Management Accounting Report

This report provides a comprehensive analysis of management accounting principles and their application in the context of Ever Joy Enterprises. It examines various management accounting systems, including cost accounting, inventory management, and job costing, and discusses the importance of budgetary control, break-even analysis, and the adaptation of management accounting systems to address financial challenges.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
a. Define management accounting and financial accounting......................................................1
b. Cost accounting System..........................................................................................................2
c. Inventory management system................................................................................................2
d. Job costing system...................................................................................................................3
e. Different management accounting reports and their functions...............................................3
f. Requirement of sound business system and importance of the accounting information.........4
LO 2.................................................................................................................................................4
A. Definition of break even point and break even quantity........................................................4
B. Correct formula......................................................................................................................4
C. Calculation of expected profit used for outcomes..................................................................5
LO 3.................................................................................................................................................5
Advantages and disadvantages of various type of planning tools for budgetary control............5
LO 4.................................................................................................................................................7
Compare how organisations are adapting management accounting system to respond financial
problems......................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting reckoned as a subject that contains recording of financial and non-
financial information, planning, forecasting and budgeting for better management and control in
organisational context (Amoako, 2013). This report is prepared to define the concept of
management accounting and different type of management accounting system that helps in
management and decision making. Use of management accounting reports are also defined in
this report. Ever joy enterprise is the organisation seeking for managing the financial resources
for better control. Various type of cot accounting techniques is used to analyse the profitability of
organisation. Budgetary control process with use of various type of planning tools are also
illustrated. Use of management accounting system for overcome financial problems of
organisation also defined in this report.
LO 1
a. Define management accounting and financial accounting
Financial accounting
It indicates towards the fundamental procedure yearly report which is primarily for the
outer partner. It is connected with estimating generally speaking execution of the business as far
as expanding productivity, development and legitimate usage of assets and so forth. This will
help with surveying hazard which can be additionally changed into income. It produces month to
month or week after week reports for "Ever joy enterprises" for inner groups of onlookers, for
example, division administrators and additionally higher specialist (Brewer, Sorensen and Stout,
2014).
Management accounting
It is known as powerful procedure of planning administration reports and records that can
give precise and opportune information and measurable data according to the necessity of
supervisor to settle on short-or long pull choice.
Basis Management accounting Financial accounting
Areas of
coverage
within the
organisation
It just used to cover the inward
division with the end goal of
management.
It is considered for the outer
gatherings, for example, potential
speculators and outside partners.
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Format of
presentation
There is no any set arrangement
utilized for the exhibiting
information before management.
Financial accounting has essential to
make utilization of particular
organizations for the chronicle and
showing information.
Legal
requirements
It is not required formal manner.
there is no any sort of statutory
prerequisites is necessary.
It is altogether sanction to get ready
money related records for each
organization.
Type of data
used
Historic and additionally prescient
information are essential base of
choice making.
Only notable or factual data is
premise of powerful basic leadership.
b. Cost accounting System
It is known as powerful system that has been utilized by the organizations to appraise the
expense of their items to analyse benefit, stock valuation and cost control. Predicating the exact
expense of products is crucial for beneficial tasks. Ever joy enterprise may consolidate the
separated cost in single format and save the additional reporting cost. There are different kinds of
costing strategies that are made reference to beneath:
Job costing: these specific parts which render different sorts of administrations as
particular from those which related with administration conveyance segment. Ever satisfaction is
the person who is connected with giving all sort of amusement related administrations to
different clients.
Batch costing: This is said to be generally speaking expansion of occupation costing. A
cluster can be speaking to a wide number of little requests that went through the processing plant
in group measure (JOSHI and et. al., 2011). Ever joy enterprise need to decide per units cost of
tickets by separating the expense of aggregate individuals.
c. Inventory management system
A component of inventory network administration, stock investigation will in general give
data about the stream of makers to distribution centre and from these administrations to the point
of offers. It is just known as supervision of non-promoted inventories and stock related items
(Klemstine and Maher, 2014). As it tends to be utilized in assembling segments be that as it may,
Ever Joy enterprises can utilizes this as look at aggregate accessibility of tickets that are reserved
or empty. Like, resources following and stock administration arrangement are essential based for
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the organization. For example, standardized identification scanners and printers for tickets and
worldwide situating framework are a few models that are crucial for the organization.
d. Job costing system
It is known as one of the viable frameworks that is appointing underway related expenses
to an individual item or gathering of items. It is a sort of cost that monitors the expense and
income by its activity and empowers all the institutionalized announcing of gainfulness.
