goals and objectives within
workplace and make strategies in accordance to availability of cash. Apart from this, for
establishing an effective communication between organisational members the budget is a
supportive tool. It supports to make decisions that whether fund needs to generate from
external sources of finance or not. Under this, cash balance is evaluated as it gives outline
of cash availability. Control: It leads to known that how much level of sales and revenue has to be generated
along with the level of production within firm (Nuhu and et.al., 2017). On the basis of
this, easily able to control over those expenses which are unproductive for the entity.
Other than these, if production level seems high then helps to control volume of
manufacturing and reduce stock level.
 Evaluation of performance: In addition to this, budget helps to assess business
performance by using variance analysis. In this particular approach, forecasted data
compared with facts and figures generated in the workplace at the end of accounting
period.
M3 Use of various planning tools and application to prepare and forecast budgets
There are various planning tools included in the financials and management accounting
which help to make an effective plan i.e. budgets and forecast several financial information.
Financial budget is effective planning technique by which Tech (UK) Limited become highly
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able to forecast cash flows, assets, liabilities, expenses for purchasing fixed assets and
shareholder's equity. Apart from this, operating budget is another planning tool which helps to
prepare basically three budgets which are like expenses, sales and project.
 Variance analysis: Under this, budgeted as well as actual figures are compared and
analysed properly. It shows performance of the enterprise and helps to make decisions
accordingly.
 Financial analysis: As per this, various financial statements are analysed of the past
accounting periods. On the basis of such statements, future information can be forecasted
easily.
 Ratio analysis: It reflects business performance and helps to compare with past and
present information. Moreover, proper decisions can be made for making investments,
expenses and costs etc.
 Supply and demand analysis: In this market analysis is to be done by taking base of
supply as well as demand these two aspects. On the basis of these elements, management
of Imda Tech (UK) Limited can forecasts expenses and incomes.
 Use of accounting software: With the help of different kinds of softwares the company
able to prepare budgets and forecast various financial information. In accordance to this,
Enterprise Resource Planning is highly considered software.
TASK 4
Ways through which BSC approach is used for responding financial shortfalls
Balanced scorecard is an approach which applied within working environment in order to
assess business performance appropriately. Under this generally four terms included which are
like learning and growth, customer, financial as well as internal business procedures.
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Illustration 1: Balanced scorecard
(Source: What is a Balanced Scorecard?, 2017)
 Finance: In the present project, financial information required to analyse in order to find
loopholes or issues occurred in the Tech Limited organisation. At the time of applying
auditing procedure in the selected firm then it has been identified that, it generates loss at
the end of fiscal year which is worth of 1.5 million GBP. For resolving this huge loss
BSC is an effective tool where financial perspective is referred. It evaluates overall
financial transactions occurred in the firm and compare with final statements at the end of
year (What is a Balanced Scorecard?, 2017). During this respective procedure, if any
kind of issues arisen then identified along with its causes. For example: in the company if
loss generated at the month or year ending then through financial perspective of BSC it
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has been assessed that due to raising indirect cost this issue incurred. Further, the
management will make strategies for reducing those expenses which occurred indirectly
as well as unproductive within workplace. As it will apply the tactics then able to reduce
such expenditures and boost up profitability. Customer: Using the second perspective of BSC i.e. customer, management of the Tech
(UK) Limited easily able to analyse loyalty of the users towards the company. Apart from
this, attraction, satisfaction level, other aspects related to customers etc. are also
evaluated through this. Process: It helps to know that how smooth the business is completing its several aspects
like production, selling and distribution, administration etc. Procedures are reviewed. In
addition to this, to assess that whether firm uses innovative and new technologies to
manufacture products and services also this perspective is supportive.
 Learning and growth: To know that in which ways the firm growing in industry and
become efficient to generate huge sales this perspective is taken into account. Apart from
this, up to which extent employees are learning and growing at the workplace of Tech
(UK) Ltd this aspect of BSC is used.
Connection of KPI with Tech Ltd's financial issues
Key Performance Indicator is one of the highly effectual system of MA through which
financial and non-financial both kinds of the issues can be identified resolved. In the workplace
of Tech (UK) Limited when issues incurred related to cost, expenses, return on investment,
profit, incomes etc. then KPI is connected with cited firm. The reason is that, management
accountant use KPI also along with BSC to assess single financial issues. Further, in context to
non-financial issues like quality, efficiency, productivity etc. also same system is applied by
Tech Limited.
Comparing BSC used within another business organisation
Apart from BSC approach, there are wide range of systems included under the
management accounting which helps to assess financial issues and respond them in favour of
company. As per the present analysis it has been identified that Tech (UK) Limited company
applied BSC for responding financial issues. On the other hand side, Thomsons Online Benefits
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company which has market presence in software industry suffered from the loss before some
years. As this issues occurred then another firm considered Key Performance Indicators
approach which is one part of MA (Otley, 2016). In this different elements are used for analysing
business performance like net profit, product quality, sales, efficiency, productivity etc. After
applying these all indicators, management of Thomsons Online Benefits able to know that at
which stage loophole occurred. For instance, if it founds that due to reducing quality of products
provided by cited firm sales declining and loss incurred. At this position, actions and strategies
for improving standards of goods issues of financials resolved in an appropriate direction.
M4 Ways through which MA helps to firm in sustainable success
On the basis of systems of MA, the Tech UK Limited able to make effective solution of
several financial issues. Once all the shortfalls resolved properly then become highly capable for
generating huge benefits and financially sound in the industry of electronics. As it able to boost
up financial position then easily can provide products and services at the lower cost with the
highest quality. Moreover, it is clear indication of become successful for long period of time in
the selected industry. Hence, it can be evaluated that MA is highly beneficial for the Tech (UK)
Limited in order to get sustainable success.
CONCLUSION
From the above analysis it has been ascertained that, management accounting is a vital
aspect for every firm for framing strategies in order to meet internal objectives. There are
different systems like cost accounting, job costing, stock management etc. essentially required
under the Tech UK Limited company. The reason behind this is that, these approaches helps to
assess costs, profitability and make pricing decisions. Apart from this, different methods of
managerial reporting like accounts receivables, production, sales, budget etc. used by Tech
Limited firm. When looking at the income statements then cited firm generates net loss and
profit worth of -5375 and 4625 GBP as per absorption and marginal costing respectively.
Besides these all, it can be concluded that budget is very pivotal part for the firm in order to
assess the future financial information in respective industry. Moreover, balanced scorecard is an
approach which helps to Tech Limited for analysing financial obstacles and resolve them in
proper direction.
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REFERENCES
Books and Journals
Bertz, J. and Quinn, M., 2014. Interpreting management accounting rules: an initial study of
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