Management Accounting Research and Review

This assignment provides a comprehensive review of management accounting research, including relevant studies, articles, and books on the topic. It covers various aspects of management accounting, such as cost accounting, budget efficiency, and sustainability reporting. The assignment includes a list of references from reputable sources, providing students with a valuable resource for their academic work.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Meaning of management accounting and their essential requirements................................1
P2: Various types of management accounting system reporting................................................4
M1: Benefits of using various types of accounting system.........................................................7
D1: Critical evaluation of various accounting reporting system.................................................7
TASK 2............................................................................................................................................8
P3: Various types of costing method uses for calculating net profit...........................................8
M2: Analysis of various management accounting techniques..................................................13
D2: Critical analysis of data collected from income statement.................................................13
TASK 4..........................................................................................................................................13
P4: Merits and demerits of using various budget......................................................................13
M3: Analysis of various budgetary tools..................................................................................15
D3: Critical evaluation of financial issues................................................................................15
TASK 4..........................................................................................................................................15
P5: Balance scorecard to overcome financial problems...........................................................15
M4: Analysis of Financial problems.........................................................................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................18

INTRODUCTION
Management accounting is an essential aspect for every business organisation. This
would be helpful for the managers to increase their profitability and efficiency in quicker
manner. The role and responsibility of managers is to research a well organise system that can
assist in attain overall aims and objectives for an organisation. As mention in the case study
“Tech Imda” is operating in electronic gadgets in different products in the UK market. In order to
increase the profitability for the company they need to make use of appropriate accounting tools
and techniques to record various financial transactions during the time (Amoako, 2013).
This particular project report is providing valuable information about use of management
accounting system and reporting in an organisation. However, various types of costing method
uses for calculating net profit for the cited company. Merits and demerits of using budget are
mentioned under this project. Some specific comparison is being done with other companies in
order to determine financial issues and effective tools to overcome those issues are discussed
under this project report. All the data collected by the managers are utilised in making
appropriate decision to generate more valuable outcomes in coming time.
TASK 1
P1: Meaning of management accounting and their essential requirements
Finance is said to be life blood of any business organisation. It is essential for trade,
industry and commerce as main energy for wheels for the purpose of attaining overall growth for
the company in coming time. It is needed for establishing and operating any business, whether
operating in small or large scale. Management is concern with provide valuable support the
accounts department to manage and control proper flow of capital in the department.
Management accounting is an essential aspect by which manager and other crucial person those
are related with the internal or external department supported in more effective manner.
Accounting is an essential part of finance department in order to collect, summarise and analyse
appropriate solution to the company (Brewer, Sorensen and Stout, 2014).
Definition: Management accounting is known as a systematic process of formulating
management report and account that delivering accurate and timely financial data needed by
managers to make day to day decision financial transaction of an organisation. On the other
hand, management accounting is used to analyse business costs and operation in order to build
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internal financial report and statements to assist decision making procedure in attaining overall
business aims. The appropriate function implies mainly four parts such as:
Planning: It has been seen that planning is an essential aspects for building short term and
long term actions to attain a specific objectives. A budget is the financial planning indicating
about resources are being acquired uses over a particular time interval.
Organising: This seems to be an effective process of establishing an organisational design
and assigning role to an individual working in an organisation for attaining business aims and
objectives. It has been seen that types of organisational structure is differ from one business
enterprises to one another. Organisation needs clarity regarding each manager’s role and duties
and line of responsibility (JOSHI and et. al., 2011).
Controlling: It is known as an effective process of monitoring, measuring and evaluating
actual outcomes to ensure that a business enterprises aims to attain in more effective manner. It
is accomplished with the use of collecting feedbacks from various employees and staffs.
Decision making: This process of selecting between competing best alternative from their
business operations. It is inherent in every of three management functions that describe on the
basis of analysing performance of an organisation.
Management accounting Financial accounting
It is used to regulate and examine by the
entrepreneur, it is not consider standardized
statements.
It is associated with using law in more
standard manner.
It also uses future information and data which
is not only historical data but uses for the
purpose of planning in coming time.
These are mainly related with economic events
of the past, the statements consists of historical
data.