Essentially, work arrange costing framework is utilized just when the things are recorded is
adequately not quite the same as each other. For any accounting framework to manage work
costing, it can permit work numbers to relegate to single things of consumption and profit from
the offers of tickets. Models structuring a product program that can record data related with the
deals and booking of tickets.
e. Different management accounting reports and their functions
It is critical for them to keep up all sort of information that are related with the exchanges.
Announcing must be done on standard premise so changes of slip-ups can be kept away from in
not so distant future time (Lim, 2011). It would help with gathering information that is required
by administrators to work a viable business in not so distant future time. An administration
revealing framework is fundamental part to control frameworks that can give business data. This
can be as reports and proclamations. The framework is confined to help individuals from the
administration through giving precise and convenient information. The information could be
from money related, representative headcount and client resources in care. There are different
advantages which are achieved by the assistance of utilizing proper announcing framework.
Some of them are talked about underneath:
 An administration announcing framework is required to be more exact. There could be
any inconsistency as far as announcing.
 It has been discovered that powerful administration revealing lead to enhances
responsiveness to issues and convey association administrations.
Account receivable report: This report comprises of unpaid arrangements of client’s detail
solicitations and additionally unused credit reminders as indicated by the specified date. It is the
essential instruments utilized by gathering individual to inspect which solicitations is most
extreme past due for the instalment.
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Performance report: It is set up to analyse the execution of organization's money related
soundness. They are routinely arranged through government bodies which would be financed by
open cash. Ever Joy enterprises need to inspect most recent multiyear of execution with the goal
that genuine outcomes can be resolved.
f. Requirement of sound business system and importance of the accounting information
Benefits of sound accounting system
There are different advantages of utilizing accounting framework for gathering, keeping
and preparing budgetary and accounting information those are utilized in powerful basic
leadership. Some of them are made reference to underneath:
Automation and profitability: With the advanced account administrator can conquer issues
and increment efficiency. It is less tedious as of manual strategy.
Accuracy: People used to make blunders more often than not while recording of exchange
with the end goal to manage every one of these issues, a modernized accounting framework is
been intended to diminish the mistakes.
It is essential for an association to make an incentive to their partners by giving them
most extreme rate in benefit or offers. With the opportune conveyance of information to
interior and in addition outside would prompt upgrade the general development and
efficiency of ever delight venture (Tessier and Otley, 2012).
LO 2
A. Definition of break even point and break even quantity
It is considered to be add up to number of units or sales remain adequate to absorb fixed
cost. It is essentially done at inside administration accounting setup that can inspect the
connections among cost, volume and benefit.
B. Correct formula
Selling
price: 20
Variable
cost 10
Contributio
n 10
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Fixed cost 60000
PVR Contribution/Sales*100
10/20*100=50%
BEV ( in
amount):
Fixed cost /
PVR
:
60000/50%= 120000
BEV (in
unit): Fixed
cost /
contribution : 60000/10 = 6000
C. Calculation of expected profit used for outcomes
Contribution: Fixed cost + profit
: 60000+3000=90000
Selling price: Contribution /PVR
=90000/50%= 180000
Sales (in units): 8000*20=160000
Contribution = sales *PVR
: 160000*50%=80000.
Desire profit=contribution-fixed cost
= 80000-60000=20000
LO 3
Advantages and disadvantages of various type of planning tools for budgetary control
Budget: It is said to be an estimation of future use that can be going to be contributed amid
the time. In alternate words, it a money related arrangement for a characterized span that can
comprises of arranged sales, volumes and winning, costs and also other back related angles. The
spending time frame if the time which is approved to spend the capital granted and can meet the
fundamental prerequisites of the organization. There are different sorts of spending which are
should have been investigating by the assistance of arranging instruments. Some of them are
talked about underneath:
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Production Budget: After the achievement of the business spending plan, the organization
dependably go for the planning of generation spending plan (Klychova and et. al., 2015). It is
completely founded on aggregate expected dimension of offers, regardless of whether the
organization needs to roll out any improvements in the dimension of stock. Any sort of choice
with respect to the re-appropriating creation are broke down before the definition of this financial
plan. In this the creation limit of each division required to be worked out and figures must be
made reference to all sort of constraints.
