Management Accounting Report

This report examines the concepts and applications of management accounting, using Airdri Limited as a case study. It analyzes essential requirements of management accounting systems, different reporting methods, cost analysis techniques, and planning tools for budgetary control. The report also analyzes the company's financial problems and how management accounting systems can be adapted to address them.

MANAGEMENT
ACCOUNTING

Table of Contents
MANAGEMENT ACCOUNTING ................................................................................................1
TASK 1............................................................................................................................................3
P1 Management accounting and essential requirements of management accounting systems...3
P2 Explain different methods used for management accounting reporting................................5
P3 .Appropriate techniques of cost analysis to prepare an income statement.............................6
P4 Advantages and disadvantages of different types of planning tools used for budgetary
control.........................................................................................................................................6
Strategic planning:-Application of SWOT in Airdri is first hand drier manufacturing firm......8
Strengths .....................................................................................................................................8
P5 Compare how organisations adapting management accounting systems to financial
problems......................................................................................................................................9
Difference in between airdri financial consultancy and Bright-star financial limited:............10
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
The word management defines as planning, organising, staffing, directing and
controlling to achieve objective as to get an organizational success for future smooth
sailing(Renz, 2016). The word accounting defines a report or the analysis of Ballpark number
and give a big picture of business in an appropriate manner. So, Management accounting works
as managing the activity by different figures to get the knowledge of market scenario which help
in planning for future growth. To understand the concept of management accounting, Airdri
company selected. It was founded in 1974 by peter philipps and peter Allen. It is in Oxfordshire
(UK).
In the project report detailed information about the management accounting, its type etc
are discussed. In addition this report contains various management accounting technique their
advantage and disadvantage and many more .
TASK 1
P1 Management accounting and essential requirements of management accounting systems.
The word management defines as planning, organising, staffing, directing and
controlling to achieve objective as to get an organizational success for future smooth sailing.
The word accounting defines a report or the analysis of Ballpark number and give a big picture
of business in an appropriate manner( Maas, Schaltegger and Crutzen, 2016.). So, Management
accounting works as managing the activity by different figures to get the knowledge of market
scenario which help in planning for future growth.
In an organization, management is needed as to build a trust among employees towards
the goal. It clarifies the work which functioned to cut-throat the competition in a market. The
management help in getting the goal on the table and delegate the authority in different groups to
get the aim fulfilled in an efficient and effective manner.

Airdri Limited which works for manufacturing of different electrical equipment and a
leader in world at present in hand dryer development, the aim is to offer the best comfort to its
customers and can maintain the stabilise goodwill in market.
Management accounting has a vast difference when it compares to financial accounting
as it works more on to operational reports and financial accounting comprises all different
reports of accounting standard which help in taking vital decision for the company growth.
Essential requirements of different types of management accounting systems.
Style of management is much more important as it fix a way to handle the management
internally, either in autocratic or democratic manner. In Airdri ltd, management has adopted both
the style according to its team, as the nature of employee and the effective work which has been
done by communicating goal for the purpose of strengthening intrinsic motivation among
employees together.
Organizational structure which has classified in two different areas functional and flat
structure. In functional structure manager gives authority only to the extent of own function and
in flat structure, manager works on all definite reports and information by which decision has
been taken to make the organization better. In Airdri Ltd work has been allotted by the
information, what information the manager is getting, who will use the information and how the
information can be useful for taking the decision in smooth sailing of a business.
Financial information related to accurate value with reliability is much more beneficial at
the time of taking decision in the company. The manger focuses on the updated data and talks of
finding the different analysis in maintaining appropriate cost for company.
Cost accounting system facilitate a frame work by which an organization estimate the
original value of a product manufactured in an industry, Airdri which works on reducing the cost
with an appropriate cost cutting method and maintain its quality in an appropriate manner.
Inventory management system coordinate or to supervise the flow of merchandise from
the one level of manufacturer to the end till it enter into point of sale. The flow of good in Airdri
supervise on the basis of its defect so to offer the best quality in market.
Job costing system put efforts in maintaining or recording the cost of a manufacturing job
rather than finding its process. Airdri takes help of job costing system where managers write
every record related to the cost of each job and maintain the information which help in the future
operations of a business.

