Management Accounting Research and Sustainability

The provided assignment details a collection of academic articles, books, and online resources related to management accounting. The sources cover various topics such as environmental management accounting, strategic management accounting, and the relationship between theory and practice in management accounting. The resources are from reputable publications like the Journal of Accounting & Organizational Change, Management Accounting Research, and the Australian Journal of Business and Management Research. This collection is suitable for students seeking past papers and solved assignments for their studies.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Essential requirement of different management accounting systems...................................1
P2. Different methods of management accounting reporting.....................................................3
M1...............................................................................................................................................6
D1................................................................................................................................................6
TASK 2............................................................................................................................................6
P3 Calculation of cost by using marginal and absorption costing methods................................6
M2 ..............................................................................................................................................8
D2................................................................................................................................................9
TASK 3............................................................................................................................................9
P4 Advantages and disadvantages of different types of planning tools used for budgetary
control.........................................................................................................................................9
M3.............................................................................................................................................11
D3..............................................................................................................................................11
TASK 4..........................................................................................................................................11
P5 Adoption of management accounting systems to respond financial problems....................11
M4 ............................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
.......................................................................................................................................................15

INTRODUCTION
Management Accounting is a system which helps in the collection of financial and non-
financial information. This system plays an important role to control and monitor the employees
effectively to enhance their performance. It includes various methods of accounting like cost,
inventory and job costing which contributes in planning, decision-making, risk management, etc.
Application of such systems enhance the decision making power of management of organisation
which helps in formulation of effective strategies and budgets. These budgets are working as
standards which guide employees in performance of their different functions. Further, such
standards are used regarding appraisal of actual performance of employees. This helps in the
identification of issues which are faced by employees at workplace. Zylla is a small company
which provides diversified products in the UK (Vasile and Man, 2012).
In the present report, different management accounting systems and their essential
requirements in organisation, different methods of management accounting reporting, calculation
of cost using marginal and absorption costing methods as well as advantages and disadvantages
of different types of planning tools which are used for budgetary control will be explained. Also,
the use of management accounting systems in response of different financial problems faced by
organisation will be discussed.
TASK 1
P1. Essential requirement of different management accounting systems
Management Accounting: It is an important process of identifying, analysing,
measuring and communication of important information which helps in the accomplishment of
organisational objectives. This includes various accounting systems and reports that help in the
collection of financial and non-financial information which is further used in preparation of

effective strategies and budgets. This provides an opportunity to take effective decisions
regarding their day to day business activities. Various systems of management accounting helps
to make improvement in major three areas which are strategic , performance and risk
management. The basic function of management accounting is to help the manager of Zylla to
plan about future actions and enhance decision-making power which assists in formulation and
implementation of strategies. It includes the use of various accounting methods like job costing,
inventory management, variance analysis, etc. Every different method has its own importance
regarding presentation of important information of organisation. Similarly, management
accounting reports help in the interpretation of such information to draw important conclusion.
Large number of benefits are arrived by the management of Zylla like appraisal of employee’s
performance, preparation of effective policies, determination of actual position of organisation in
market, etc. Overall, impact of such systems is that it helps in the achievement of predetermined
targets within stipulated period of time (Ward, 2012).
Essential requirements of management accounting systems
The major requirement of these systems is to manage their different functions which
contribute in improvement of existing performance of employees. This provides an opportunity
to achieve their goals effectively and efficiently. Three areas which are improved with the use of
such accounting systems by the manager of Zylla are mentioned as below:
 Strategic management: Management accounting systems help in the formulation of
effective policies which guide employees to perform their work on the basis of such
strategies. This can be prepared with the help of financial and non-financial information.
It helps in the removal of work related issues.
 Performance management: In this, performance of employees are appraised on basis of
such standards and budgets which are prepared by the manager of Zylla. This provides an
opportunity regarding providence of solution which improves their skills and knowledge.
 Risk management: Information provided by management accounting systems helps in
identification of the risks which are associated with functions of zylla company. For
example: Job costing method helps in the identification of most profitable process which
helps to improve their profitability and optimum utilisation of given resources (Albelda,
2011).
Different management accounting systems

