Management Accounting and Reporting in Waitrose

This report covers the essential requirements of management accounting, different methods used for management accounting reporting, cost calculation using appropriate techniques for preparing income statement, and advantages and disadvantages of various planning tools used for budgetary control in Waitrose.

MANAGEMENT
ACCOUNTING

Table of Contents
REPORT..........................................................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and essential requirement of management accounting.............1
P2 Different methods used for management accounting reporting........................................4
TASK 2............................................................................................................................................5
P3 Cost calculation using appropriate technique for preparing income statement................5
TASK 3............................................................................................................................................8
P4 Advantages and disadvantages of various planning tools used for budgetary control......8
TASK 4..........................................................................................................................................10
P5 Use of management accounting to respond to various financial problems.....................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

REPORT
From: Management Accounting Officer
To: General Manager
Subject: To write a report to GM covering management accounting and management accounting
system together with different costing techniques and reporting to enable the organization
implement them.
INTRODUCTION
Accounting is a useful term which assist an enterprise; therefore, they can maintain their
financial records in an adequate way. Entire data which is associated with accounts need to
include in organisation's statements (Burritt, Schaltegger and Zvezdov, 2011). Basically,
financial statements are connected with long time duration. Instead of this, if firm wants to take
judgement for short period of time then they can utilize managerial accounting aspect. As per
this, it is like a procedure and contains all data as well as information which is connected with
daily activities. With the assistance of management accounting, an employer of company can
easily take appropriate decision which caters growth and success to them. The present report is
based with Waitrose which is one of the leading supermarkets in United Kingdom. In this
assignment, there is a description about many forms of reporting system. This report
incorporates, understandability of administration bookkeeping idea and diverse strategies which
are utilized to empower an association to set up these announcement. Alongside this, there are
different arranging instruments and systems can likewise utilized by an association so they can
manage money related issues in a powerful way. Many pros and cons are also determined here
which are necessary to give response related to financial issues.
TASK 1
P1 Management accounting and essential requirement of management accounting
Management accounting is an adequate procedure which gives data and along with this
information to entire administration; therefore, they can take appropriate judgement internally
(Dillard2014). It is required for manager to concentrate on those info which are related with
statistical and financial as it will aid them to take decision for firm either for long or short period
of time. This will also helpful to take judgement for regular activities. It provides support to
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enhance execution of an enterprise and for this purpose manager needs to eliminate entire short
comings which is associated with business.
It is fundamental for an employer as well as leader to concentrate on all operational
activities and facts which are connected with an enterprise. This is totally vary from money
related bookkeeping which prompts get ready for developing procedures amid a whole year
(DRURY, 2013). Monetary information formulate and in addition based on past data.
Management accounting is entirely distinguish form it and it always support to look forward.
Manager accounting is accessible for intrinsic users of an organisation; this, it encourages
confidentiality in report (What is A Management Accounting System?, 2017).
As indicated by Institute of management accounting this term can be describe as
“management accounting is a career which includes cooperating in administration basic
leadership, conceiving arranging and execution administration frameworks, and giving mastery
in monetary announcing and control to help administration in the detailing and usage of an
association's technique". Therefore, according to this it get examined that administrative
bookkeeping process aid in formulation of strategy and its implementation in a satisfactory way.
Alongside this, it likewise empower a firm to keep up suitable execution of their own when
contrasted with contentions (Elbashir, Collier and Sutton, 2011).
Administrative bookkeeping has a few number of advantages which advance in viable
execution and operation. Convenient and exact data will bolster administration to settle on some
educated choice about operational things in which cutting of cost, increment in showcase
spending plan and so forth are some central point. Another significant advantage of
administrative bookkeeping is to wipe out repetition from business and finish up some
advantageous judgements.
There are different sorts of administration bookkeeping framework are utilized and
present by researchers however some get chose for making suitable records which are:
Cost accounting system: This procedure normally utilized by the organizations and
business elements to assess the estimation of their items and examine gainfulness, stock
valuation and cost control. It is very troublesome for an association to assess the exact cost of
item. On the off chance that they end up plainly ready to determine this reality then the odds of
productivity tend to rises. By utilizing cost bookkeeping framework, administration will ready to
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quantify the best item which is reasonable in long haul setting and satisfactory moves can be
made on them (Cost Accounting Systems, 2013).