Sales budget: A business utilizes sales spending plans to set office objectives and decide
gaining and gauge creation related necessities. it is known as the administration by and large
estimation of offers for up and coming budgetary day and age. It can influence both working
spending plans and by and large ace spending plan of the ever bliss ventures. It has been seen
that by and large, salary articulations start with sales, the planning method starts with the
aggregate sales estimation. This kind of spending plans can give early adjust to the ever
satisfaction in creating items according to the aggregate sales.
Cash budget: Assessed cost can be made on month to month, quarterly and yearly that
can include nonfarm salary and costs and additionally different things. It is said to be an
estimation of all money receipts and consumption that are relied upon to emerge amid a specific
timeframe. It is also called as meagre arrangement ahead of time that can maintain a strategic
distance from here and now decrease of money for the organization. Just by the assistance of
arranging the utilization of assets inside Ever delight can be overseen appropriately. The
fundamental motivation behind this money spending plan is to get ready definite of an
organization's aggregate money inflows and surge amid a specific spending period.
Budget variation: It is said to be distinction among the financial plans or baselines
measure of consumption or procuring and real sum (Bennett, Schaltegger and Zvezdov, 2013).
The spending change is more ideal on the off chance that the genuine spending plan is a lot
higher than the financial plan or the real costs which is not exactly the predicated spending plan.
A fluctuation is distinction among planned, arranged or standard cost that can be figured for the
two expenses and profit.
Importance to Ever Joy enterprise:
The reasons for variety among real outcomes and the planned number are resolved to feature
the regions of enhancement for the organization. Fluctuation examination bargains about as a
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control framework. Difference investigation manages in general examination of deviations in the
planned and genuine monetary execution of Ever delight. Examination of wide deviation on key
things helps the association in knowing the causes and it empowers administration to explore
conceivable strategies for how such deviation can be survived.
Planning is an essential tool which is used to control many problems that rises within
company. Some are mentioned below:
Scenario tool:
This is the techniques which is related to an effectual structure that assist Ever joy
Enterprises to know about the upcoming scenario. Various future situations are analysed within
company. Purpose of this system is to set up estimated outcomes which is different from the
common known scenario. So, company can make a plan so that they tackle with the upcoming
scenarios.
Advantage:
The results from this tool is used in risk management and process of budget. This helps
Ever joy Enterprises to deal with uncertain situation by making strategic decision for future.
Disadvantage:
It is tough to develop future scenario matrix because future unsure. So, this is a difficult
for Ever Joy Enterprise to make decision about future growth.
Forecasting tool:
It is the tool which is utilise to estimate upcoming trends and results of Ever Joy
Enterprises by evaluating the past data. This is most essential techniques that are considered by
firm to plan their future projects.
Advantage:
Ever joy enterprise can utilise this tool to forecast future by taking appropriate decision
so that company can accomplish their objectives.
Disadvantage:
Forecasting is generally done on the basis of estimation, therefore it may be not reliable
and accurate in all the situations.
Contingency tool:
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Contingency tool is utilise to analyse the risk of business management which related with
some certain outcomes. This assist Ever Joy Enterprise to formulate strategies that are used to
overcome from various problems which may occur in upcoming time.
Advantage:
Contingency tool help Ever Joy Enterprises to examine uncertain business risk and
strategies can be made to overcome from that issues.
Disadvantage:
Ever Joy Enterprises can not control the internal and external activities with the use of
this tool as these are uncertain in nature.
LO 4
Compare how organisations are adapting management accounting system to respond financial
problems
Financial governance
Administrative consistence used to depict the points that an association seek to
accomplish in their actions to guarantee that they can know about and find a way to conform to
related laws, arrangements and controls (Transparency, 2017). By the assistance of exact
consistence, the progressions of money related issues can be decrease up to a degree. It will help
with expanding most extreme changes of development that can be further useful in
accomplishing by and large points and destinations. The other reason consistence is the most
basic is activity, paying little mind to whether it is ensuring that it doesn't occur by following
managerial consistence, or by giving verification that all basic and sensible moves were made
with the activity in regard to keep any sort of occurrences. A guideline of nourishment
administration is that interior partner would be educated with respect to the organization's
general exercises that are done later on and any risk related in their business procedures.
