Management Accounting Research and Case Studies

This assignment requires students to analyze various management accounting research papers and case studies. The provided list of references includes articles on topics like competitive strategies, carbon management accounting, strategy and performance analysis, diversity and validity in positivist management accounting research, and more. Students are expected to understand the concepts, theories, and practices discussed in these papers and apply them to real-world scenarios or business cases.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P1 Meaning of management accounting and requirements and types of accounting.............1
P2 Different methods of management accounting reporting..................................................3
M1 Benefits of management accounting systems..................................................................5
P3 Computation of marginal and absorption costing.............................................................5
M2 Range of management accounting techniques.................................................................6
P4 Different types of planning tools and merits and demerits...............................................7
M3 Use of various planning tools..........................................................................................8
P5 How management accounting system used to respond to financial problems..................9
M4 Management accounting system leads to organisation success.....................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting information is crucial for organisation to resolve various issues
and improve upon its performance. Present report deals with importance of management
accounting to Zylla Company by which performance may be enhanced in a better way. Types of
management accounting and methods of reporting are also discussed. Moreover, calculation of
marginal and absorption costing are done. Various planning tools are explained along with
advantages and disadvantages of the same. Furthermore, management accounting systems are
explained which could be used to adapt to respond to financial problems. Thus, such type of
accounting information strengthens internal operations of the company.
P1 Meaning of management accounting and requirements and types of accounting
Management accounting is a useful branch of accounting for the managerial personnel of
the firm so that they may be able to take enhanced decisions in effective manner. This is
essentially required as business operates in dynamic environment where changes takes place now
and often. In such scenario, costs may be increased for manufacturing particular product and as
such, revenue would be impacted significantly. Thus, business needs to make better decisions so
that changes can be handled in effective way and this can be possible because of implementation
of management accounting in the organisation. It refers to that part of management where the
managers look out the needs of the business in relation to it operations, preparing financial
reports i.e. to be used by the management, helps in decision-making and helping them in
planning policies and strategies.
Management of firm relies on financial information which is provided to them with the
help of financial accounting and from this, managerial reports are prepared and imparted to
management in order to take better decision for the firm. Zylla Company also uses such
accounting as it provides clarity from where it has to improve upon and initiate control upon
expenses for injecting profits. Another essence of such accounting is that business can easily
analyse costs incurred on activities which can be reduced up to a high extent (Aykan and
Aksoylu, 2013). It helps organisation to effectively make decisions with much ease. In relation to
this, requirements of different types of management accounting are as follows-
1. Cost accounting-
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Cost accounting is effective method as it analyse costs and then make attempt to reduce
overall expenditures of the firm incurred on manufacturing commodities. This is quite useful
accounting method as overall costs are assessed and unnecessary expenses are carried out which
are not benefiting in the process and as such, they are reduced up too much extent. Zylla
Company can be benefited by cost accounting as expenditures can be eradicated by cost reports
imparted to management. It is essentially required by the firm so that expenses may not exceed
total revenue. There are different types of costs such as variable, fixed, semi-variable, indirect
and direct which are incurred and management can make enhanced decisions to initiate control
upon the same. Thus, cost accounting is essentially needed in the company to minimise expenses
and maximise profits.
2. Price optimisation technique-
Price optimisation is another useful method which is used to carry out how demand varies
with the change in price of the firm in the best possible manner (Burritt, Schaltegger and
Zvezdov, 2011). It is mathematical model which is utilised to know how customer's behaviour
changes when there is increase or decrease in price of particular commodity. This is used to
assess whether customers are willing to purchase at the prevailing price or not. It helps
organisation to quote price with regards to preferences of consumers and as such, price is quoted
in relation to customer's demand. Thus, company can easily sell its products without any
difficulty. Zylla Company should also rely on the price optimisation technique so that customers
may be able to purchase goods in effective manner. It is important as when prices are high, rivals
may drive away customers and when price are set low, profits cannot be garnered. Thus, through
this method, firm can easily quote price which will be beneficial in every aspect.
3. Inventory management-
Production is required so that company may be able to sell products in effective way.
