An Analysis of Recent Themes and Directions for Management Accounting Research

The provided content includes a collection of academic articles and online resources related to management accounting. The articles, published between 2010 and 2014, cover various topics such as method triangulation in interpretive management accounting research, risk and risk management, social and environmental accounting, organizational change, and feedback in management accounting. Additionally, there are online resources that provide definitions and explanations of key concepts like cost-volume-profit analysis, marginal cost, and budgetary control. Overall, the content provides a wealth of information on various aspects of management accounting.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................4
P1 Management accounting and requirement of different types of management accounting
system..........................................................................................................................................4
P2 Methods which are used for reporting of management accounting.......................................5
TASK 2 ...........................................................................................................................................7
P3 Cost calculation with the help of marginal and absorption cost techniques..........................7
TASK 3..........................................................................................................................................11
P4 Advantages and disadvantages of the budgetary control planning tools in the case of
Austin Fraser.............................................................................................................................11
TASK 4..........................................................................................................................................13
P5 Comparison of how organisations adapt system of management accounting for responding
to financial problems.................................................................................................................13
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting is basically defined as the way through which cited entities will
be able to analyse financial statements and it will assist management who will help in giving
detailed description of the company's financial position, which is generally required by the
various stakeholders of the company. It is defined as the occupation which helps to give support
to the administration or management in the process of decision making, proper planning and also
helps in the management of employees performance (Kaplan and Atkinson, 2015). It also gives
support in the making of financial report and control for supporting management in the strategy
formulation and implementation. These accounting provisions are being used by the managers so
as to get important information for taking decisions, which helps in the proper management of
the functions. This report is based on the Austin Fraser which is a recruitment consultant
company and deals in the information technology, engineering and various sectors of life
science. This report will provide help regarding different methods of management accounting,
and will also support in determining disadvantages and advantages of planning tools of
budgetary control. Reports which are based on the management accounting will helps to show
what kind of amount is available with the company and will also help inn the analysis of profit
generation.
TASK 1
P1 Management accounting and requirement of different types of management accounting
system
Management accounting is the way which helps in analysing, using, sourcing and
communicating different decisions which are in relation with finance and non finance
information for generating and preserving value of the entity. It is the combination of accounting,
financing and administrating the different skills and techniques of the business which is required
for adding value in any entity (Macintosh and Quattrone, 2010). Management accounting keeps
on working in the overall business, it not just give advice to managers, implicate and finance
important decision, formulate business strategies and monitor risk of the business. It tends to use
each and every kind of information and not just the information which is related to the finance,
which will help in leading business to the success. Marginal absorption and costing is one of the

tool and technique of accounting through which entity can prepare effective and efficient
strategy to maintain productivity in the business.
There are several management accounting system which will be helpful in the
development of Austin Fraser. Management accounting also provides support in the to reduce
expenses of operational activities. It is used by the business owners to review operation's cost of
the activities and the economic resources which will be used by the entity. It helps to understand
properly that how much money should be required by the business (Baldvinsdottir, Mitchell and
Nørreklit, 2010). It is also used for conducting various analysis on the quality of the resources
which will be used in the production. Management accounting also helps to improve the cash
flow because budgeting is its important part. Owners of the business use budget so as to get the
full analysis of the financial map which will help in the maintenance of future expenses. Master
budget can also be prepared by the company for the analysis of needed expenses. It helps to
increase the financial returns as by this forecast report can be prepared related to finance for the
sales and demands of customers.
Management accounting is required for the different purpose and these requirements can
be defined as :
 Traditional based management accounting : This is the very important management
accounting system, it helps to focus on the cost which is a means of job order and a way
to process cost. This method will be helpful for the Austin Fraser , as the entity will be
capable to allocate different types of cost which is relation with material, labour and
manufacturing. This system is the most useful and necessary for the entity. Job order
costing is used in the manufacturing companies who have large projects (Ward, 2012). So
for this, such type of techniques will be helpful for tracing and the company will be able
to allocate resources easily in the desired project. Process costing techniques helps in the
allocation of different processes.
 Lean management accounting : This is the kind of term which is used by the mentioned
entity for the need of change in relation with control, administration, accounting and
measurement which will help to assist the lean manufacturing and thinking. It is
revolutionary as it not just focus on the cost , but is also helpful in the support to make
strategies for controlling and reducing the management cost. This type of accounting
helps the management accountants to define different strategies which are in regards with

