Management Accounting - Assignment Sample

Management
Accounting

Table of Contents

INTRODUCTION
MA also called as cost accounting that are chain of activities for identification,
measurement and analyse with interpretation by communicating knowledge and information to
get desirable goals and objectives. It is one of most crucial activity to understand the
commercial with costing collection by translating in important knowledge and information. So
MA crucial for a firm to deliver and accommodate necessary information for getting competitive
advantage. This report rely on Oshodi PLC that well known production enterprise have expertise
in production of JOJO fruits for all age people. This assignment rely on MA and importance of
various MA system with included tools for reporting of MA. It also studies the cost and related
advantages such as absorption and marginal cost to get important details. At last it focus on
planning tools with benefits and drawbacks of various kinds of techniques to plan which
administration can adapt management accounting systems to eradicate fiscal trouble.
TASK 1
P1
MA refers to crucial aspect for an organisation to transform the process after analyse
costing which associated by products so that important decisions should be reap out.
Management accountants observe or evaluate the various events regarding the business after
evaluating demand of consumers in better style. In an organisation to coordinate various
activities they should be apply different ways of MA systems here are:
Management accounting takes financial information and after that build reports by
internally and confidentially from managers that enables in occupy best opportunities by
evaluating ways to operate a business in effective way.
Inventory management systems:
IM is an crucial discipline regarding the specify the shape and coordinate stocked goods
(Armitage, Webb and Glynn, 2016). Goods or stocked goods needed at every location to check
its visibility for supply various types of goods and services at last-ditch user base. So it helps to
balance the both demand and supply side for giving delighted experience to customers base . It
majorly tracks the two crucial functions stock room of organisation by receiving information and
shipping also. It ultimately proved helpful to accurately know the current inventory level. Oshodi

PLC uses the FIFO kind of inventory system to succeed and coordinate actions concerned with
the inventory in proper way.
Cost accounting system:
CAS availed by producers to capture and evaluate actions related with production by
availing the inventory system (Bobryshev and et.al., 2015). It is majorly designed for to track
and record directions of stocked goods at kinds of tier for manufacturing goods process. In
context of Oshodi PLC they by using cost accounting system estimate with related cost while
producing goods analysing level of gainfulness, appraisal of stocked goods by measuring
costing in better style. So that very much crucial part of MAS by delivering final goods and
services by measuring each and every factor in better manner.
Job costing system:
JC accounting that a chain of activities by assigning cost that related with a particular
job or a business activity. That management system widely used for the manufacturing and
construction industries by allocating costs at time of production of goods in better way. In JBS
various types of cost involved in it which are direct substantial, manpower and kinds of cost
with many more. In context of Oshodi PLC they use the job costing system for assign the cost of
a particular business activity to remain always competitive in market place.
Price optimisation system:
Price optimisation system proved helpful for finding the best price for products and
services to get maximum pay from consumers and enhance their willingness to purchase
products (Brennan and Merkl-Davies, 2013). By using for evaluating the fluctuations in supply
of products in both B2B and B2C kind of business they deliver lot of time and efforts for setting
price optimisation by ensuring that their products should reach frequently and maximise profit.
In context of Oshodi PLC they by using that management accounting system by calculating
demand which differ from various cost steady after combining content with basis of stocked
goods by recommending best cost.
For a firm all various types of MAS play an important base by delivering the basic value
and deliverables that ultimately helps in taking decision making. It enables to transform the
knowledge that contains into reports, financial statements and in other documents. It tracks each
and every activity until reaches to ultimate consumer base in proper way.