Large number of accounting systems are adopted by the manager of Zylla which help in
preparation of different accounts. Such accounts provide information which is further used to
operate business functions effectively. Different accounting methods are defined as below:
 Cost accounting system: It is an effective system which helps in the determination of
costs which are actually incurred by Zylla in production of their different products. The
main aim behind use of such system is to effectively allocate costs on basis of results
arrived by organisation. The manager of Zylla uses this system regarding reduction of
irrelevant costs and increase their profit margin as well. This helps in the determination
of profitability, costs and other factors which have influence on achievement of desired
targets. This system is used by manager of company to ascertain the amount of expenses
which are incurred in manufacturing process.
 Inventory management system: Major aim behind the use of such system by the
manager of zylla company is to effectively track level of stock available in organisations.
This provides an opportunity regarding effective allocation of stock to different
departments as per their needs. This system also contributes in the reduction of total cost
of inventories to generate high returns from their different business functions. This
system provides timely information regarding shortage of raw materials. This helps in
avoiding the situation of shortage in raw materials. To effectively track their stocks,
manager of zylla company uses ABC costing method to control and monitor their level of
stocks (Arroyo, 2012).
 Job costing system: This system has the main function of recording job cost for each and
every item. It helps in effective allocation of direct material and labour which brings
effectiveness and efficiency. This method is effective when organisation manufactures
different kinds of products which are not related to each other.
 Managerial accounting: This accounting system improves decision making power of the
manager of zylla company, as provides various financial and non-financial information. It
can be further used by them to improve control and manage their different functions on
basis of these standards (DRURY, 2013).
P2. Different methods of management accounting reporting
Reports: It is one of the important aspects which includes recording of important
financial transactions of zylla company on regular basis. The data which is recorded in such

different reports is gathered from different sources like operational, financial, investing activities,
etc. Such reports have large number of important for zylla company. It helps in providence of
internal and external information to their different stakeholders. Such different reports which are
prepared by the accounting officer of zylla company are performance report, job cost report,
Accounts receivable report, inventory management report etc. All these reports provides
important information which is further used by stakeholders to make their decisions.
One of the crucial report of every organisation is their profit and loss account. This
account provides the information regarding income and expenses incurred by company during
one accounting year. This account is further used by the manager of Zylla company to prepare
income report to support their decision making regarding important matters. This reports
provides the information regarding the net profits earned by organisation in one accounting year.
This helps to keep record of their expenses and try to minimise extra costs which are incurred on
non profitable projects.
Reporting provides the information regarding the functions which are performed at
different level of organisation. This helps in determination of the ongoing projects which are
performed in an organisation. Different reporting systems have their own importance on different
procedures. This helps in preparation of the effective budgets which enhance their future
profitability.
Importance of reporting systems
As the large number of importance are gather by the manager of Zylla company with the
use of different reporting systems. One of the major benefit which is derived by Zylla, due to
timely providence of information to stakeholders is to gain their trust and confidence towards the
activities of organisation. This also helps to make good relation with their clients and customer's.
It provides opportunities regarding improvement of their position and image in market. Different
importance of such reporting systems are define below:
 Providence of valuable information: Different reports consist different information
regarding performance of different departments. So, it provides real information of each
possible level of organisation. The informations which are gathered from the use of such
reports are current trend of business, cash flow, fund flow etc.

