Management Accounting Analysis and Practices

This assignment delves into the crucial role of management accounting within organizations. It examines various accounting systems and reporting methods used to analyze resources effectively. The analysis encompasses costing methods, profitability determination, and the overall financial health of a company. The aim is to highlight how management accounting provides insights for informed decision-making and control over organizational problems.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(A): (i): Concept of management accounting and their essential requirements..........................1
(ii): Cost accounting system........................................................................................................2
(II): Inventory management system............................................................................................2
(IV):Job costing system...............................................................................................................2
(B): (I): Various management accounting methods of reporting ...............................................3
M1: Benefits of using management accounting system and their application............................4
D1: Critical evaluation of accounting reporting integrated within a company...........................4
TASK 2............................................................................................................................................5
(i): Different types of costing methods use for calculating net profit.........................................5
M2: Analysis of various accounting techniques.........................................................................6
D2: Critical analysis of income statements.................................................................................7
PART 3............................................................................................................................................7
(I): Advantage and disadvantage of using planning tools in budgetary control.........................7
M3: Analysing planning tools.....................................................................................................8
D3: Critical evaluation of financial issues..................................................................................9
TASK 4............................................................................................................................................9
(I): Comparison of various financial issues related with various companies..............................9
M4: Analysis of financial problems.........................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
In context to the mentioned case study, it has been seen that manager of “Zylla Company” is
facing certain kind of issues related with the recording of various accounting information. It can
be resolve by using appropriate management accounting systems that can assists an organisation
to analyse their financial transactions that are done during the time. It has been observed that
management accounting is an essential part of every business organization, Through the use of
this manager can use to attain their objectives without incurring extra costs for the company.
This project report is providing crucial information about various accounting system and
reporting that is being used to evaluate various financial data. Uses of costing methods are also
discussed under this report to determine total net profit for the company during the time.
Effective uses of various planning tools to which are helpful in budget control are illustrated
under this project. Analysis of various financial problems and their effective measure to resolve
those issues are mentioned under this report (Amoako, 2013).
TASK 1
(A): (i): Concept of management accounting and their essential requirements
Nowadays, it has been determine that management is always trying to use that tools or
systems which will be helpful for the company to generate more effective outcomes in near
future time. Accounting is said to be an effective system which is use to summaries, record and
analyse various financial transactions that are being incur by Zylla Company during the period of
time. While management is responsible for managing all the information that are being collected
by the account manager by using appropriate functions such as:
 Planning: This seems to be an effective technique by which company need to make early
strategies to generate more capital of profit with the limited amount of investment in their
projects.
 Organising: It refers as appropriate function of management to collected valuable
amount of resources that are needed to accomplish valuable amount of profits during the
time (Brewer, Sorensen and Stout, 2014).
 Controlling: This is a necessary management functions to control all the operations that
are being done at operational level of an organisation.
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 Effective decision making: According to this particular function which is used to
provide right direction to their business to make appropriate decision in order to increase
profitability of an organisation.
There are various types of management accounting systems which are useful for the
systematic recording various financial transactions into their respective format. Some of them are
discuss underneath:
(ii): Cost accounting system
It is known as one of the effective accounting system which is use to record, classify,
analyse and evaluate various alternative aspects that are related with production process. The
primary motive of using this particular accounting system is to advise management regarding
one of the most vital course of actions those are related with cost efficiency and ability to
produce more reliable results for the company. There are various types of costs associated with
the manufacturing of products such as standard cost, normal and actual. The total estimation of
accurate costs of products is eventually helpful to increase profitability operations for Zylla
Company.
(II): Inventory management system
It is ongoing process of moving specific part and products into and out of a company’s
location. The role of managers is to manage their inventory level on regular basis as they place
new orders for goods and ship order out to their respective client. The primary motive of using
this system is to track their inventory level, orders and sales level. This will be an effective
aspect for the mangers to increase goodwill of the company. It is an essential aspect in retail,
wholesale, services sector and many other crucial sectors (JOSHI and et. al., 2011).