Price optimizing system which linked to the customer response as how the different
prices of product and services changes with the change of its different channels. Airdri take it as
defining the functioned to determine its best price by which company can get a maximum profit
from the market.
P2 Explain different methods used for management accounting reporting.
Managerial accounting report defines the accounting report of various aspect related to
planning, organising, staffing, directing and controlling the performance of an individual or a
group in a company(Messner, 2016). These reports are recorded on continuous basis and work
on analysis at the end of a financial year. According to the situation in the market, the reports are
beneficial to its future purpose as to resolve issues facing in the future market and can get
success in future for smooth sailing.
Budget Reports :- It is the most critical part of a company as it measure the performance
to maintain a exact record of different institutions or the department of a company. It clarifies all
the numbers related to the whole business and department wise as to take the decision for future
and can make the profit maximise. Airdri which indulge in budget report with its previous record
and took help in taking the scenario of its earning and expenditure, it maintain a balance in the
company capital as to fulfil its goal and mission for the future.
Account receivable ageing report :- It defines the function of credit report as the clients
in many company don not focus on payment at the given period of time, and fixed themselves in
the defaulter section of the company. Airdri which has thousand of transaction on credit basis
and to maintain the account receivable ageing report, company works on data while maintaining
the record of its defaulter customers. It regulates all the defaulter list and focuses on maintaining
every aspect of its client way of transaction. Business are more on extending credit limit, it helps
in boosting the sale of a company, but when it comes to payment method then, clients are more
focused in stretching the given period of time.
Cost managerial accounting reports :- It defines the article cost which has been
manufactured in the company. Manufacturing involves all the raw material, related to labour,
overhead or any other cost including other cost incurred into it(Holopainen, Niskanen, and
Rissanen, 2019). The cost managerial helps in finding the merchandise value for the market in
order to make the product available for the customers. Airdri which add-up all the values of raw

material and its other expenses related to manufacturing the goods and services. This cost report
focus on every corner where the company spends to manufacture the goods and records every
related summary of all the transaction in a business. Managing the cost in Airdri is beneficial as
it talks of every raw material, related to its manufacturing process to its every operation until it
comes in the hand of customers. This report help Airdri in finding its reasonable prices which the
company can offer in market.
Performance report :- It showcase the whole outcome of a company at the end of a
financial year, it talks about the performance of an organization as a whole or can relate to the
every individual in a company(Chenhall and Moers, 2015.). Many different departments also
analyse its performance report on the basis of its previous records. Airdri put all its effort in
finding every performance of an individual, group or department in a company. It maintain a
balance for the future growth as performance report includes all the aspect of past records so to
handle the situation in an appropriate manner. Performance report also work on improving its
way of handling dynamic situations and make their company more strong in facing challenges.
P3 .Appropriate techniques of cost analysis to prepare an income statement
Analysing of cost in a company is necessary part of a success, as it maintain records of
every transaction in an appropriate manner(Granlund and Lukka, 2017). It involves different
type of analysis to frame the strategies for the growth of a company. Analysis of cost effective,
which help in profit maximization, analysis of cost benefit which gives strength to the company
and help in maintaining goodwill in the market.
Absorption costing- Absorption costing method is also known by the full costing method. In the
total cost of production is calculated including both the cost fixed and variable cost.

Marginal costing- Marginal or variable costing is a kind of technique which considers
fixed cost as the period cost and variable cost as the cost of production.

Income statement by marginal costing method:
Interpretation- The above transaction focuses on the company 's value, it relate with the
every aspect and analyse as the company is getting net loss in the above scenario of method of
costing. In the method of finding managerial cost of company, it showcase a net loss of 75000,
even if the company focus on its absorption method then the net loss is same as above.