Customer demand can be easily met by the organisation in effective manner (Cadez and
Guilding, 2012). For accomplishing desired production, inventory is needed in optimum
quantum to achieve production. It is required in adequate quantity so that no spoilage may
occur. Wastage is made when excess quantity is ordered by the production department and as
such, extra costs of handling in the warehouse is incurred. On the other hand, if less stock is
ordered, demand of production department cannot be accomplished. Thus, inventory requirement
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related managerial report is prepared and desired quantity is ordered which fulfills demand in the
best possible manner. JIT approach is required so that no wastage may occur as inventory is used
only when it is actually needed in production department. EOQ is useful tool to minimise
ordering and carrying cost and purchase desired quantity.
4. Job costing-
Manufacturing of products is done in order to achieve desired production and meet the
demand of customers in effective way. When production is attained, various costs of
manufacturing are incurred. Job costing is a method based on jobs performed by overheads
which are incurred when production is accomplished. This is essentially required so that costs
incurred on various jobs can be analysed and as such, reduction of expenses may be done in
order to achieve maximum efficiency in the best possible way. It helps organisation to
effectively minimise expenditures on jobs so that maximum production can be attained without
incurring more manufacturing overheads. Zylla Organisation can easily attain production by
controlling upon expenses in effective manner (Lachmann, Trapp and Trapp, 2017).
P2 Different methods of management accounting reporting
Various management accounting reports are described below-
1. Segmental report-
There are various units in the company which performs daily operational tasks. Such
units are also called as segments and are assessed by the management and report is provided to
them regarding performances of varied segments in the best possible manner. The segmental
report is also attached in financial statements which can be effectively utilised by users of
accounting information to interpret financial health of the firm and take better decisions. This
report is helpful for investors which may easily carry out whether investment should be made in
the firm or not. On the other hand, creditors are benefited with regards to solvency position of
company whether loan may be provided to organisation or not. The report includes revenue
generated from operating segments. Moreover, it is made available by public entities and not
private ones.
2. Performance report-
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This report is prepared to assess performance of something which is directly or indirectly
helping organisation to achieve goals in effective manner. Usually, employees' performance is
judged with the help of this report (Types of Managerial Accounting Reports, 2016). It means
that performance can be evaluated by preparation of the report. Management of Zylla Company
is easily benefited by this report as performance of employee's can be judged in effective manner
and if it is not up to the mark, then improvement may be initiated so that performance can be
maximised with much ease. Thus, variances found in actual results and planned one, corrective
action can be taken so that lost productivity of employees may be attained.
3. Inventory management report-
Inventory is required to be ordered in desired quantity as per the needs and requirements
of the production department so that maximum manufacturing can be achieved in the best
possible manner. This is required in optimum and adequate quantity so that it leads to no
wastage. It occurs when more than required quantum of stocks are purchased, it increases
handling expenses as it is needed to be stored in the warehouse. When the same is available in
less quantity, desired production cannot be accomplished. In order to overcome this situation,
inventory management report is prepared (Leotta, Rizza and Ruggeri, 2017). The production
department provides clarity to the management regarding the requirement of inventory in order
to accomplish customer's needs. This report is then provided to Zylla Company's management so
that they may analyse demand and as such, required quantity is purchased and supplied to
production department. Thus, spoilage of resources is eradicated as inventory is managed
effectually.
4. Job costing report-
Job costing is effective way of analysing expenses incurred on various manufacturing
jobs engaged in the production process. In relation to this, job costing report and imparted to
management so that costs on specific jobs can be assessed and measures can be taken to initiate
control upon expenditures in the best possible manner which are not benefiting in overall
production and reducing profits. Thus, with the help of job costing report, expenses on overheads
can be controlled in a better way. Hence, Zylla Company can reduce expenditures on those jobs
which are underperforming and direct those funds to good performing overheads helping in
maximising level of production (MONEM and SAEIDI, 2017).
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5. Accounts receivables ageing report-
Customers are provided with goods on cash or credit basis. When goods are imparted to
customers on credit, payment for the same is received afterwards within credit policy formulated
by the firm. In relation to this, accounts receivables ageing report is prepared by the company so
that it may be able to clarify how much amount is pending to be collected from the debtors. This
report is formulated in which unpaid invoices of consumers are carried out along with their
names and outstanding amount is listed as well. This help organisation to effectively extract how
much money remains outstanding and as such, company can collect the same from the
customers. If more amount is pending, firm needs to implement strict strategies so that payment
may be recovered within stipulated time.