(IV):Job costing system
It refers as an appropriate system for allocating production cost to a single products or group
of products. Basically, the job order cost is use to measure all those products those are
sufficiently separate from one another. This process of assigning costs a company incur to a
particular job a business is associated with Zylla Company.
Price optimisation system: It is said to be an effective mathematical evaluation which is
done by a company to analyse how customers would react about various pricing policies that are
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been keep by Zylla. It is analyse prices that a company would analyse will best reliable to attain
their overall aims and objectives in order to increase operating profit during the time.
(B): (I): Various management accounting methods of reporting
In every business organisation, whether related with retail or services sectors is needed to
increase their productivity by using appropriate tools and techniques. Reports are said to be an
effective tools which is used to analyse current position of the company by taking into account
various financial statements of Zylla Company. A Business reporting system is an essential term
which is used to a large range of application that is being used to collect, store, analyse and
delivery appropriate access to information to assist in better decision making to make appropriate
selection of options. In respect to maintain strong balance among professional accounting
practices is essential for the increase of business efficiency during the time. This has been
determining that both management accounting and financial accounting is produce as reports for
a company’s internal stakeholders as opposed to outside stakeholders. Report is systematic detail
information about various financial data that are providing complete image of the company.
There are various sources of data collection which are collected from various departments such
as marketing, human resources and financial department. These reports are helpful to various
investors in order to make upcoming decision making about capital investment in their future
projects. There are various types of methods which are uses to prepared reports. Some of them
are discuss underneath:
Performance report: It is an effective activity in any management operation or project
which is used to communicate valuable position during the Zylla Company. It consists of
collecting and analysing project detail, communicating completion of project, proper allocation
of resources and forecasting future progress or various stakeholders those are related with the
company (Klemstine and Maher, 2014).
Account receivable report: According to this particular report, all information related
with total lists of unpaid customer invoices and credit memo of the company. This will be
essential report for Zylla Company to determine total recovery time to collect all overdue
payment from debtors.
Inventory management report: As per this particular report, managers uses to determine
all necessary detail about total opening and closing stock which are being kept by Zylla
Company during an accounting period of time. There are various techniques which are helpful in
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controlling and managing stock position of the company. some of them are inventory turnover
ratios, ABC costing and economic order level.
Job cost report: According to this particular report which is said to be starting place
through much of the data contained in other reports. This particular report uses to track all costs
and earning by Job and make enable a standardize reporting in order to increase profitability by a
job. This seems to be list of each job those are working on and total costs which are incurred on
the production of products during the time (Lim, 2011).
Operating budget report: According to this particular report which is prepared by the
company in order to analyse total costs and expense that are going to be incur during the period
of time. The primary sources of preparing report are taken from production, sales and raw
material budgets details.
M1: Benefits of using management accounting system and their application
In accordance to increase maximum chances of company growth they need to make use of
accounting systems in more effective manner during the time. It has been determine that all those
types of systems are mentioned in the above report are having their own benefits. Some of them
are helpful to increase maximum growth and stability for the company. such as cost accounting
system is said to be an effective tools which would analyse total cost Zylla company is investing
for their overall profit during the time. Whereas in case of inventory management system which
is used to determine and record all invoice details that are incur during production process.
Operational budgets are also having specific feature to increase overall growth during the period
of time.
D1: Critical evaluation of accounting reporting integrated within a company
In respect to analyse overall performance of the company, managers are needed to use more
effective reporting systems that are responsible for delivery more accurate results for Zylla
Company. As above mentioned various types of reporting system, performance report is consider
more reliable systems which is related with analyse past performance with the present time.
Whereas account receivable report is use to examine total time debtors are needed to complete
payment of overdue amount. Apart from this, inventory management report used to analyse total
stock position is being kept with the company.
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TASK 2
(i): Different types of costing methods use for calculating net profit
Cost is said to be value of amount which is being liable to get something. It has been seen
that costs are directly or indirectly related with the production of products and services that are
incur by the company during an accounting period of time. In business, cost is mainly a
monetary valuation of efforts, material, time and risk incurred during the time. thus, is not
valuable part of an organisation which will be helpful to determine maximum growth chances for
an organisation. In business, the cost can be one of the important acquisition under which the
amount of money expended to attain it is counted as primary costs that in incur during the time.