cost reduction and these kind of procedure can be implemented in Austin Fraser, with the
help of this managers of personnel management will be able to make required decisions
(Otley and Emmanuel, 2013).
 Inventory management: It includes the supervision of inventory and stock items. It is the
component of the supply chain management, and supervises goods flow from warehouse
to manufacturers and from facilities to sale point. It helps in the management of the stock
and outflow and inflow of stock needed by company.
 Budgeting: It helps in allocating money for a specific activities or provide sum of money
for the purpose of the budget. It can be defined as the way used to prepare detailed
statement regarding financial results which are expected for a particular time period in
future.
 Capital expenditure planning: it is a planning regarding the money which is spent by an
organisation or business in order to maintain or acquire fixed assets like buildings, land,
equipments etc. This kind of planning is very essential so that business can make proper
planning.
P2 Methods which are used for reporting of management accounting
Reporting of management accounting is very important for Austin Fraser's development.
There are different methods which are used in the reporting of management accounting and
which will also help in the growth and development of the mentioned entity. It assist in making
different reports, plans, strategies which will be important for business for carrying out its
operations in a efficient and organised manner. Different techniques and methods which will be
used for the reporting of management accounting in Austin Fraser are given below : Cost Accounting : It is defined as the record which maintains all cost which is there in
the business, it is used in such way that improves the management of the entity. It helps
in finding out cost of the company for the production by making analysis of input cost
which is involved in the different steps of production and fixed cost like depreciation of
capital tools (Cinquini and Tenucci, 2010). Cost accounting first make record and then
measure cost separately, after that it will make comparison of input and output results
which will help entity in the performance management of the finance. With the support of
better cost allocation method, Austin Fraser and its management can reduce cost by
making several strategies.

 Financial Planning : To have a proper financial planning is the key to success in Austin
Fraser which helps in the planning of different factors which are related with finance.
Main aim of the entity is to earn profit, they always aims to make profit by decreasing
cost and with the proper maintenance of product and service quality which a company is
offering. Finance planning is the important tool for the achievement of business goals and
objectives (Fullerton, Kennedy and Widener, 2013). Planning of different factors which
are in relation with finance will be very helpful for the stakeholders of the Austin Fraser
and it will also help in the decision making which is very necessary for the entity. On the
other hand management accounting officers will be able to make good finance structure
and that will fulfil every requirement of the entity by making use of the existing
resources. Financial statement analysis : It is required to make proper and efficient analysis of
financial statement. There are different kind of financial statements which is required to
be managed by the mentioned entity. Statement of income and financial position
statements should be prepared by the Austin Fraser, and this finance statement helps in
reflecting the financial position of the cited entity. Management and administration of the
cited entity will be able to make analysis of the statements for different periods, which
will help business to take out information related to financial position so that analysis can
be made (Luft and Shields, 2010). Cash flow analysis : Management accounting officers of Austin Fraser company can
make use of analysis which is related to cash flow of the particular financial year. It will
also helps to get proper information about different sources with the help of which cash is
generated in the entity for the cash which is required for the activities and the projects.
Movement of cash and tracking will be helpful for the entity to invest fund in different
areas. Cash flow statements is differentiated in three parts: Flow of cash from investing,
financing and operating activities. With the help of cash flow analysis cited entity will be
able to get information which will help in analysing how much cash is required in various
activities (Scapens and Bromwich, 2010)
 Fund flow analysis : With the help of it, cited entity will be able to analyse the
movement of fund in a specific year. These movements of funds of a specific year are