Benefits of management accounting systems
The management accounting systems have immense benefits to organisation. Costs can
be analysed and controlled in a better way because of cost accounting. It is helpful as company is
able to initiate control upon expenses in the best possible manner. Furthermore, enhanced
decisions can be taken with the help of management accounting systems. On the other hand, firm
is able to assess demand of customers by forecasting their requirements and as such, demand can
be analysed and as a result, profits may be garnered with much ease.
P3 Computation of marginal and absorption costing
Marginal Costing income statement
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Marginal/Variable costing is the cost which occurs when an extra unit of output is being
produced. It includes all the direct cost required to produce a product i.e. the material, labour,
and wages it also includes indirect cost i.e. Variable overheads. It can be interpreted that income
statement on the basis of marginal costing is carried out above. The total sales revenue is 21000
having 600 units at per rate of 35. Cost of sales amounts to 9100 which is attained by 700 units at
the rate of 13. From this, closing inventory is deducted which is 1300 having 100 units left for a
period and having 13 per rate. Thus, variable cost is achieved as 7800. Contribution per unit is
arrived at 13200 and from it, variable overheads are deducted amounting to 600. Then after
subtracting variable costs, all fixed costs are deducted to arrive at net profit. The fixed
expenditures are production overheads, selling expenses, administrative costs amounting to
2000, 600, 700 respectively. Thus, net income generated is 9300 which is good for Zylla
Company as it is able to control upon its expenses.
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Absorption Costing income statement
It means to include all the cost incurred in the business. It is also known as “full costing”
as it include both variable and fixed overhead charges in the cost of product or the operations
This most common and traditional method use to ascertain the cost of product. It is also known
as “full costing”. Absorption costing calculation is carried out by effectively absorbing
overheads. Various manufacturing costs are absorbed by this technique. It can be interpreted that
sales revenue achieved by the company is 2100 having 600 units at the rate of 35. On the other
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hand, cost of production is 11200 which can be further bifurcated as 700 units at rate of 16. The
closing stock is 1600 and accounting to fixed production overheads is 100. Thus, total cost of
production is 9500 and as such, contribution per unit is 11500. On the other hand, variable cost
of 600 is deducted. Furthermore, all fixed costs are deducted such as selling and administrative
ones. Thus, profit arrived is 9600 which means that Zylla Company has gained good net income
after effectively absorbing manufacturing expenses (Turner and et.al, 2017).
Range of management accounting techniques
There are various techniques which are helpful to the organisation to improve upon its
performance. Among this is cost variance which is the difference between actual and planned
costs. It can be said that such technique is helpful for producing financial documents quite
effectually. Another technique is revaluation accounting which implies that revaluation of assets
is done so that book value and market value can be adjusted. This help Zylla Company to
effectively prepare financial documents.
P4 Different types of planning tools and merits and demerits
The various planning tools and advantages and disadvantages are listed below-
1. IRR-
IRR (Internal Rate of Return) is another effective method used to judge potentiality of the
investment in effectual manner. It is uses discounting rate which makes NPV (Net Present
Value) of cash inflows of new project to zero. This means that return that will be generated from
internal operations is carried out by this planning tool. Higher the IRR, better for Zylla Company
to invest in the project (Fourie, Opperman, Scott and Kumar, 2015).
Merits
1. One of the main advantage of IRR is that it takes into consideration time value of
concept in effective manner. Moreover, it analyses cash flows that will generate internal returns.
2. Another merit of this planning tool is that calculating IRR by taking discounting rate is
an easier task to be accomplished. Thus, potentiality and effectiveness of project can be judged
with much ease.
Demerits
1. The main disadvantage of IRR project size is not taken into account. Thus, cash flows
are analysed and compared with the capital invested in the new project.
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2. IRR is not suitable as future expenditures are not focused at all. This method only takes
into account present value.