There are various types of costing methods those are helpful for an organisation in order to
compute total net profit for Zylla Company. Some of them are discuss underneath:
Marginal costing: It is refers as an effective cost develops which is being followed during
an accounting system. These are said to be a crucial cost that are related with production of
additional costs of a unit. It is used to consider only variable costs and fixed costs are absorbed
during the time. According to the purpose of making appropriate decision making managers uses
to consider this particular costing method (Tessier and Otley, 2012).
Absorption costing: It is known as a appropriate costing method which will be helpful to
evaluate total production cost of a product and services. As per this particular cost which uses to
take into account both variable and fixed costs those are applicable in the production process
(Absorption costing, 2018). This seems to be full costing method because of all cost associated
with the manufacturing process. In order to make future decision, this is not taken as more
perfect method for future decision making.
Comparison:
Absorption costing Marginal costing
As per this particular method, both variable
and fixed costs are taken into consideration.
In these specific tools, only variable costs are
taken into account.
This seems to be not valuable for making
future decision making.
It is uses as more appropriate tools for
making upcoming decision in order to
increase profitability for the company.
Net profit can only be determined through
analysing gross profit for the company.
Valuation would be done by considering
contribution per units for the purpose of
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getting total net profit during the time.
Calculation through marginal costing using Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Computation of Net profit by using absorption costing
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
M2: Analysis of various accounting techniques
In accordance to make proper analysis of results, it is necessary to make use of effective
techniques which would be helpful in gaining maximum advantage for the company during the
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time. These techniques are more valuable in increase goodwill as well as productivity of an
organisation during the time. There are various types of accounting techniques which are being
helpful in order to attain primary objective for the company. Some of them are standard costing
which is more reliable to enhance actual performance with the budgets one. While some are
marginal cost which is accurately reliable for enhancing growth for an organisation.
D2: Critical analysis of income statements
From the above calculation, it has been seen that both absorption and marginal costing are
reliable for evaluating total net profitability for the company. If Zylla Company wants to use
either of the methods they can be able to attain maximum growth chances during the period of
time. If they are going to use marginal costing they are able to get 7500, whereas in case of
absorption costing method they are able to incur maximum profit of 7800. The total comparison
of 300 is being determine which is arises because of fixed costs treatment. The most appropriate
method of making future decision they need to select marginal cost for the company (Van der
Stede, 2015).
PART 3
(I): Advantage and disadvantage of using planning tools in budgetary control
Planning is an utmost important aspect for every profit motive company. By having
appropriate plan a company can be able to increase their productivity during the time. Without
having proper support of every department, management cannot be able to take necessary
decision regarding their future plans and profitability. For this purpose, budget is being prepared
by an organisation. It is said to be an estimation of total costs and expenses a company is going
to incur in near future time (Zoni, Dossi and Morelli, 2012). A system of overall administration
control in which actual income and investment are being compared with proper planned income
and overall spending. If plans are implemented in right ways the results are generated more
positive for the company near future. It is highly approaches to make use of planning tools to
control effects of budgets. Some of them are discussed underneath:
Forecasting tools: It is said to be an effective tools to make future prediction for
upcoming costs and expenses those are incur by the company. The more accurately Zylla
company would forecast internal and external factors are affecting small business. Using a wide
variety of tools and techniques for staffs can will create regarding their operations and overall
functions of an organisation.
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Advantages: The main notable benefits of quantitative forecasting tool are that effective
projection depends on strength of previous data. The mains sources of data derive from the total
experience of qualified employees and staffs.
Disadvantage: The main demerits of forecasting are the same as that of any other of
estimating the future. It has been hard to predict future in more effective manner.
Scenario tools: The primary aim of this particular method is to incur forecast based on
arguable situations. In contrast two past method, where the outcomes forecasting is intended to
be a likely result during the time (Lavia López and Hiebl, 2014).