Price optimising system: Another significant work which need to execute by
administration is to determine the reaction of clients on various scope of merchandise and
ventures through various channels. Accordingly, administration verify that costs which will help
them in meeting with their targets, for example, increment in working benefit of a business.
Inventory management system: With change in time, many organizations influence their
procedure to digitalise. This assistance in performing and doing every one of the things in a
suitable way. Stock administration framework is a framework which empower an association to
recognize level of requests, deals and conveyances of item and administrations. By utilizing
propelled stock administration framework, organization can decide the level of stock through
such programming.
There are some others methods which are associated with management accounting
systems, are mentioned as beneath:
Transfer pricing: In administration exchange evaluating allude to all things considered
circumstance when one upstream department deal items to next downstream unit (Flamholtz,
2012). In such connection, some esteem get added by divisions which prompt enhance cost of
items.
Lean accounting: A noteworthy target of lean bookkeeping is to dispose of the wastage
which is related with venture and in addition accelerate the way toward working, diminish
blunders which emerge in business and influence the procedure to clear and reasonable. It
likewise help in inspire change and change in business alongside this settle on the choice
procedure compelling by taking appropriate activities.
For framing a best and appropriate an incentive for the item and offer them at right cost is
one of a test for business. Waitrose need to decide the best cost which is appropriate for their
clients and convey items at such rates. Alongside this, at such value level, administration need to
decide their clients viewpoint too. This will support to store in expanding their benefit level.
Alongside this stock administration framework will help them in keep up appropriate stock with
the goal that client get fulfilled (Granlund, 2011).
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P2 Different methods used for management accounting reporting
With assistance of management accounting, an employer of company can easily resolve
many issues which are affecting their business operations. For making report, it is required for
superior to use various distinctive methodologies. Reports are developed for a particular reason
to follow up on different things. Management accounting is done; therefore, firm can improve
their productivity and in addition profits. This is useful for entrepreneurs who more often than
not have any desire to utilized these records for essential key bits of knowledge for an
association.
Reports related to accounting bolster in keep up health and in addition execution of
business for longer period of time (Jaber, 2016). For above stated purpose, Waitrose can use
several forms of reporting methodologies. Various administrative bookkeeping reports for
company are mentioned as beneath:
Budget report: This is foremost report which is linked with procedure of management
accounting. It empowers both employer as well as leader; therefore, they can control value which
is related with many divisions in an organisation. For estimation of expenses top level authority
can formulate budget for business so that they can use fund as per need. Through applying many
methods manager can eliminate unwanted cost from working process. For preparation of budget
an employer can use some cost approaches and in addition they can eliminate some expenses in
those process which can affect business negatively. Valuation of goods can also be done with aid
of this methodology.
Account receivable aging report: It is fundamental for administration department to
identify their entire debts and payments adequately; therefore, they can line up policies
accordingly (Koh and Tan, 2011). This report is a useful component of detailing technique which
incorporates information of such clients who do not fulfilled their duties on time. Instead of this,
three fundamental sections planned by supervisors with 30, 60 as well as 90 days late customers.
Hence, it is required for Waitrose to keep up this information in programming and in addition
take strict activities against it as soon as possible.
Job cost report: It is a noteworthy duty of each pioneer in an association to distinguish
most productive area related with entire business surroundings. As a result, it will enhance
circumstances of generation of maximum revenues. This report gives a normal perspective of
undertaking. Accordingly, pioneers as well as supervisors need to pick such tasks which are very
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gainful in nature and in addition bolster maintainability of company. This is a fundamental piece
of cost bookkeeping framework which encourage a choice to embrace and snatch market
openings which are much income producing and amplify operations at direct cost price. Superior
of Waitrose need to find out such tasks and dissect them in an appropriate manner; therefore it
can cater growth and success to company (What is Cost Management in Accounting?, 2017).