P4 Advantages and disadvantages of different types of planning tools used for budgetary control
Planning tools helps the organisation in guiding and taking measures regarding projects
and program. It provides detailed analysis of what organisation needed to be done.
Budget is one of the planning tool that is prepared in order to deal with unforeseen
circumstances. It process of predicting in advance what amount should be set for the completion
of activities. It helps in controlling the expenditure and determine if the company has enough
money needed to run the business operations. There are different types of budgets used by airdri
let's discuss them in detail:-
 Capital budgets- As the organisations involve in the multiple small and large scale
projects thus it creates an obligation on the part of managers to prepare capital budget
that determines the high expenses and investments such as building plant or investments

in long term business. This budgets also identifies the rate of returns being generated
from the projects.
 Operating budgets- These sort of budgets are prepared to forecast expenses and
revenues. It includes variable costs and interest in order to check if the sales are met as
per the standards. This helps managers in effective decision making as they are in
position to review and interpret the results.
Alternatives for budgets are as follows-
Zero based budget- These are such methods which can be used in place of budgeting.
Under this it starts with zero base unlike others, it gives justification regarding the expenses
incurring on the products and services. It evaluates each and every cost and these are prepared
for maintaining the finances.
Activity based budgeting- It is used to manage the cost concerning various activity.
Targets are set and performance of activity is regulated as per them(Nitzl, 2016. It helps in
improving the productivity of each processes and leads to achievement of organisational
objectives. The main focus is related to determination of factors driving the cost and not just past
expenditure. There Behavioural implications of budgets-ore it is different from traditional
budgets.
Behavioural implications of budgets-
This brings positive behaviour in the people as it helps in increasing the efficiency and
effectiveness of organisation. There are different pricing strategies set by the companies to set
rates of their products and services.
 Penetration Pricing:- Under this prices are charged much lower with a n aim to
gain large market share(Soderstrom, Soderstrom and Stewart, 2017). Airdri uses
this strategy and charge lower prices for the electronic products. Using these
techniques helps in grabbing the attention of wide range of customers.
 Economy pricing: Under this the cost of promoting and marketing are kept
minimum to gain profits. This is used for lowering the overhead costs.
 Price skimming- Using this strategy companies charge higher amount for the
purpose of gaining competitive advantage and later lowers it down.
 Competitors based pricing strategy used by the organisation in which prices are
set as per the prices of it's competitors. It is strategic pricing policy that are based

on demand and supply of goods and services being offered. If the product's
demand is high it charge higher price on the other hand if supply of products is
high in the market then price are charged lower.
Costing systems
 Actual costing systems- This system takes into consideration actual cost associated with
materials, labour and other production cost.
 Normal costing system- This costing system consist of cost of actual prices and quantities
to to measure direct costs.
 Standard costing- These are used to compare the actual and budgeted costs to improve
and control the expenditures. It calculates the variances occurring due to various factors.
Actual costing differs from normal costing and standard in a way that it uses actual cost instead
of budgeted amount where as standard takes into consideration of expected cost.
Strategic planning:-Application of SWOT in Airdri is first hand drier manufacturing firm
Strengths
 provides fast and free delivery
Weakness
 Lower finances
Opportunities
 higher competition
Threats
 Technology
P5 Compare how organisations adapting management accounting systems to financial problems
Monetary issues: Budgetary issues are the negative circumstances for organizations in
which they experiences the absence of cash or reserve(Wagenhofer, 2016). It impacts adversely
on the organization's development and gainfulness. To defeat from these issues organizations
makes different techniques and plans. airdri money related consultancy organization faces some
monetary issues which are following :
 Absence of working capital: Working capital is a sort of capital which is required to
finish everyday exercises. This emerge because of absence of money. airdri money

related consultancy constrained organization faces this budgetary issue because of
absence of reserve accessibility.
 Issue related accounting report: In this money related issue, organizations face the issue
of confuse among liabilities and resources. This happens because of lower benefit and
sells. The chosen organization face this issue on the grounds that in a critical position
sheet of organization, they have more liabilities in contrast with resources.
 Issue of cash the executives: Cash in the board is a technique for dealing with the store or
portion of reserve fittingly(Chiarini and Vagnoni, 2015). Without legitimate
administration organizations face numerous money related issues. airdri money related
consultancy restricted organization face the issue of legitimate administration of assets.
The executives bookkeeping approach : The executives bookkeeping approach is useful
in fitting utilization of the executives bookkeeping strategies to take care of the budgetary issues
which associations face. airdri restricted applies this way to deal with illuminate their budgetary
issues. They utilize following methodology :
Benchmarking-Benchmarking is an apparatus which is utilized by the organizations to
look at the methodologies, plans and approaches with the contenders to accomplish upper
hand(Fourie, Opperman, Scott and Kumar, 2015). It empowers the real execution estimation
for the organizations. This is likewise useful in illuminating the money related issues by looking
at the outcomes. The chose organization utilize this apparatus to get upper hand just as to unravel
the budgetary issues.
Key execution pointer- Key execution marker is a sort of act estimation instrument
which helps in assessing the execution of an association and specific movement. airdri restricted
apply this apparatus to quantify the budgetary execution with a target to take care of money
related issues.
Difference in between airdri financial consultancy and Bright-star financial limited:
BASIS Airdri financial consultancy Bright star financial limited
Issue related The organization is confronting the
issue of absence of the board of cash
because of this there are parcel of
budgetary issues are emerging.
Without cash the board they can't
This organization is confronting the
issue of befuddle asset report. Because
of this they can't coordinate among
liabilities and resources. Their liabilities
are expanding ceaselessly in contrast