compared with any other year, with this analysis, information related to utilization of
funds, and use of resources can be done.
Application and system of management accounting will be helpful in the concern of
Austin Fraser for the development and management of reports of accounting. Reporting which is
used for the management accounting is the way to make report and administration account which
helps to provide accurate information with time related to statistics and finance. It also assist in
the making of short term and long term decisions.
According to Vaivio and Sirén, (2010) , management accounting structure is important
and helps in providing efficient management control. It helps in increasing the efficiency of the
business and support in the performance management of employees. On the other hand Soin and
Collier, (2013), explains that accounting of management is the significant factor which will help
in the appropriate planning in relation with finance and other resources which are used in
different activities. System of reporting and accounting both contributes in the growth and
development of Austin Fraser, it helps in the preparing fund flow and cash flow statements,
which is needed to analyse the flow of cash.
TASK 2
P3 Cost calculation with the help of marginal and absorption cost techniques
Net profit can be calculated with the help of various methods and techniques of
management accounting. Net profit of Austin Fraser according to the absorption and marginal
costing is specified below :
 Absorption Costing : This type of costing is defined as the technique of management
accounting with the help of which various cost that are related with the different types of
production process that are being implemented on the product. This type of method is
also helpful in the inventory evaluation of the cited entity (Nandan, 2010). Number of
expenses are carried out on a specific basis, hence when the expenses actually occur, then
at that time it is necessary that expense of the budget may be different from the actual
budget. The technique of absorption costing helps in the management of over and under
absorption.
Income statement as per the absorption cost :

NET PROFIT AS PER ABSORPTION
COSTING:
Sales (35*600) 21000
less:
Cost of Production 9600
Gross Profit 11400
LESS:
Fixed and variable cost:
variable sales overheads (600*1) 600
Admin & selling cost (700+600) 1300
less;over absorbed fixed production overheads -100 -1800
NET PROFIT AS PER ABSORPTION
COSTING: 9600
 Marginal Costing : Principles which are of marginal costing are helpful in making of
short term decisions in a entity. At the different level of operations, marginal costing can
be used for that level in which contribution is generated. In other words it can be said that
marginal cost is defined as the change in the opportunity cost which is changed because
there is change in the production. There is difference in the opportunity cost because
there is increment in the cost of production (Contrafatto and Burns, 2013).

Statement of income as per marginal costing:
NET PROFIT AS PER MARGINAL COST
Amount
Sales (35*600) 21000
less:
Cost of Production (6+5+2) -9100
closing stock (100*13) -1300
variable cost -7800
Contribution 13200
less:
variable sales overheads (600*1) -600
fixed overheads -2000
Admin & selling cost (700+600) -1300
-3900

Total 9300
Difference in the marginal and absorption costing :
Marginal Costing Absorption Costing
 In this the cost which is variable in
relation with the production is
completely allocated.
 Cost of the product includes the
variable cost (Pitkänen and Lukka,
2011).
 Division of overhead is in two
categories which is variable and fixed.
 Profit can be calculated with the help of
ratio of profit volume.
 In this different type of cost is
assimilated on a particular basis and
after that the cost get allocated to
different products.
 In this there is assimilation and
allocation of variable and fixed cost
which is related with production.
 In this there is division of overheads is
in three categories: administration,
production, and overhead of
distribution and selling (Cadez and
Guilding, 2012).
Austin Fraser uses the management accounting techniques for improving their financial
growth and reputation in the existing and new market. The manufacturing industry functions
with approx 50 employees and their turnover is £500, 000. So with the aim to increase their
turnover they will be able to use various functions so as to enhance the performance. Various
techniques are :
 Absorption technique : This type of technique is used by the entity for the calculation of
the expenses. This will help in making income statements so as to get managed properly.
Austin Fraser's total fixed production is £200 and gross profit is £9800.
 Technique of cost volume profit : This will help entity to analyse their overall profit for
the identification of the profit level.

