Management Accounting Tools and Techniques

This assignment provides an in-depth analysis of management accounting tools and techniques used by Ryanair Airlines. It discusses the application of key performance indicators, benchmarking, and cost accounting systems to enhance financial governance and decision-making. The study also examines the role of management accounting in supporting servitization and organizational learning approaches.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various kinds of accounting systems:...............................................................................1
P2: Several approaches of management accounting reporting system ..................................2
M1...........................................................................................................................................4
D1...........................................................................................................................................4
TASK 2............................................................................................................................................5
P3 Net profit as per marginal and absorption costing method:.............................................5
M2...........................................................................................................................................6
D2...........................................................................................................................................6
TASK 3............................................................................................................................................6
P4: Advantages and disadvantage of planning tools use for budgetary control.....................6
M3:.........................................................................................................................................8
D3:..........................................................................................................................................8
TASK 4............................................................................................................................................8
P5: Comparison of financial problems arises in Ryanair with Lufthansa airlines ................8
M4:.........................................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
In present the scenario, it has been seen that management always looking to use best
accounting systems that can assist in generating more effective outcomes for an organisation. It
has been seen that management accounting systems are one of the most useful tools that can
assist in managing and record on financial transaction in more systematic manner. Through this,
managers should make proper understanding of different systems and report that are useful in
taking crucial decision-making in context to the Ryanair company. The primary motive of this
project report demonstrate several types of report those are helpful for Ryanair company. By this
there long and short-term objectives can be attain in more effective manner (Hilton and Platt,
2013).
However, specific information about various accounting systems and cost techniques
which are helpful for assessing overall net profitability of the company. Apart from this, project
would guide certain planning tools which are related with budgetary control. Henceforth, this
report will assist in effective measurement of financial issues those are present in the mentioned
company are discuss under this report.
TASK 1
P1 Various kinds of accounting systems:
As provided in the case study, as this can be said that Ryanair Airlines services that
operates two countries which are UK and Ireland. This is emerged in 1985 by the Ryan family.
The main objectives of this airline organisation for rendering the best and efficient services to the
passengers so that the company could gain the sustainability for their business operations.
Nowadays, Ryanair airline have uses their business operations in an effective manner by using
various management accounting system in an effective manner.
Cost Accounting System: This is the cost accounting system which helps to reduce the
cost of the product or services in an effective manner. Here, in the case of Ryanair Airlines uses
costing accounting system which ultimately helps to lower the price of the passengers in an
effective manner (Youssef, 2013). The cost accounting system is the effective tool that can be
used by the organisation in order to gain their business sustainability in an effective manner.
Earlier, the traditional costing method was used by the organisation for lowering the cost of their
products. But this is the modern costing approach which helps the organisation for lowering the
product or services in an effective manner.
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Job Costing System: This is the job costing system which is used at the time when the
product is produced in a lot. This is the costing tool under which various products are made in a
single lot and the cost is assessed for a lot not for a single quantity. This is the quantity which is
used for making the sustainable development. The Job costing is the tool which is used by the
organisation where the manufacturing of the products are done. Job costing system helps the
organisation in order to assess the cost of a particular lot.
Price optimisation system: This is the most effective tool which is used by organisation
for optimising the price of the product in an effective manner. By using this tool, company would
get to know about the competitors price so that the products or services of the quoted company
which could make an effective strategy for gaining the sustainability by gaining the competitive
advantages via lowering the price of the product (Klemstine and Maher, 2014).
Inventory management system: this is one of the most crucial accounting system which
is used by the organisation in order to optimise the inventories in an effective manner. Inventory
management system helps the organisation for maximising the available resources in an effective
manner. However, the main obstruction for using this inventory management system is to lower
the cost in an effective manner. By using this system, inventory is managed effectively so that
the business could gain the sustainable development and also take initiatives to lower the cost of
the product. Now the Ryanair airlines needs to adopt this management accounting systems so
that they could attempt to gain the sustainability and also helps the organisation to lower the cost
of the product in an effective manner. There are certain tools in order to lower the cost in an
effective manner. These all are the modern accounting approach which ultimately helps to gain
the sustainability. There are certain tools which could gain the sustainability in an effective
manner. The management accountant uses these tools in an organisation so that the organisation
could attain the competitive advantage over the other rivals.