P2
MA that helps to produce the reports for an organisation internal stakeholders against the
external stakeholders. Its result of MA for preparing periodic reports for an organisation and
various departments. For an organisation it is important to evaluate varies types of MAC
techniques for coordinating and communicating necessary information to ultimate consumer
base.
Budgets report:
Budget is a financial document that build on behalf of income and expenditure for a
specific time period. In context of manufacturing company, they include in their budget the
expected items that should be sold out and produce with resources required to builds products in
well manner. By using the simple model of production and sales that are the initial stage of
budgeting process with help of historical accounting knowledge and information. It proved
beneficial to forecast budget by assuming the sales unit over a specified time period. In context
of Oshodi PLC prepare financial budget by predicting each and every variable that helps in
forecasting budget in proper manner.
Cost reports:
Managerial accounting proved beneficial to determine cost of goods. It should be taken
as the complete fresh price of products, overhead cost, labour price and many more factors that
come into consideration (Burns, 2014). in that whole process cost should be bifurcated into total
no. of unit that are build at time of manufacture goods better way. In cash data brief in nature
that helps managers to observe pricing of goods in against the selling cost. It proved beneficial
for managers to plan by managing limit of their income. In context of Oshodi PLC by using cost
reports calculate various kinds of prices that are very much important for them for achieving
organisational goals and objectives.
Performance reports:
Performance reports refers to the collection of necessary knowledge and information
related with the performance of an individual, then analysing it and creating reports on them and
send them to respective stakeholders that are part of reporting of performance related to project.
It is an important part of communication management plan for achieving organisational goals
and objectives. With the help of reports a manager should be determine for review an individual
actions and activities for accordingly liable to best serve to them. It provides all necessary

information that are required at all level of an organisation to lead in marketplace . In context of
Oshodi PLC by taking that reporting system they can be able to better serve their employees by
identifying their key skills and abilities that ultimately give motivation to them.
Account receivable ageing report:
ARG is a kind of written report that list out consumer invoices and various kinds of
credit entry by using data extent. That a kind of first hand instrument that avail by collection
personnel that helps to determine about overdue of payment (Edwards, 2013). It used as a
collection tool that contain contact information for each and every consumer base. In respective
organisation Oshodi PLC with availing techniques and tool firm should be evaluate financial
health of their consumers so that they can give best goods accordingly.
It can be said that for a firm to correlate various tools and techniques so that better results
should be accomplished for achieving best results that are measurable in nature.
M1
For an organisation some important benefits of manageable accounting system that are
here:
Management accounting
system
Benefits
Inventory management
systems
That kind of group helps to organisation to enhance sales by
balance both demand and supply side of their products by
acknowledging the viability of their products. It proved
beneficial in enhancing the transparency while dealing with
situations such as in context of Oshodi PLC they by tracking
each and every activity until it reaches at ultimate consumer
base. It is an kind of combination of technology and various
kinds of processes that helps to Oshodi Plc in their monitoring
and maintenance of stocked products and services to get proper
outcomes. So it is very much effective for an organisation to
evaluate each and every attribute such as raw material, suppliers
and finished products to sent to end users.
Cost accounting system: Cost accounting system proved beneficial for organisation in

fixation of prices of products and services on basis of demand. It
proved helpful to give best experience to consumers by
allocating right kind of prices related to goods of Oshodi PLC.
Job costing system JCS proved beneficial for managers with individuals by
calculating the individual’s jobs and help out that specific job is
for them or not. It acts as determining the level of profitability of
the job and enables for future consumers to decide that they take
interest or not in particular job. In context of Oshodi PLC they
by using it determine the specific job that proved fruitful for
organisation. In context of Oshodi Plc they use JCS for assigning
and accumulating the various kinds of costs such as
manufacturing cost of an individual unit output. They helps in
various items produced in various manner that has significant
associated with it.
D1
MA system integrate with the accounting reporting to get best organisational process by
contributing best efforts in context of a firm. For an example their cost accounting system
aligned with the processing of goods to get proper outputs in better way (Gond and et.al.,
2012.). It can be possible for organisation to get better kind of resources aligned with the
organisational works and processes to remain always competitive in market place. So it can be
concluded that MAS aligned with the its reporting should be able to achieve goals. In context of
Oshodi PLC they integrate both the management accounting system and reporting to take major
decisions with the help of management accounting system that provides current and relevant
numbers that deliver important data regarding the profitability of business and accordingly
reports should be build.
TASK 2
P3
In an organisation different types of pricing associated to get better results by using
various kinds of costs that are as follows:

Absorption costing:
AC is kind of MAC method in which various kinds of expenses consisted at time of
manufacture goods as per principles of accounting with outside coverage (Guthrie, Ricceri and
Dumay, 2012). There are some kinds of direct costs associated while manufacture a goods and
services by converting them into final products to deliver at ultimate consumer base. In that all
kinds of overhead cost such as utility cost and many more are come under it. In that cost directly
consisted each and every factor that directly includes in producing the product and services.
Marginal costing:
MC of production that bring modifications in cost by bringing production of units to
remain always competitive in market. Major purpose of MC for determine at time scale for that
firm could achieve economies of scale to remain always leading in scenario. The marginal cost
that helpful in production that manufacturers by getting optimum level of production. It is
helpful to producing one additional unit and get revenue from it that gives overall cost as per
product line. In context of Oshodi PLC they use marginal costing by producing products and
services in an additional unit of production to get right kind of output.