Business is being done by entities and various operations of business is being performed
in the environment for improving growth (Harris and Durden, 2012). Austin Fraser will be able
to use different methods and tools for calculating the financial data, it will also help entity to
identify expenses so as to make success and growth. Net profit of the entity is 7500 as per the
marginal costing.
TASK 3
P4 Advantages and disadvantages of the budgetary control planning tools in the case of Austin
Fraser
Control in the budget can be of two types which is being used in the entity, and they are
specified as the financial control and the budgetary control in the management accounting.
Budget is generally defined as the expression which is quantitative in nature and it is related
with financial of a particular time period. In the volume of the budget the planned sales,
expenses, resources, liabilities , assets and the flow of cash is being included. It defines various
plans that are related with the business strategies, organisation, activities and events. It is the
process with the help of which desired results get compared with the achieved results (Busco and
Scapens, 2011). It helps in controlling the cost of the business and also make coordination with
the different departments , helps in the preparation of the budget, define various responsibilities
and then help in taking corrective actions to achieve profit. There are different types of tools for
budgetary-control. Master Budget : This type of budget helps in the aggregation of all low level budgets
which is being produced by the entity's different functional areas, it also includes the
budgeted financial statements, cash forecast and financial plan. It is the set of
interconnected budget related with cost of production, sales , income, purchase etc.
Illustrations

 Operational Budget : It is the combination of the known expenses, estimated future cost,
and the forecasted income in an year. These kinds of budgets are prepared in advance of
accounting time, that is why they need estimated revenues and expenses. It a plan for
expenditure which is required for the maintenance of the functions of entity (Lavia López
and Hiebl, 2014)
Illustrations

 Cash flow Budget : Budgets which are related to cash flow helps in analysing the inflow
and outflow of cash, in regards with the day to day business activities. This budget is
monitored for examining shortfall between expenses and sales.
Illustrations

 Financial Budget : It helps in making business report in regards with income and
expenses, which includes profits of business and income and cost of capital expenditure.
It helps to manage assets like property, investment etc. Static Budget : It contains various elements which remains unchanged with the variations
that occur in sales level, like overhead cost. Departments of the organisation fix some
amount of money in budgets which should be get spend, and its the managers duty to
make sure that such amounts are effectively spent (Agbejule, 2011)
Illustrations
There are different advantages and disadvantages of budgetary planning tools which are
used in the Austin Fraser :
Advantages
 With the help of budgetary planning tools all functional budget are available in capsule
form and they can be checked by cross verifying the information and the information
which is related to forecast balance sheet can also be retrieved.
 It helps in managing the current expenses and with this future expenses can also be
projected. Reserves can be build and the accountability can be maintained with the help
of planning tools (Harris and Durden, 2012)
 The tools help in determining whether the amount of cash balance is sufficient to
maintain operations or not, this also help in the optimum utilisation of cash.

 It also helps to maintain coordination between various departments of the Austin Fraser
so as to get the work done effectively.
Disadvantages
 The planning tools may be sometime lack in providing specificity and it may be difficult
to update the master budget because of many categories that are included.
 There may be a less flexibility because of the planning tools of the budgetary control,
which can give negative impact on the company's revenue (B Douglas Clinton CMA and
CFM, 2012)
 The planning tools will create pressure on the workforce because of large targets.
Planning tools of budgetary control are used for preparing and forecasting the budget of
Austin Fraser. These tools will help the entity to make successful budget in relation to different
departments and organisation. They will help manage the current expenses and will also support
to manage future expense. Master budget will helps to control the liquidity and the maintenance
of the expenses and revenues will also be done (Callahan, Stetz and Brooks, 2011)
In Austin Fraser budgetary control planning tools will give solutions for the various
financial problems, which will the organisation to achieve growth and success. In the cited entity
financial budget will provide help to make sure that the money is devoted at appropriate place on
right time. With the help of which entity can define the income and the expenses. There should
be an allocation for both expected and current expenses in the financial plans so as to solve the
conflicts and problems in the entity.
TASK 4
P5 Comparison of how organisations adapt system of management accounting for responding to
financial problems
Financial problems can be defined as the situation where worry regarding money will
cause stress. There are many organisations who are facing hard times in financial planning. Some
of the financial problems can be defined as:
 Cash deficit: When there is lack of cash with business or with an organisation then they
will not be able to manage daily activities properly.