P2: Several approaches of management accounting reporting system
It has been seen in various profit motive companies which are operating in manufacturing
or service sectors that they are having certain issues that are related with recording of financial
transactions. The managers of Ryanair aircraft's use to protect their operations resources of losses
through using appropriate reporting system. A report is known as systematic record of all the
financial transactions those are being done by company in their one fiscal year of time. It is
necessary for them to manage their valuable aspects that can helpful them in increasing
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profitability as well as to take competitive benefits over other companies. This is an essential
objectives of managers to maintain their everyday transaction in more reliable manner in
accordance to analyse financial position of the business (Ward, 2012).
This would require to follow certain policies and regulation of accounting in accordance
to modifies specific changes to overcomes mistakes that are hampering their overall business
operations. There are different types of method that would be useful for the purpose of reporting
specific transactions into their respective format. Some kind of reports are needed to prepare by
Ryanair company. This would include budgets, account receivable, inventory management
system and other. These reports would assist in delivering plenty of opportunities in order to gain
more reliable results to Ryanair company as on increase their future decision more effective.
Such kind of reports are more helpful for external stakeholder of Ryanair company and other
investors to determine overall performance of an organisation before making any critical
decision regarding their overall capital investments. Thus, it will be crucial for generating more
effective outcomes through deliver them appropriate information about their current business
performances. This will assist in increasing growth as well as performance of an organisation.
For this purpose, managers of Ryanair company is to make reports on regular basis so that
chances of mistakes can be controlled. Some of them are illustrated underneath:
Operational budget report: According to this particular report, all expenses those are
being done by Ryanair company in their daily business operations are recorded under this report.
Development of this budget will guide employees to perform their task in respect to manager
their objectives so that valuable targets can be attain in more easy manner. This will restrict an
employees that are related in business operations in respect to proper utilisation of resources
(Wickramasinghe and Alawattage, 2012).
Account receivable report: According to this particular reports managers are held liable
for formulating a system that can assist in providing information about all credit and due
payments. This will be related with all those aspects that remain unpaid or keep record of
outstanding invoice details. This will assist in protecting company's from every critical situation
mostly in any financial crises.
Performance reports: According to this particular reports that are more effective
because they are held responsible for achievement of more reliable outcomes during the time.
The primary purpose of evaluating actual performance with taking standard data through using
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corrective actions. All the data would be collected from past as well as present year
performances.
Job cost report: This particular report, managers can determine total amount of
expenditure which will be generated during the year. However, it is utmost important aspects for
the managers those are helpful in accounting reporting. It is primary responsibility of managers
to analyse crucial aspects in which proper gain can be determine during implementation of new
projects (Quattrone, 2016).
Inventory management report: According to this specific reports that will assist
Ryanair company to manager their regular passengers during the year. Under this report, certain
aspects would be indicated in sufficiency of spare parts that will be helpful in any critical
situations. All those expenses related with aircraft's equipments can be analyse more effectively
before positing into this report.
M1
As per the cited organisation, Ryanair Airlines, by implementing above mentioned
systems which could assist to the manager and limit their daily financial conditions. This could
render the effective data that are highly essential for incorporating the strong decisions. There are
few of the essential advantages which are written hereunder:
Reduce Costs: By taking assistance of an adequate accounting systems, managers could
effectively assist for managing the operational activities in an effective manner.
For incorporating future decision: As per this specific reports, which is formed up by
taking assistance of financial and non-financial data. This will help managers in order to form an
essential decisions relating to the achieving of desirable objectives.
D1
During profitability of the organisation, company is required to incorporate the both
system and reporting in accordance with the most effective manner. Both of these are
contributing for the advancement of cited airlines operations in this intense market. This can be
said which helps in monitoring business operations that are connected with the entire
performance of the organisation.