Inventory report: Waitrose is dealing in grocery products as there is high circumstances
of hazards as goods can degenerate. Henceforth, it is must for them to maintain their
merchandises so that they can accomplish needs and wants of their clients timely and improve
their client base. Waitrose is much broad super market chain which is established in United
Kingdom and they can use inventory accounting approach for determination of their goods
which they are going to convey to their buyers. Along with this, report is important for firm as
in each store item accessibility is foremost thing behind their growth and development.
Therefore, Waitrose need to decide these things as well as work appropriately as per
techniques and reports which are formulated by superiors. Henceforth, they can attain desired
goals and targets in an effective and efficient way. Alongside this, different framework
additionally must be utilized for leading proficient activities of business (Liao, Chu and Hsiao,
2012).
TASK 2
P3 Cost calculation using appropriate technique for preparing income statement
Cost is characterize as sum which must be paid or surrendered to get something. As per
accounting, expenditure is describe as amount which is regarding cash for advantage which a
person or an association need to expend. It incorporates entire cost which will arise during
manufacturing. It is necessary for an employer to find out actual price of an item. Along with
this, it is essential to decrease unwanted factors and waste from production process. As a result,
they can create best quality goods for their buyers and provide them at a reasonable value.
Many kinds of cost which are advantageous for firm during operational activities. This
will aid manager to sell their items at correct value which can be easily purchase by buyers.
Description of cost types are stated as beneath:
Fixed cost: Production of an item and in addition administrations is required part of each
and every form of company. There are some cost in business which cannot be modified and
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always be fix. Along with this, it also never change at the time of production. Top authority need
to take this type of value under consideration (Laudon and Laudon, 2016).
Variable cost: During the time of production, it can be determine that value can be alter
as per unit of manufacturing. This kind of cost can provide adverse affect on image of company.
Therefore, it is required for superior to control it as it can influence their profits also.
Direct cost: It can affect directly to production process of items and services. Basically, it
is connected with particular good, for example: cost which are related to material can be
occurred at the time of manufacturing. Crude material, labours, machines and so on are a few
things which can be consider as immediate cost in firm.
Indirect cost: There are many costs in an organisation which cannot be determined easily
as it is much difficult to charge them. Therefore, it can be known as indirect cost. There are
various examples which are linked with it, like depreciation, expenditure related to
administration and so on.
Operating cost: In company, there are some kind of cost which are associated with
operational activities of project. This sort of value are related with daily exercises. Hence, it is
required for an enterprise to control it so that they can maximise their income. Along with this, if
manager wants to improve their production of goods then they have to reduce their operating
cost in an appropriate way (Petty and et. al., 2015).
Rather than this, there are some form of cost which can be found out in an association,
such as:
 Absorption costing
 Marginal costing
Absorption costing: It can be portrays as procedure and involve entire cost which are
connected with an item. It will comprises both sort of cost indirect and along with this direct;
therefore, exact value of goods can be identified. Additionally, in this entire expenditures of
products and services are considered as cost and divide into two segment of overhead, one is
fixed and another is variable.
Income statement as per absorption costing:
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Particulars Amount Total
Sales value (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 9600
Marginal costing: It is an adjustment in aggregate cost when production of product
quantity get enhanced with manufacturing of another. With assistance of this procedure,
influence of variable price can be easily determined. Alongside this, gainfulness of division as
well as item is should in connection through utilizing negligible costing. Statement of income by
utilizing this costing is as beneath; therefore, net benefit get distinguished for Waitrose.
Particulars Amount Total
Sales 21000 (600*35)
Less: Variable cost
Direct material 3600 (600*6)
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Direct labour
Variable production overhead
Variable sales overhead
3000 (600*5)
1200 (600*2)
600 (600*1) 8400
Contribution 12600
Less: Fixed cost
Production overhead
Administration cost
Selling cost
2000
700
600 3300
Net profit 9300
Hence, net revenue from above described income statement is £9300 which describes that
income of organisation is much adequate. Fundamental pros of marginal cost is that it can be
operate easily and along with this can be comprehend by individuals. Additionally, it can be
determined that company is controlling their variable expenses and in addition product. As a
result, they can provide goods to their customers at a reasonable value. With aid of this
administrative department needs to concentrate on variable overheads as fixed cost are same all
the time. Sales of an enterprise is much effective and their actual sales us almost 21000 and in
addition contribution is 12600. To examine profits of firm manager can sue contribution as it
caters capability to business in future.