 Improved decision-making: Large number of information is provided which enhance
the decision making of manager of zylla regarding selection of best alternative from the
large number of choices (Herzig and et. al. 2012).
 More efficient use of resources: The major importance of reporting system is helps in
identification of the operational inefficiencies. This provides opportunity to effectively
allocate resources in removal of such problem. This helps in improvement of productivity
at maximum level by optimum utilisation of given resources.
 Reduces loss: Such reports helps in anticipation of future issues and problems. This
provides opportunity regarding preparation of effective contingent provisions which
lowers down the impact of such future issues.
 Increased financial returns: Reports present by accounting officer of zylla company
helps the manager in identification of lack of knowledge among the employees. This
provides opportunity to adopt effective training programmes which improves their skills
and performance. It helps to earn large number of profits by completion of their tasks
within given period of time.
Different types of reporting system
There are many reporting systems are used by the accounting officer of zylla company
which contributes in improvement of their productivity and profitability. Such different reports
are mentioned below:
 Performance report: This report is important regarding determination of exact position
of Zylla in market. This reports contains the information regarding past information of
company which is easily compared to interpret current position of organisation. With the
help of such report, easy to identify information regarding actual utilisation of resources,
future trends etc.
 Accounts receivable report: It is effective report which contains information regarding
the current debtors of Zylla from which some amount is due to come in business. This
helps the manager to analyse information regarding their credit policies and the time
period under which amount is recovered from their debtors. If the current policies are not
effective to recover amount then it helps in preparation of effective strategies and policies
(Kotas, 2014).

 Inventory management report: It is important report which is need to prepare by every
organisation regarding optimum utilisation of their given resources. ABC costing and
EOQ are two methods which are used by accounting officer of zylla regarding
maintenance of record of stocks. This helps to maintain the sufficient balance of their
stock.
 Operational budget report: This report provides the information regarding estimate of
expenses which are incurred by organisation production of their products. This helps to
ascertain their profitability ratio which is earned by organisation in future. This report
includes the information regarding day to day functions of zylla.
 Job cost report: This report provides the information regarding the cost which is
incurred on starting of any new project. It is effective method for determination of the
profitability of particular job by evaluating about their costing and revenue. Such reports
provides the information the manager of zylla company to identify most profitable
process which provides higher return. This helps to save important time and cost on such
processes which are not much profitable (Lukka and Vinnari, 2014).
M1
There are large number of merits of using management accounting system to zylla
company which is define below:
 It provides opportunity regarding reduction of operational expenses by focusing on
profitable projects. For ex, Job costing method helps in identification of such projects.
 These systems provides financial and non financial information from which important
conclusions are drawn by the managers which improves their decision making power.
 It also provides opportunities regarding improve their financial returns through effective
forecasting about demand and sales which arises in future period of time.
D1
Reporting systems helps to provide information about organisational activities to
different stakeholders. Zyalla is small company which provides large number of diversified
products. Use of such reporting systems helps to interpret information which increases their
results and provides opportunity regarding improves their profitability. Such information is
further used to make their budgets and improves their forecasting power.

TASK 2
P3 Calculation of cost by using marginal and absorption costing methods
Cost: It is an amount which is required to be pay to get sufficient amount of results. In
organisation context, cost means which is incurred by company in production of [particular
product. It includes all costs which are related to direct labour, material, resources, workers etc.
Forecast about costing involved in production process helps in determination of the profitability
of the project. Zylla company, also identifies the cost which incurred in production of unit. It
provides opportunity to them to ascertain their profit margin. There are many methods which are
used in calculation of cost, but two methods which are used in Zylla are marginal and absorption
costing which are define below:
 Marginal costing: It is effective method which is used by the accounting officer of zylla
company in determination of cost incurred on the production of one more extra unit. This
method consider only variable costs and ignore fixed costs which are incurred in
production process. It means that, marginal cost includes only prime cost and variable
overheads. This method is used only if the break point is achieved. In calculation process,
formula which is used is change in cost is divided by change in quantity (Parker, 2012).
 Absorption costing: This method provides emphasis on both variable and fixed cost in
process of calculation of cost. It means all cost which are incurred in production of
particular product is considered by accounting officer. Cost is calculated by consideration
of both direct and indirect expenses. Direct expenses are such which are directly related
to the production of product. This includes about raw material, labour cost etc. Indirect
cost are such which not directly related in production process. This includes the cost of
rent of factory etc.
Absorption costing Marginal costing
It includes both variable and fixed cost in
calculation of production cost
It considers only variable cost in calculation
process of product cost. Fixed cost are
considered as period costs.
Inventory is valued at full production cost
means fixed and variable both are included.
Stocks are valued on the basis of variable cost
only.
It is not suitable method for making effective It one of the effective method which helps to