Benchmarking:
Benchmarking is tool which is utilise to do comparison among two organisations to
identify various ways for obtaining competitive benefits. Ever Joy Enterprises business
operations key metrics are compared with another. Over performance and underperformance
areas of companies are identified with this tool. Ever Joy Enterprises utilise this approach to
prepare a report which are to be followed by another firms. The benchmark report is formed
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which is related to management of cost so that they can solve the issues of inappropriate use of
money. This can be utilise by another organisation and develop the manger efficiencies for cost
management.
KPI (Key Performance Indicators):
Key Performance Indicators are utilise by company to analyse and trace the factors which
are essential for successful business. It focus on the functions and process of enterprises which
are useful for firm to measure the performance. Manager of Ever Joy Enterprises utilise this
approaches so that company can compare and set some standards which assist them to resolve
financial problems that is relate to more expenditure than income. Therefore, firm create
standards at each stage to monitor and control the expenses.
Comparison between Ever Joy Enterprises and Airdri.
Ever Joy Enterprises Airdri
After evaluating the situations of Ever Joy
Enterprises it is identified that company is
facing financial problem like uncontrollable
cost. So, to overcome from this firm use
benchmarking as this help them to control the
cost effectively.
This company are facing the financial issues
of over expenditure. So, to overcome from this
Airdri use KPI as this assist to set the standard
of performance by measuring them.
It utilise job costing reporting system because
this report is made to keep and mange the cost
records which are incurred in particular job or
project. This report is also helpful to compare
actual cost with budgeted costs.
Airdri use inventory management report
system as this help them to prepare sales,
purchase etc. reports. This report assist them to
maintained the inventory at optimum level and
also trace the different products to meet the
demand and supply of company.
CONCLUSION
From the above, it has been reasoned that administration accounting is one of the basic
angles for an association. For this reason, it is crucial to make utilization of accounting
frameworks and report. Utilization of costing strategies to decide net benefit are talk about viably
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in the above report. Utilization of arranging apparatuses in purpose spending control is analysed
appropriately. Every one of these thinks can be imperative to reach at their positive points and
future development in not so distant future time.
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REFERENCES
Books and Journals:
Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of Management
Accounting Research, 27(1), pp.81-119.
Klychova, G.S and et. al., 2015. Management aspects of production cost accounting in horse
breeding. Asian Social Science. 11(11). p.308.
Klemstine, C. F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A
Review and Annotated Bibliography. Routledge.
JOSHI, P.L. and et. al., 2011. Diffusion of management accounting practices in gulf cooperation
council countries. Accounting Perspectives. 10(1). pp.23-53.
Zoni, L., Dossi, A. and Morelli, M., 2012. Management accounting system (MAS) change: field
evidence. Asia-Pacific Journal of Accounting & Economics. 19(1). pp.119-138.
Van der Stede, W. A., 2015. Management accounting: Where from, where now, where to?.
Journal of Management Accounting Research. 27(1). pp.171-176.
Tessier, S. and Otley, D., 2012. A conceptual development of Simons’ Levers of Control
framework. Management Accounting Research. 23(3). pp.171-185.
Lim, M., 2011. Full cost accounting in solid waste management: the gap in the literature on
newly industrialised countries. Journal of Applied Management Accounting Research.
9(1). p.21.
Brewer, P. C., Sorensen, J. E. and Stout, D. E., 2014. The future of accounting education:
Addressing the competency crisis. Strategic Finance. 96(2). pp.29-38.
Bovens, M., Goodin, R.E. and Schillemans, T. eds., 2014. The Oxford handbook public
accountability. Oxford University Press.
Bennett, M.D., Schaltegger, S. and Zvezdov, D., 2013. Exploring corporate practices in
management accounting for sustainability (pp. 1-56). London: ICAEW.
Amoako, G.K., 2013. Accounting practices of SMEs: A case study of Kumasi Metropolis in
Ghana. International Journal of Business and Management. 8(24). p.73.
Online
Transparency. 2017.[Online]. Available through: <
https://www.pearse-trust.ie/blog/bid/108866/the-core-principles-of-good-corporate-
governance >.
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