Total profit using marginal costing method in November and December
November = £ 61,000
December = £ 101,000
= £ 162,000
Oshodi PLC income statement for the Month of November and December using the
absorption costing
Working 1
Normal level of population= 11,000 units
Fixed overhead cost = £ 99,000
Fixed production O/H Absorption = 99,000/11,000 = 9£/ unit.
Therefore Total production cost= Total variation cost+ fixed production O/H
Total variation cost= 25 £
fixed Production cost Absorption= 9 £
Total Production cost/ unit= 34 £

Less OH
cost Nov Dec
Variable
selling
overhead 50000 60000
Fixed selling
o/H 14000 14000
Fixed admin
O/H 26000 26000
90000 100000
Calculation
of over/
under
absorption
for Oshodi
PLC in
month of
November
and
December
Month Prod. Unit
OH. Abs/
unit
Total OH
Abs OH incurred over/ under
November 12000 9 108000 99000 9000
December 10000 9 90000 99000 9000

After calculating the important outcomes from the above mentioned financial statement
that it is very much crucial to get all necessary knowledge and information that helps in taking
important decisions. It gives performance remarks of an organisation by eliminating major loop
falls in a firm.
M2
MA system one of crucial factor for a firm to remain always effective by examining
various kinds of absorption approach, marginal approach and standard costing with many more .
With help of these techniques organisation can be build several kinds of accounting reports such
as income statements, balance sheet and other documents too that helps in taking decisions in an
organisation. With the help of various techniques that are elaborated here:
Standard costing:
SC is important kind of practice which can be get by deducting anticipated cost from the
actualized cost to get right kinds of accounting records (Hiebl and et.al., 2012). Variances are
important to show the records in between the expected with the actual results. In context of
Oshodi PLC by using that techniques they can easily compare the actual cost with the estimated
cost.
Budgetary control:
Budgetary control concerned with state of managers for utilized the budgets by
monitoring and controlling the cost factor for get desirable outcomes . In respective firm Oshodi
PLC by planned income with expenditure of their organisation and after that they allocate the
proper budget as per the requirement.
There are various kinds of management accounting tools available in front of an
organisation that helps to accumulate important kinds of data and information that helps in taking
important kinds of decisions in context of Oshodi PLC. They use financial planning, financial
statement analysis, cost accounting and many more tools to get important kinds of outcomes.
D2
From data and statistics, that should be concluded while observing the financial reports
absorption cost is higher than the marginal cost in month of November. On other hand, marginal
costing is higher in December in comparison to the previous month. For an organisation it is very

much important to remain always competitive in marketplace by grab large portion of profit. So
organisation have to adopt the absorption costing that proved beneficial for them for lead in
market. In that context the net profit is 101000 and contribution should be 300000.
TASK 3
P4
Budgetary control is a chain of activities in respect of manager to plan financial activities
to achieve performance goals with budgets by evaluating real outputs by balancing tasks as per
the need. That tools and techniques crucial for an organisation to control each and every
attributes in proper manner. By it firm can take actions by proper planning and implementation.
Here are some important kinds of planning tools which are:
Ratio analysis:
Ratio analysis is an kind of numerical tool that helpful in giving important insights about
the liquidity position of an organisation, its level of profitability by comparing with contrasting
their financial statements to get better results in proper way (Huang, Teoh and Zhang, 2013). It
is also known as fundamental analysis and many organisations use various kinds of ratios for
more detailed operational activities of an organisation to remain always competitive in
marketplace. In context of Oshodi PLC by using ratio analysis they check various important
deliverables that ultimately helps in taking decisions for gaining higher market share in fierce
rivalry world while producing JOJO fruits for all age group of people. Ratio analysis used for
budgetary control by analysing and evaluating the factors with their contribution. There are
some crucial factors that helps an organisation in taking important decisions are as:
Advantages of Ratio analysis:
Ratio analysis proved beneficial to validate the information regarding financing and
investment with operations of an organisation (Mistry, Sharma and Low, 2014). In ratio analysis
financial statements should be come in comparative format that ultimately helps to managers to
compare and contrast the financial position of respective firm for better decision taking in
Oshodi PLC. With it helps in simplifying the complex process into easy ratios for enhancing
operating and financial efficiency and for raising solvency to remain competitive for long time. It
enables in identification of problems and draw attention of management in major areas. In that