TASK 3
P4 Advantages and disadvantages of various planning tools used for budgetary control
To do entire work in a proper way, manager can develop plan; therefore, all activities will
complete timely. It is a fundamental obligation of chiefs to set up an activity design and in
addition work effectively and efficiently. If planning is done adequately then it will enhance
chance of project growth and success. It will additionally improve work execution of staff
members. Strategies as well as plan get support of management accounting.
Both earning and in addition expenses are associated with an enterprise. Thus, to manage
them in an appropriate way, manager can formulate budget for business so that better judgement
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can be taken. As a result, cost will be control appropriately. Budget is created by superior;
therefore, they can evaluate their future expenditures in advance and manage it accordingly.
It is required for an employer to make proper control over their budget as it show their
skills and abilities to complete their task within accessible resources. Along with this, it assists to
control project cost. Consequently, they can easily compare their desired performance with
actual one; thus, need of modification can be determined (Stair and et. al., 2011).
Waitrose is a retail chain sector which provides goods and services to their buyers;
therefore, they can accomplish their demands effectively and efficiently. Basically they organise
finance for them with help of various institution such as bank, government and so on.
Henceforth, it is required for them to utilize budgetary control procedure; therefore, they will
know that they are using money correctly or not. An association can use some planning methods
for their business, which are mentioned as beneath:
 Capital expenditure
 Cash budget
Above stated tools have various pros and cons which need to be taken into under consideration
by an employer; hence, he can utilize these methods adequately. Additionally, they can control
over unwanted item cost and keep up best surrounding at premises.
Tool Definition Advantages Disadvantages
Cash budget Basically, it is based on
approximation of
money inflow as well
as outflow of firm; thus
they can manage their
entire activities
systematically. With
assistance of it, an
employer can easily
determine that fund
which accessible for
them is sufficient or not
(Roy and et. al., 2011).
Give a summary that
association has enough
fund or not; thus, they
will do their day-to-
day activities. For
above stated purpose
they can calculate a
ratio, named cash
coverage.
With assistance of
cash budget manager
can increase their sales
and as a result their
If expenditures are
calculated in advance
then it is typical to do
business adequately.
Therefore, it is major
restriction which is
related with cash
budget as it aids to
determine entire year's
cost in beforehand.
If manager sell their
goods on credit basis
then it is not easy to
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profits get enhanced.
It is required to
provide detailed
statement that from
where firm is earning
cash and where they
are spending.
Additionally, they
need to control over
expenditures so that
work can be
accomplished with
minimum time
duration.
find out that all
debtors paid their
debts on time.
Many projects need
maximum cash; hence,
if cash budget is
prepared then superior
cannot utilize
additional fund. In
other words, cash
budget will restrict
workers from extra use
of finance.
Capital expenditure
budget
Fund which is spend
through an enterprise to
keep up their fixed
resources; hence, they
can enhance it for
investment purpose are
known as capital
expenditure.
As per this, company
can invest more in
future assignments as
they have capabilities
to do this.
Risk can be
determined which is
related to project.
If size of project is
broad then it is
difficult to accomplish
it in less time duration.
Hence, circumstances
for success is low.
Manager need to take
judgement adequately
as wrong decision can
move them reverse
also.
TASK 4
P5 Use of management accounting to respond to various financial problems
Issues in an organisation can be arise any time and condition. Therefore, it is fundamental
for manager to determine it and then develop some strategies to overcome from it so that entire
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work will go on appropriate way. Supervisors as well as pioneers of firm need to work
legitimately; as a result, they can manage overall difficulties effectively (Burritt, Schaltegger and
Zvezdov, 2011). If problems are found out within time then sufficient steps has to be taken. For
this methods of management accounting works effectively and efficiently. Along with this,
financial problems can arise if there is less fund and in addition reserves in firm.