2. NPV-
NPV is one of the commonly used planning tool by the business in order to judge how
much profitable is the new project (Maher, Fakhar and Karimi, 2018). This means that
profitability aspect of project is analysed and as such, firm is able to take decision whether
investment should be made or not. Higher the NPV, better for the organisation as investing in
project is worthwhile. NPV is difference between cash inflows and outflows for a particular
period.
Merits
1. One of the main advantage of NPV is that time value concept of money is considered
while evaluating profitability aspect of the project.
2. It is useful as cost of capital and risk associated while making estimations regarding
future is ascertained in effective manner.
Demerits
1. It is disadvantageous as it relies on discounting rate which is difficult to ascertain.
Moreover, projections on such basis may lead to inaccurate decisions.
2. This method is not useful as cost of capital is obtained with much of guesswork and as
such, results drawn on this basis may outweigh good investment and wrong conclusion can be
drawn (Quattrone, 2016).
3. Forecasting- It is effective planning tool as it is used to predict future sales of entity.
Merits
 Predicts future sales in effective way.
 Expenditures can be analysed easily.
Demerits
 Dependent on judgement of experts which are not correct sometimes.
 Proper analysis cannot be accomplished as it is based on assumption
4. Variance analysis – It is used to figure out deviations between planned and actual results.
Merits
 It is useful and simple to analyse variances
 Corrective action is taken for improvement
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Demerits
 It takes lot of time to assess differences
 Routine work is hampered of personnels and productivity is reduced.
5. Standard costing- It is used to take difference between actual and expected costs if any.
Merits
 Cost variances are removed instantly
 Reduction in cost can be attained.
Demerits
 It is difficult to carry out variances
 It is time consuming technique
Use of various planning tools
The planning tools such as zero-based budgeting, NPV and IRR are effective planning
tools which are helpful in preparing forecasts and budgets. Zero-based budgeting help to prepare
budget from scratch base and as such, no historical figure of previous budgets are taken and as
such, fresh budget is prepared. This planning tool is widely used in the business to formulate
budget. Moreover, IRR is used to test potentiality of investment so that project may be analysed
whether adequate returns will be generated by investment or not. On the other hand, NPV is
widely used to check whether new project would be profitable for the firm or not. Moreover,
concept of time value of money is utilised by NPV. Thus, planning tools are effective way to
forecast budgets.
P5 How management accounting system used to respond to financial problems
Financial problems can be easily resolved by Zylla Company by taking into consideration
management accounting systems. These are described below-
1. Balanced Scorecard-
The balanced scorecard is one of the effective system to respond to financial problems of
firm (Renz and Herman, 2016). This system measures viability of internal functions and as such,
external results can be generated in the best possible manner. If external outcome is not good,
feedback is provided to company to improve upon and strengthen internal functions for desired
results. With the help of this system, improvement is done which is effectively strengthens
organisation's internally and as such, financial issues can be resolved in effectual way.
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2. Budgetary target-
The budget is prepared in order to attain planned output in the best possible manner. This
help company to attain stated targets in effective way. Budgetary target is an prediction of
amount of resources that would be needed to perform future tasks with much ease. In relation to
this, expenses to be incurred are also listed in budgetary target and as such, financial goal is
prepared in anticipation of expenses and how much profit will be garnered by the company.
Thus, it helps Zylla Company to effectively respond to financial problems.
3. Benchmarking-
Benchmarking is another useful method which can initiate improvement of the firm and
financial issues can be resolved up to a high extent. This is a method by which industry' best
performing organisation may be assessed by the firm (Tappura and et.al, 2015). The practices,
rules and strategies can be followed by Zylla Company so that it may be able to implement
strategies of best performing organisation and as such, improvement can be done in effective
manner. Moreover, financial problems could be easily resolved because of benchmarking. Thus,
firm is benefited by such system of management accounting. It can be said that organisation is
able to improve upon its financial condition with much ease.
4. Key Performance Indicators (KPI)-
KPI is useful management accounting system which is used to assess performance of
workers. This means that organisation ascertains whether employees are performing as per stated
targets or not. By implementing this system, Zylla Company easily assess employees who are
efficient enough and productive as well. Thus, performance is analysed and funds are diverted
from unproductive to highly productive and efficient workers. Hence, by this KPI is used to
adapt to financial problems with much ease (Helden and Uddin, 2016).