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TASK 2
P3 Net profit as per marginal and absorption costing method:
Ryanair Airlines are implementing the costing methods in order to maximise the profits
in an effective manner so that the business could gain their sustainability in their operations in
an effective manner. However, this can be said that the management of the cited airline uses
marginal and absorption costing method in order to optimise the profits of their operational
activities. For identifying the net profits in a company, there is a strong need to use these
techniques so that the business can assess the income and expenses in an efficient manner. This
will incorporate most efficient tool for the company for various manner for future forecasting
and financial management (Amoako, 2013). Cost is directly said to the value of money which is
simply being paid for getting something. These are connected with the production process of any
goods and services. These are mostly concerned to the production process of any goods and
services. These are diverse kinds of costs that are linked with the production. Some of them are
mentioned hereunder:
Marginal Costing: This is the costing tool which only considered the variable costing.
And the contribution per unit. This kinds of costs covered only variable expenses and fixed costs
are considered. This is the cost effective tool which is used by the organisation in order to gain
the sustainability in an effective manner.
Absorption costing: This is the costing method which is used by the organisation and all
the costs which are related to the manufactured costs. This kind of costs covers the variable and
fixed costs which are related to the manufacturing costs. The main advantages of implementing
this costing method is that optimising investors so that the costs are highly reliable for decision
making.
Calculation of net profit by using various costing methods
Cost of Production (6*910) 5460
closing stock (10*6) 60
variable cost 5400
Contribution 3600
less:
variable sales overheads (600*1) 100
fixed overheads 300
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400
NET INCOME AS PER MARGINAL COST 3200
NET INCOME AS PER ABSORPTION
COSTING:
Sales (10*900) 9000
less:
Cost of Production 5760
Gross Profit 3240
LESS:
Fixed and variable cost:
variable non manufacturing overheads 100
NET INCOME AS PER ABSORPTION
COSTING: 3140
M2
This can be said that by considering an efficient account tools, this could assist in
achieving optimum benefits to the Ryanair Airline. This will assist in recording entry of each
transaction into financial statement. This will assist managers to forecast current situations for
dealing with each critical situation. Few of the them are standard costing historical and marginal
costing.
D2
As per the mentioned tool which is being done by implementing both marginal and
absorption costing (Fadzil and Rababah, 2012). This can be said that, if the cited organisation
uses marginal costing in that case net profits is earned at the rate of 3200. On the other hand, by
using the absorption costing, they are required to gain a net profits of 3140.
TASK 3
P4: Advantages and disadvantage of planning tools use for budgetary control
In every business organisation planning is utmost important part that can be formulate in
order to gain maximum return in next coming time. In respect to incur more reliable results they
need to make use various budgets which are crucial for betterment of an organisation. Budget is
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a prediction total expenses and costs that are being incur by Ryanair company during a specific
period of time. It is said to be re-evaluation on continuous basis to make proper estimation of
actual and budgeted results during an accounting period of time. It is internal tools which is
useful in order to manage and control risk factors that are arises in an organisation. There are
various factors that are discuss under this project reports. Some valuable aspects those are
associated with budget preparation are quantity, costs and expenditure. The certain aspects which
are essential to have in every budgets (Cokins, 2014). Some of them are:
 Controlling of available resources of Ryanair
 Communication of effective plan and centre managers.
There are certain planning tools which are helpful in respect to control their budgets.
Some of them are mentioned underneath:
Forecasting tools: This particular tools is useful in respect to make understanding of
future forecasting which is based on previous and current data (Forecasting methods, 2018). The
one of the most reliable and accurate require is to evaluate internal or external aspects those are
affecting business operations of Ryanair company.
Advantages:
The main motive is to collect valuable data associated with business operations. This
particular method is more helpful to assess more reliable outcomes in quick time.
Disadvantage:
This must be more possible to make accurate and reliable estimation for future demand.
Scenario tools: Such kind of tools is delivering more crucial techniques to incur best
suitable outcomes which are based on critical situations. It is said to be strategies planning tools
which are more effectively helpful in long term planning (Laine, Paranko and Suomala, 2012).
Advantages: This would provide more effective outcomes through using planned rules
and regulations.
Disadvantage: It is very difficult to predict future in more accurate manner. This will be
done as per their qualitative nature and characteristic (Chenhall, 2012).