Advantage: By the help of these particular tools, managers of Zylla company would be
able to implement appropriate idea about their selection and future opportunities those are
always become uncertain for the company.
Disadvantage: This seems to be found that sometimes, it happens that not so effective
because of modification in certain policies. In some case, this cannot be taken as valuable for
making appropriate decision.
Contingency tools: A contingency planning is a well organise plan which devised for a
results other than in usual strategies. It is more often helpful to identified risk factors those are
associated with the business. These are mostly related with changes in policies those are done or
implemented by government of large business organisation.
Advantages: According to this particular tools company would be able to improve public
relation. Increase in competition is also providing customers better services and product variety
to their customers.
Disadvantage: This seems to be hard to control as they are not able to cop up with risk
factors those are related with the business because of their qualitative nature.
M3: Analysing planning tools
In accordance to enhance reputation and market share of Zylla Company, they need to
make appropriate planning so that effective results can be determine in more effective manner.
By the help of this, managers would be able to utilised resources through using corrective
measures. Few of them are forecasting tools which is used to estimation future gains and
expenses that are going to be incur by the company on production of products and services.
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Apart from this, scenario tools are use in any critical situation in which chances of mistakes
cannot be under the control of company. While contingency tools are said to be valuable
outcome that are present in an organisation.
D3: Critical evaluation of financial issues
In accordance with making maximum profit during the time can be determine by using
appropriate measures. Some of them are relies on future sustainability of an organisation. There
are various types of financial issues those are arises in the department are profit level, product
and service quality and production related problems. To deal with all these issues, company need
to make use of financial tools such as Key performance indicators, financial governance and
benchmarking. These financial techniques are more useful in resolving any critical situations that
are present in an organisation.
TASK 4
(I): Comparison of various financial issues related with various companies
In accordance to analyse different financial problems, it has been seen that plenty of
issues are related with the internal department of an organisation. This would make huge impacts
on the overall performance and productivity during the time. It can be arises because of not using
techniques for recording various financial transaction. There are various tools and techniques
that are helpful in order to measure current position of the company. Some of them are discuss
underneath:
Profit level: According to this particular risk which is arises because of inappropriate
flow of funds to the company. Without having proper supply of capital they are not being able to
generate more profit during the time (DRURY, 2013).
Product and quality level: This seems to be an effective issue which are related with the
production process. If company is not having sufficient amount of capital they are not able to
generate better productivity during the time.
In order to remove all these above mentioned financial issues, they need to have specific
financial tools such as:
KPI (Key performance indicators): It is known as one of the effective tools which is
helpful to deal with overall performance of an organisation. This is simply related with analysing
past and present time financial stability.
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Financial governance: This seems to be an effective rules and regulations which are
being set by the government in order to smooth conduct of business. It is necessary to make use
of appropriate policies and plans that are helpful to increase profitability for an organisation
(Boyns and Edwards, 2013).
Zylla company Unicorn Grocery
It is said to be small business operations which
is operating to produce effective products to
various customers. To manage their financial
issues they need to make use of cost
accounting systems in more effective manner.
Under this particular company, as they are
working at wide scale. They are using
inventory management system and job costing
system to resolve financial issues.
Price optimisation system is another important
tool which is liable to predict estimate
responses from the customers regarding the
products those are being offered to them.
Financial governance and benchmarking is
consider as primary tools which will be helpful
to manage their overall performance of an
organisation.
M4: Analysis of financial problems
From the above discussed various financial issues those are being arises in an
organisation. It can directly make impacts on overall productivity of Zylla company. In respect to
overcome all problems, manager need to make use of effective tools that can be controlled all
these issues those are associated with the company. Some of them are Key financial indicators,
financial governance are taken into consideration.
CONCLUSION
From the above project report, it has been concluded that management accounting is said
to be crucial aspects for an organisation. For the purpose of analysing all kind of resources they
need to make use of accounting system and reporting in more effective manner. With the use of
costing method, accountant would be able to determine net profitability for the company.
However, this will analysis overall financial issues and their measure of control to rectify their
problems before making any critical decision.
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