Financial difficulties will influence soundness of business which isn't proper. Different
kind of financial issues emerge in business which are depicted as underneath:
 Low salary.
 Less revenue generation.
 Not examining books of accounts in an appropriate way.
 Lack of cash reserve and maximisation of long haul assets.
 Less focus on planning techniques as well as budget of firm.
 Improper arrangement of statements which are related with finance.
Entire issues are characterized as money related problem of business; thus, it is required
for administrative division to take appropriate steps. With assistance of management accounting
superior can tackle their overall difficulties. Along with this, they can reduce deviations which
are in their operational activities in an adequate way (Dillard2014). Consequently, Waitrose need
to find out entire issues and then work on them. For this, they can use procedure of management
accounting. Utilization of this methodology are stated as beneath:
 On short basis of time superiors can formulate reports because it is much useful to solve
problems. Less pay may be an issue for business which can bargain through examine
reports appropriately.
 By providing quality items to customers, an enterprise can easily improve their incomes
because it is most fundamental factor which can attract numerous people.
 Ideal usage of assets is additionally an essential thing of management accounting. Thus, it
gives direction to an organisation so that they can do their entire work effectively. If they
are using resources in sufficient manner they can convey maximum quality goods to
individuals.
 Wastage of assets can shackle operation activities of firm directly or indirectly. For above
stated purpose, lean bookkeeping need to utilize by association; therefore, they can
manage problems (Elbashir, Collier and Sutton, 2011).
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 It is required for company to keep up their cash reserve; therefore, entire issues which are
related to finance can be resolved timely as it can develop uncertainty in business. Along
with this, they can decrease fixed assets because it is difficult to convert them into cash.
 To manage overall expenditures of firm, an employer can create budget. Thus, they can
operate their business activities more adequately.
 Develop financial evidence appropriately; hence, it will cater long term advantages and in
addition manager can take effective judgement also. It provide success and growth to
enterprise.
Waitrose need to utilize this methodology for their business; therefore, they can develop
it effectively and efficiently. They can react on money related issue in exceptionally well way
with no trouble. If manager is not providing response to any financial difficulties as well as
crises then growth of organisation can get prohibited and it can provide adverse affect. If there
are more vulnerability in business then it will take firm reverse. Appropriate steps as well as
activities need to determine through utilizing some statements. They are person who specifically
interface with business in working entire things in an adequate way (Flamholtz, 2012).
Furthermore, company can sue some measures which can be used by company for growth
and development. For above stated purpose, there are some techniques which can be used by
them:
 Key performance indicator
 Budgetary targeting
With assistance of these methods administrative unit can easily deal with risks which is
affiliated with their organisation. KPI is helpful to determine those elements which are useful for
an association for longer period of time. For above stated purpose, superior needs to examine
their past records. Instead of this, with aid of budgetary control, Waitrose can use entire
resources adequately. It is fundamental for company to formulate an action as it is useful to do
overall activities effectively and systematically (Granlund, 2011).
 Primarily, it is required to determine origin of problem.
 It is essential for manager to use sufficient methods; thus, difficulties can be sort out
within minimum time span.
 Execute each and every thing systematically.
 Utilize entire assets appropriately.
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Hence, it is necessary for an employer to work on these steps so that they can acquire best
results. Along with this, they can also take decision efficiently.
CONCLUSION
It get closed from above report that administrative bookkeeping is a useful idea in
business situation. It empower a substance to keep away from all mistake and elevate quality to
an association. For this connection, different administration bookkeeping framework get figure
out which are basic to manage numerous issues. On the premise of bookkeeping detailing,
administration can control their costs and speculation complete at correct place at ideal time. By
utilizing peripheral and retention costing approaches, net benefit or net misfortune by each
generation movement get enrolled too. For playing out everything right way, different arranging
devices can be utilized by a firm and their points of interest and weaknesses likewise get figure
out which need to consider by administrators of an organization. Albeit appropriate advances
must be conveyed down for reacting to different money related issues of a business.
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