some kind of crucial information lost in accounting statements and in that situation ratio analysis
proved beneficial to eliminate concerning problems in proper way.
Disadvantage:
There are some disadvantages of Ratio analysis that a firm have to bring some changes in
a year end and in that respect firm have to improve in their financial statements (Mokhtar, Jusoh
and Zulkifli, 2016). So while bring changes ratio analysis brings only minor changes that not
properly imply by organisation. With ratio sometimes neglect the changes in price level due to
change in pricing so Oshodi PLC should manage actions by putting right efforts or attribute in
proper style.
Variance analysis:
Variance analysis is an kind of quantitative investigation by comparing and contrasting
the actual with planned difference behaviour in terms of finance. It helps in exercising control
over organisational activities to get better results in organisational development and
enhancement (Pavlatos, 2015). It proved effective in condition of review magnitude of variance
on basis of trend line so that in condition of sharp alteration organisation can take necessary
steps. There are some major advantages and disadvantage too to get desirable outcomes in
organisational development and enhancement. This tool used for budgetary control by finding
out qualitative data and analytics by comparing the attributes to reap out important attributes.
Advantages:
Variance analysis helps in taking remedial actions in various conditions to get right kind
of outputs. Sub division in various parts of that activity helps in disclosing the relationship in
various variances exist in Oshodi PLC.
Disadvantages:
Variance analysis have some major disadvantage that it consumes long time and efforts
to examine the variance in proper manner in that process corrective actions should be delayed in
Oshodi PLC. The monitoring tools and techniques takes lag time so requires control measures to
get effective results in organisational development and enhancement.
M3
Preparing and planning for budgetary control is one of important tool to get positive
results by preparing and forecasting budget to get important results (Spraakman and et.al., 2015).
In respective firm by availing planning and budgeting tools in which cash budgets, master

budgets and capital budgets that proved beneficial in forecasting and preparing budgets. It is very
much obligatory to build a strong framework regarding knowledge to predict in planned manner
to control various budgetary activities. In context of Oshodi PLC they use various kinds of
financial planning tools and techniques such as cash flow analysis, standard costing, marginal
costing and budgetary control to get important kind of outcomes in order to get potential
outcomes in positive manner. They by using budgetary control technique they can easily estimate
the financial needs and accordingly plan to accumulate results in proper manner.
TASK 4
P5
MAS refers to inner scheme of an administration that proved beneficial to measure by
evaluating their necessary processes to managing the activities of an organisation (Strauss,
Kristandl and Quinn, 2015). MAS verified beneficial to firm in eradicate various kinds of
financial problems such as scarcity of resources, long chain of products and higher cost are
important with mostly founded problems that faced by an organisation.
Financial problems:
Financial problems that occurs in every kind of organisation for that various kinds of
tools and techniques should be used. Financial problems become the biggest reason of stress in
front of people and create variety of issues such as bankruptcy. Some kinds of financial concerns
that are:
Debt:
Surrounded from the debt is one of most serious financial problems in front of
organisations that exist in first place. Organisations by putting on mortgage their properties and
other assets initiative towards mounting credit card bills before debt turning towards the ugly
turn. In context of Oshodi PLC from banks and other financial institutions made it easy to get
credit so that they can access from there so that important outcomes should be achieved.
Cash flow problems:
Mostly organisations face the problem of cash flow, if a business deals in where bills or
services should be performed as so many other businesses should be performed to get fruitful
results (Youssef, 2013.). In context of Oshodi PLC they have to take tough decisions to get best
kind of financing decisions to give delighted experience to consumer base.