decisions enhance their decision-making power.
To attain gross profit needs to deduct cost of
goods sold from total sales
To attain contribution accounting officer need
to deduct variable cost from total sales
This includes the evaluation of information to
provide information to external stakeholders to
enhance their decision making. It helps in
calculation of income tax effectively.
It includes the analysis of data for the purpose
providing information internally within the
organisation.
Computation of net profit by using marginal costing
Profit and loss statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Calculation of Net profit by using absorption costing
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:

Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
M2
Accounting tools are further used by the management of Zylla company to understand
about financial position during an accounting year. Such information helps to enhance their
investment planning and determination of the project which is more profitable. From the analysis
of financial statements of company it is identified that company has sufficient amount of funds
which cab be used in future to expand their business operations. So, it is important to keep the
record of data which is used as planning tools to identify about the most profitable processes in
organisation (Van der Stede, 2011).
D2
After interpretation of the financial statements of zylla company, it is observed that
absorption and marginal costing are providing different profits. If absorption costing method is
used then organisation is getting the revenue of 7800. On other hand, with the use of marginal
costing method the organisation goes to earn the revenue of 7500. This difference which is arises
of 300 is due to non consideration of fixed expenses by absorption costing method
(Baldvinsdottir, Mitchell and Nørreklit, 2010).
TASK 3
P4 Advantages and disadvantages of different types of planning tools used for budgetary control
Budget: It is a plan which is prepared for particular period of time which provides
information regarding different functions of organisation. It can be prepared for the future period
of time to provide direction to their employees regarding their objectives and aim which they
have to achieved in such accounting year. It can be of various kinds like finance budget,
operating budget etc. For ex, financial budget helps in effective allocation of funds to different
departments of company. On other hand, operational budget working as standard which is
required to adhere by employees in performance of their different activities.

Budgetary control: It is considered as important technique of budgeting which helps the
management of zylla to carry their different operations effectively like, planning, coordination
and analysis. It in included in such part of budget which is categorised into different sections
which is called as budget centre. It provides the opportunity to the manager of zylla, to
understand the concept of effective management of resources in accomplishment of their
objectives without paying extra costs (Christ and Burritt, 2013).
Process of budgetary control
 Consultation with managers: It is important for manager of zylla company to consult
with other managers of another divisions. This helps to ascertain important information
and their view points which helps in preparation of effective budgets. This contributes in
maintenance of effective communication between the departments for the success of
zylla.
 Effective assumption: It depends upon the capability of manager of zylla company to
effectively interpret conclusions from such informations which are derived from other
managers. Effective assumption power helps to make contingent provisions which protect
from future losses (Cinquini and Tenucci, 2010).
 Fixing of organisational data for budget to accomplish objectives: This includes the
process of gathering and fixing of data from various departments which is further used to
make plans and setting of standards.
 Measurement of actual data with budgeted: Under this step, actual performance of
zylla is compared with the budgets which are prepared by management to estimate their
profitability and growth rate. This also provides opportunity regarding to solve their
issues and improves their performance.
 Review analysis: It is final stage, which includes the process of review about
ascertainment that their process is goes into right direction or not. If it is working
properly, approved by higher authorities of Zylla company.
Planning Tools: It include all tools which are used by the management of zylla company
to maximise their planning skills. It helps to ascertain their future goals and objectives
effectively. This also helps in development of business plan. Such different planning tools which
are used by the managers of zylla company are define below:

Forecasting tools: These tools are basically used by the management of zylla company
to forecast about their future operations. To forecast about future actions, needs to use historical
data which provides information regarding their current position. To make effective budgets,
management needs to have good skills, knowledge and judgement power.
Advantages: The main advantage of of this tool is that it consider past performances and
objectives in preparation of future plans. From the past figures of sales and cost, helps to
ascertain the trends which are going to arise in future (Dillard and Roslender, 2011).
Disadvantages: The budgets are based totally on estimations, so not provides the actual
figures of cost and sales achieve by company in future.
Scenario tools: This includes the process of use of alternative tools as per the situation
arises in front of the manger of zylla company. This provides opportunity regarding to enhance
their planning and operational management. It can be changed as per change in demand and cost
incurred by organisation.
Advantages: Application of such tools helps to effectively understand about situations
arises in zylla. It provides opportunity to apply effective method which improves efficiency.
Disadvantages: It is considered as time consuming tool in comparison to other
approaches. It not always provide accurate and right information (Macintosh and Quattrone,
2010).
M3
Large number of planning tools are used by the management of Zylla company. Such
planning tools helps in preparation of the effective budgets which are used as standards. The
planning tools are used are forecasting, scenario tools etc. Such tools also have some
disadvantages as they are not providing accurate and based on estimation.
D3
Financial problems are the issues related to funds arises in front of the management of
company. Such issues have large number of effect on production functions of company. It is
important for manager to analyse such issues because it helps in removal of risks.

TASK 4
P5 Adoption of management accounting systems to respond financial problems
All the organisations which are working always have the fear of financial problems. Such
financial problems lowers down the capacity of organisation to perform their different functions
effectively. It is noticed that finance and performance has direct relation with each other.
Financial issues are arises due to not effectively using the techniques of recording financial data.
There are many tools and techniques are present which are used by the management of
organisation ascertain their financial return. This helps to effectively allocate funds to different
departments as per their requirements. Budgetary control is effective method which includes
large number of techniques which helps regarding continuous monitoring of issues and
performances to sustain better control. The management of Zylla company used such tools to
attain effective control over the inflows and outflows of capital ( Nandan, 2010).
Techniques used to overcome from the financial problems
There are many techniques are available which is used by different organisations to
overcome from their financial problems. The techniques which are used by the manger of zylla
company are mentioned below:
 Key performance indicators (KPI): Such indicators are working as standards which are
required to achieve by every employee of organisation. If such requirements are not
fulfilled, issues are identifies and proper solutions are provided. Such indicators helps to
make effective control over performances (Nixon and Burns, 2012).
 Benchmarking: This includes about setting goals for individual employee of company
on the basis of their ability and capacity of performing tasks. Such benchmarks are
required to achieve by employees in completion of their tasks. This helps in optimum
utilisation of given resources either raw materials of funds.
Zylla company 4Com Plc
Zylla company is small company which
operates their functions at small level. In this
case, large number of chances are present
regarding mistakes are happen in future. To
make their processes more effective needs to
It is also small organisation which is working
in telecom sector. This organisation also needs
to makes their process effective in achievement
of heir common goals. As different functions
are involved in broadcasting business required

adopt KPI criteria which helps to keep
continuous eye on the performance of their
employees.
to provide different goals to each and every
employee. To make effective control upon
them, there is need adopt Benchmarking
criteria.
If such methods are not used then it effects the
decision making power of management. For
this purpose, there is need use different tools to
remove such issues.
To support in achievement of individual goals
of employees. Management decided to provide
appropriate training programmes to improve
their skills and knowledge.
M4
After identification of financial problems, needs to adoption of the such approaches
which helps to overcome from this issues. The main two approaches which are used by Zylla are
KPI and Benchmarking. Both these approaches helps to fix standards and keep continuous
monitor on their performances. This provides opportunity regarding improvement of their skills
(Qian, Burritt and Monroe, 2011).
CONCLUSION
It has been concluded from the above report that, management accounting is important
for every organisation to achieve success in their future transactions. This includes various
systems which helps in collection of information from different sources which can be further
used to interpret important conclusions. Absorption and marginal costing are two effective
methods which are used by zylla to understand about profitability. KPI and Benchmarking are
two different approaches used to tackle financial problems.

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Kotas, R., 2014. Management accounting for hotels and restaurants. Routledge.
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