Particulars January February March Quarter
Cash sale (40%) 140000 146000 152000 438000
Credit sales from last 172800 168000 175200 516000
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month (80%)
Credit sale from two
month ago (20%)
35400 43200 42000 120600
Total cash collected 348200 357200 369200 1074600
Add: GST @ 10% 34820 35720 36920 107460
Total amount 383020 392920 406120 1182060
M3:
According to determine overall productivity of an organisation. It is necessary to make
use of planning tools that are being useful in order to achieve upcoming objectives that are set by
Ryanair company. Forecasting tools are helpful in future planning and management of risk that
are directly related with their performance.
D3:
According to this, proper techniques is more reliable aspects of an organisation which are
require for the purpose of increase overall growth and performance of the company. To remove
financial issues they needed to make use of certain tools by using Key financial indicators and
benchmarking.
TASK 4
P5: Comparison of financial problems arises in Ryanair with Lufthansa airlines
There are various aspects those are related with the company. It will assists in making
evaluation of present performances with the past one. In accordance to determine overall
financial problems which are being seen in airline companies are discuss below. There are
certain types of financial issues such as:
Profit level: These kind of issues are generally happens because of inefficiency of capital
that can lead to make huge impacts on overall operations of the company.
Product and service quality issues: The another important issues which are more
commonly seen in service sectors are related with delivering of products and customer care
supports to various passengers.
Some of crucial financial tools that are use in resolving above issues:
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 KPI(Key performance indicator): Such kind of tools are helpful in order to evaluate
overall performance of the company. This can be done by using data from past and
present records of an organisation (Sisaye and Birnberg, 2012).
 Financial governance: These are related with legal government rules and regulation
which are being set out for proper operation of business.
Comparison:
Ryanair Lufthansa
They are dealing with various problems which
are associated with large number of expenses.
In order to manage them managers need to use
KPI tools.
It has been seen that earning and operating
gains at this companies missed to forecast in
their third quarter. This can be manage by
using benchmarking as well as financial
governance.
M4:
In respect to this, there are certain financial problems which are related with various
aspects such as cost accounting systems and management of inventories. Such kind of thinks are
use or manage by the use of different tools and techniques such as key performance indicators
and benchmarking.
CONCLUSION
From the above mentioned analysis report, this can be said that the Ryanair Airlines uses
various management accounting tools that can be used in order to gain the sustainability in an
effective manner. This can be said that the management accounting tools are used in order to
make concerned report. Further net profits as per marginal and absorption costing which are used
for maximising the profits. Various planning tools are used by the organisation in order to have
the budgetary control.
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REFERENCES
Books and Journals:
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Ward, K., 2012. Strategic management accounting. Routledge.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it wiser?.
Management Accounting Research. 31. pp.118-122.
Cokins, G., 2014. Top 7 trends in management accounting, Part 2. Strategic Finance. 95(7).
pp.41-48.
Laine, T., Paranko, J. and Suomala, P., 2012. Management accounting roles in supporting
servitisation: implications for decision making at multiple levels. Managing Service
Quality: An International Journal. 22(3). pp.212-232.
Chenhall, R. H., 2012. Developing an organizational perspective to management accounting.
Journal of Management Accounting Research. 24(1). pp.65-76.
Sisaye, S. and Birnberg, J. G. Eds., 2012. An organizational learning approach to process
innovations: the extent and scope of diffusion and adoption in management accounting
systems. Emerald Group Publishing Limited.
Amoako, G. K., 2013. Accounting practices of SMEs: A case study of Kumasi Metropolis in
Ghana. International Journal of Business and Management. 8(24). p.73.
Klemstine, C. F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A
Review and Annotated Bibliography. Routledge.
Youssef, M. A., 2013. Management accounting change in an Egyptian organization: an
institutional analysis. Journal of Accounting & Organizational Change. 9(1). pp.50-73.
Fadzil, F.H.B. and Rababah, A., 2012. Management accounting change: ABC adoption and
implementation. Journal of Accounting and Auditing. 2012. p.1.
Online
Forecasting methods. 2018.[Online]. Available through:
<http://www.oecd.org/eco/outlook/forecastingmethodsandanalyticaltools.htm>.
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