Ways to overcome from financial concerns:
In context of Oshodi PLC they use various kinds of tools and techniques to resolve the
financial hindrances which are as:
Benchmarking:
It is a chain of activities for measurement and evaluating execution of firm goods by
processes in against business of another business concern. The chief aim of it is to determine the
internal skills and opportunities to bring improvement so that best results should be
accomplished. In context of Oshodi PLC by setting benchmarks they can easily evaluate the
performance regarding financial projections with other factors that are helps in getting important
insights about firms gains in positive mode by reducing financial losses.
Balance score card:
Balance score card is an important kind of tool to evaluate the performance by using
strategic management with motive of internally identification to bring improvement in their
functions to get best external outcomes (Strauss, Kristandl and Quinn, 2015). In context of
Oshodi PLC by evaluating their internal with external environment organisation can be able to
get right kind of outputs after getting quantitative results that important information should be
gathered and interpreted by managers and executives to remain always competitive in
marketplace. In context of Oshodi PLC they are very much attentive to eradicate problems that is
debts by using tools and techniques so that desirable results should be accomplished for gaining
higher productivity in rivalries.
Ratio analysis:
Ratio analysis is a kind of financial tool and techniques in terms of financial statements
that helps in eradicating no. of issues or problems such as issue of liquidity, efficiency regarding
operations to gain important results. In context of Oshodi PLC they by using the ratio analysis
evaluate the various factors to get more detailed information that helps in taking important
decisions.
Tools and techniques that are used by organisations for resolving issues or concerns:
Oshodi PLC Airdri
Oshodi PLC which is a manufacturing
organisation that produces JOJO fruits so it
uses tools and techniques to resolve various
On other hand in context of Airdri while facing
the financial problems they use tools and
techniques to remain always competitive in

kinds of issues or problems that are
fluctuations in pricing and income by using
benchmarking that are an important tool to set
standards while facing financial problems or
concerns to eradicate liquidity concerns.
marketplace. In situation of debt they use
balance score card to measure their
performance by evaluating each and every
factor related with the organisation and its
related factors. By using consultative
management style organisation can resolve the
problem.
M4
For an organisation it is very much necessary to evaluate the financial concerns and use
important tools and techniques as per the concerning issue or problem (Mistry, Sharma and Low,
2014). In context of Oshodi PLC they respond in positive manner while any kind of discrepancy
faced by them. For an example Oshodi PLC faces the issue of liquidity that they do not have
enough cash for day to day operations to get effective results. In context of Oshodi PLC they by
using budgetary control, key performance indicators and other non financial tools helps to set
standards to address delays. They helps to identify the social environment and trends that directly
influence the organisational capabilities to create value in front of consumers in proper manner.
They by building sustainable corporate challenges strategy for the organisation build a positive
image in front of stakeholders. On other hand in context of Airdri by using that tool they set
standards by evaluating and measure each and every factor to overcome from the debts. So in
different cases deliverables of tools and techniques should be different to get right kind of
outputs in organisational development and enhancement.
D3
Some tools and techniques are very much important for a firm to remain always
competitive in marketplace. In context of Oshodi PLC they countenance the issue of liquidity
that they don' t have enough cash to operate daily basis actions in systematic manner. In that
scenario they use varies types of techniques by evaluating with the benefits and drawbacks so
that best tool should be evaluated . In that particular scenario they get support to respond against
in financial problems to get potential advantage. In context of Oshodi PLC they use financial

governance and acknowledge about the application of it to overcome from the financial issues or
concerns also they understand the skills and capabilities to deal and prevent the problems such as
misshapen of resources that are meant to business to grow incrementally. All effective strategies
to overcome from the financial issues needs proper time and effective kind of reporting and full
disclosure of all results to get better outcomes.
CONCLUSION
From the above document it has been concluded that MA is very much crucial for an
administration to organise and succeed each and every activity in improved way. It helps in
collect important knowledge and message from the different kinds of financial reports such as
balance sheet, accounting reports and many more so that better decisions should be made to
remain always competitive in marketplace. For an organisation management accounting tools
proved beneficial to accord pricing and other factors as per consumer needs and demands.
Planning tools and techniques proved beneficial to criterion action of a system by pre-determined
standards.

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Appendix 1:
Per unit £ £
Sales price
Direct
material 18
Direct
wages 4
Variable
O/H 3
Total
variable cost 25 25
Contribution
Working 1
Calculation
of Total
variable cost
£
Direct
wages 4
Direct
material 18
Variable
O/H 3
Total
variable cost 25

Working 2
£ £
Sales price 50
Production
Variable
cost 25
Selling
variable O/H 5 30
Contribution 20
Working 3
Funding
variable
selling
overhead =
10% of sales
value.
Variable
selling
overhead =
10/100=50/1
= £ 5