utilize successful utilization of
reserve for specific movement.
with resources and this is making load
on the organization.
To solve the
issue
Based on above money related issue
it is required that they required to
apply the Key Execution Pointer
device. With the utilization of this
apparatus they can defeat from this
budgetary issue. It is device which
estimates the budgetary execution in
a viable way so on the weight of this
instrument the administration bureau
of chose organization will
doubtlessly make ideal utilization of
store since this apparatus gives rules
to actualize the exercises in way
which is productive.
In the wake of looking in this money
related issue of this organization, it is
important for the organization to apply
Benchmarking instrument to understand
the budgetary issue. It is an instrument
which gives a system to make new
creative procedures as per the
contenders. This will help organization
in getting great benefit with higher
development so consequently resources
will likewise increment and the one
point they will almost certainly
coordinate liabilities with resources.
CONCLUSION
From the above report it concludes the basic function of a company by which it can
maximize its profit from the market, it focuses on various analyses of previous financial year
data and maintain stability in the cut throat competition of the market. To ahead of the pack, it
analysis the ballpark number of every financial year and showcase a big picture of business in a
market. Financial management, which focuses on planning till controlling of all numbers of a
company and maintain a balancing figure to formulate future game plan for an organization
towards the future smooth sailing. These financial accounting and different reports give an idea
to think out of the box and maintain an upper hand as a strength in building its goodwill more
stronger. Managers always keep their eye on the ball to get the objective in an efficient and
effective manner.

REFERENCES
Books and Journals:
Renz, D .O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production. 136.
pp .237-248.
Messner, M., 2016. Does industry matter? How industry context shapes management accounting
practice.Management Accounting Research. 31. pp.103-111.
Chenhall, R. H. and Moers, F., 2015. The role of innovation in the evolution of management
accounting and its integration into management control.Accounting, organizations and
society. 47. pp.1-13.
Granlund, M. and Lukka, K., 2017. Investigating highly established research paradigms:
Reviving contextuality in contingency theory based management accounting
research.Critical Perspectives on Accounting. 45. pp.63-80.
Nitzl, C., 2016. The use of partial least squares structural equation modelling (PLS-SEM) in
management accounting research: Directions for future theory development. Journal of
Accounting Literature. 37. pp.19-35.
Wagenhofer, A., 2016. Exploiting regulatory changes for research in management
accounting.Management Accounting Research. 31. pp.112-117.
Holopainen, R .M., Niskanen, M. and Rissanen, S., 2019. Management Accounting and
Profitability in Private Healthcare SMEs. International Journal of Public and Private
Perspectives on Healthcare, Culture, and the Environment (IJPPPHCE). 3(1). pp.28-
44.
Soderstrom, K .M., Soderstrom, N.S. and Stewart, C.R., 2017. Sustainability/CSR research in
management accounting: A review of the literature. In Advances in Management
Accounting (pp. 59-85). Emerald Publishing Limited.
Chiarini, A. and Vagnoni, E., 2015. World-class manufacturing by Fiat. Comparison with Toyota
production system from a strategic management, management accounting, operations
management and performance measurement dimension. International Journal of
Production Research. 53(2). pp.590-606.
Fourie, M. L., Opperman, L., Scott, D. and Kumar, K., 2015. Municipal finance and accounting.
Van Schaik Publishers.