5. Financial governance-
Financial governance is termed as the set of processes, rules and duties which are to be
performed by the top management so that company may be able to resolve problems in effective
manner. The duties are assigned to personnels who possess relevant abilities, capabilities so that
they can manage Zylla Company quite effectually. This is crucially required as without capable
management team, company cannot flourish and operational tasks would be completely wasted
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and no outcome would be achieved because of improper management. Thus, financial
governance help to respond to problems.
Management accounting system leads to organisation success
The management accounting system is effective way which leads organisation to success
with much ease. In relation to this, cash flow statement should be prepared by the company so
that cash generated and utilised in various activities could be utilised in effective way (Wouters
and Kirchberger, 2015). The activities of cash flow statements are operating, investing, financing
which provides clarity about cash position of company. Thus, by analysing activities, operating
expenditures can be reduced so that production may be injected. Hence, this system leads
organisation to success. Moreover, management accounting provides way to carry out better
decision with the help of financial information supplied to the management.
CONCLUSION
Hereby it can be concluded that organisation may be able to take better and effective
decision with the help of financial information provided by the financial accounting. This help
management of company to take decisions so that internal functions may be strengthened in
effective way. Moreover, various types of management accounting is helpful in ascertaining
performance of company and as such, better decision can be taken with much ease. On the other
hand, marginal and absorption costing are useful technique to analyse expenses and initiate
control over the same leading to more profit. Furthermore, planning tools discussed are quite
useful to Zylla Company so that it may be able to take structured decision with regards to new
project. Management accounting systems are also useful for organisation so that financial
problems could be resolved in effective way. Thus, management accounting information is much
beneficial to organisation.
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REFERENCES
Books and Journals
Aykan, E. and Aksoylu, S., 2013. Effects of competitive strategies and strategic management
accounting techniques on perceived performance of businesses. Australian Journal of
Business and Management Research. 3(7). p .30.
Burritt, R .L., Schaltegger, S. and Zvezdov, D., 2011. Carbon management accounting:
explaining practice in leading German companies. Australian Accounting Review. 21(1).
pp.80-98.
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Cadez, S. and Guilding, C., 2012. Strategy, strategic management accounting and performance: a
configurational analysis. Industrial Management & Data Systems, 112(3), pp.484-501.
Englund, H. and Gerdin, J., 2018. Management accounting and the paradox of embedded
agency: A framework for analyzing sources of structural change.
Fourie, M.L., Opperman, L., Scott, D. and Kumar, K., 2015.Municipal finance and accounting.
Van Schaik Publishers.
Lachmann, M., Trapp, I. and Trapp, R., 2017. Diversity and validity in positivist management
accounting research—A longitudinal perspective over four decades. Management
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Leotta, A., Rizza, C. and Ruggeri, D., 2017. Management accounting and leadership construction
in family firms.Qualitative Research in Accounting & Management. 14(2). pp.189-207.
Maher, M.H., Fakhar, M.S. and Karimi, Z., 2018. The relationship between budget emphasis,
budget planning models and performance. Journal of Health Management and
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MONEM, R. and SAEIDI, M., 2017. THE SAFETY-RELATED COST ENGINEERING IN
WORK ENVIRONMENTS FROM THE MANAGEMENT ACCOUNTING APPROACH
AND USING MODERN PERFORMANCE MEASUREMENT SYSTEMS.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research. 31. pp.118-122.
Renz, D. O. and Herman, R. D. eds., 2016. The Jossey-Bass handbook of nonprofit leadership
and management. John Wiley & Sons.
Tappura, S. and et.al, 2015. A management accounting perspective on safety. Safety science. 71.
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Turner, M. J and et.al, 2017. Hotel property performance: The role of strategic management
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van Helden, J. and Uddin, S., 2016. Public sector management accounting in emerging
economies: A literature review. Critical Perspectives on Accounting. 41. pp.34-62.
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Wouters, M. and Kirchberger, M. A., 2015. Customer value propositions as interorganizational
management accounting to support customer collaboration. Industrial Marketing
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Online
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