 Increased debt from loans or credit cards: Too much debt can be a problem for
business, large loan payments and high interest rates of credit card can increase monthly
expenses, and will make tough situation in raising profit.
 Not enough cash flow: Calculation of cash flow is done by subtracting total expenses
from the total income. If business will not be able to maintain proper cash flow, then
forcefully they need to take debt in order to continue working which will be a financial
problem.
 Poor financial management: Every business needs financial budget and business plan in
order to guide how they will spend and raise money, and how financial shortfalls and
surpluses will be handled. If there will not be proper market research and underestimate
competition then company will not be able to survive properly.
Management accounting helps in providing the provisions of financial data and will also
help the entity to give advice regarding growth and development of the different business
operations. Various decisions can also be made by this, which will help in the executions of the
plans and the management of the performance (Abrahamsson, Englund and Gerdin, 2011).
Accounting of management will also helps to give various tools that will give support to the
Austin Fraser and its administration for getting solutions of different problems which will affect
the cited entity for the management of day to day activities, there are many activities which are
related to the management accounting and it is used by the managers of Austin Fraser. It is
examined that management accounting techniques future projects, financial accounting and cost
accounting is used by the administration and is also compared with the techniques of Nisa retail
store which is also a manufacturing company. According to financial accounting : If the managers of management accounting use the
available data which is there in the statements of finance, then there are several methods
which are used by Austin Fraser so as to give corrective decisions against different
problems which affects the development. Methods which are used by the Austin Fraser
and Nisa Retail Store are :
1. Analysis of Ratio : Cited entities make use of the ratio analysis for analysing the different
data and the figures of finance, which will be helpful in forecasting and making various
decisions (Busco and Scapens, 2011).

2. Analysis with the help of comparative financial statements : Better strategies and
decisions can be made by the mentioned entities with the help of comparison between
one year with the figures of another year by which research can be done on any variance.
3. Cash flow analysis and fund flow analysis : Managers of the management accounting of
Austin Fraser can make use of such tools for the management of the funds, because the
administrating of the Austin Fraser will face problems in which will be related to the
availability of the funds and and therefore they will need to manage their financial
position with the help of fund flow analysis. This can also be helpful to track the
movement of cash so as to make the proper cash maintenance by the management of the
mentioned entity (Pitkänen and Lukka, 2011)
 According to the cost accounting : To manage the cost accordingly is the main
problem of every organisation. Therefore mentioned entities should manage its
structure of cost so as to make products and service cost effective.
1. Marginal costing : With the concepts that are mentioned in the techniques of
marginal costing , several problems can be solved that are related with the cost.
Officers of management accounting of Nisa Retail Store and Austin Fraser use the
method of cost volume profit under marginal costing.
2. Analysis of cost variance : Variance can be defined as the difference between the
desired and obtained figures. There may be a positive and the negative variance,
and so they should be managed accordingly. Negative variance show that the
budgeted figures have not been achieved, which means growth of the company is
not optimum.
 On the basis of future information : Austin Fraser and Nisa Retail Store can use
management accounting techniques for solving different problems which are related
with the projects of future (Nandan, 2010). Mentioned entities will identify different
aspects which may affect the projects of the future, other than this entities needs to
analyse different returns which can be generated from the the activities and projects
of the future. These techniques are :
1. Budgeting and budgets
2. Budgetary control

The proper management accounting gives value to the organisation, so as to resolve
problems. It is a function of internal costing which will help Austin Fraser in the process of
decision making. Decisions are generally related with operations, productions and investments.
The main aim of management accounting is to collect and record statements of finance from
different departments of the organisation. It will helps to analyse budgets and provide their
funding in the allotment of asset (Abrahamsson, Englund and Gerdin, 2011). It includes the
estimation of raw material cost, sales etc.
CONCLUSION
From the above report it can be concluded that the techniques of management accounting
is necessary for the growth and development of the entity. These may include absorption costing,
marginal costing and analysis of cost volume profit. Austin Fraser's management accounting
officers can maintain the finance position of the entity and can also make strategies by analysing
various tools and techniques of ratio and financial statement analysis. Austin Fraser has less than
50 employees, therefore it has less workforce for managing the activities so that the accounting
officers will be able to make budgets so that the various tasks can be allocated effectively and
efficiently. Here, income statements of the entity has been prepared from which it is analysed
that both techniques provide different figures of profit because of their different method. It can
be said that the techniques of management accounting give reliable results which depends on the
selection of appropriate techniques by entity.

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