The people are having no any obligations,
although they need to decide on the
company’s operations by using performance
of an organisation.
The statement of accounting regulation is
reported in more specific manner by using
financial data for the company.
It is use to measure both financial and
operation performances.
It is used to consider only financial
information for the company.
Importance of using management accounting system:
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 It is used to make proper determination of aim, management accounting on the basis of
collected information they are able to determine their goal and tried to find out
appropriate route through which they can reach at their specific aims.
 It helps in preparing effective plan in which producer is taken into considered as more
reliable more Successful to produce article in accordance with increase overall growth for
the company.
 It is use to measure overall performance of an organisation by comparing actual data with
the standard one (Klemstine and Maher, 2014).
 ABC costing: It seems to be an effective accounting tools that is used to analyse
activities that Tech UK need to perform and allot indirect to the cost of a products.
 Relevant costing analysis: Such kind of cost analysis is associated with administration
decision that make modification according to the future results.
 Evaluation of using data: It is necessary aspect for every managers to deliver
information that are being use to formulate appropriate planning in order to make vital
decision in coming times.
Types of management accounting system:
Cost accounting system: It is known as primary accounting element of management
which is held significant in recording, analysing and determining best suitable alternative those
are effective for Tech Imda. The important purpose of using this system is to provide valuable
advices to their owner regarding one of the main sources of actions that are assistance with the
cost of manufacturing products and services. Through the help of this, company would be able to
generate more valuable outcomes by analysing efficiency and capability to delivery more reliable
outcomes for the company. It consists of various costs such as action, standard and normal costs
uses during the time (Lim, 2011).
Actual costing Standard costing Normal costing
This cost of job is being analyse
through using actual material
and applied overhead costs.
In this particular cost, the basic
amount of costs is taken into
account by using comparison of
budgeted direct costs during the
time of manufacturing process.
The normal cost a company is
incurred from use of direct
labour and material which is
normally being use in future
time.
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Inventory management system: As per this particular system which a manager uses to
control their overall stock that is being kept by the company during the time. It has been said to
be ongoing process for the purpose of moving products and inventory that are being kept by
Tech UK during the time. It is necessary for the owner of an organisation to control and analyse
their inventory level on regular basis.
There are various types of stock valuation tools and techniques which is required to be
followed at the time of production process. Some of them are:
FIFO: It is utmost important aspect for production managers in which actual flow of
material required to follow this particular methods that used to make accounting tools as per the
logical selection.
LIFO: There are specific businesses which is related with an asset management and
valuation method that assumes that all those stocks produces or attain last are one used in first
time.
AVCO: It is said to be periodic inventory system which is use as perceptual techniques in
an organisation. There are more common as average cost techniques that use to analyse total
value of closing stock.
Job costing system: It is utmost important accounting system for making predication of
total costs required to formulate a well organise product and services during a specific period of
time. Basically, this costing system is use to analyse all those costs that are require during the
time of manufacturing an individual products or group of products. By the help of this, company
will be able to incur a particular job related with Tech UK Company.
Batch costing: It is more similar as job costing in which all information about products
detail production data and batch number are located is more easily.
Contract costing: It is use to regulate proper flow of cost that are related with a specific
contract. Such as a company bids for a wide construction of any new projects associated to their
prospective individual.
Process costing: It is mostly use as an essential aspect for a project management. This
requirements can be effectively use for allocating cost for producing one units during the time.
Service costing: It is necessary techniques of operations costing that is helpful for an
organisation to deliver services in respect of producing goods in more effective manner.
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P2: Various types of management accounting system reporting
It has been seen that company need to make proper analysis of every financial transaction
in appropriate manner in order to attain more benefits for the company. In addition to the basic
traditional accounting report which Tech Imda must completer for the purpose of evaluating tax
aspects. It is said to be collection of data that can give useful information regarding their day to
day operations. In case of standard report which can be formatted to as per the IFRS rules and
regulations. Management accounting is being organised in any way that use to make sense for
their business. Financial report are seen in some situation that a varies on the basis of mentioned
information. It would also provide valuable information which would assist in better
understanding a company operations in more specific point of concern.
It is necessary to make evaluation of income statement which would information crucial
information about total expenses Tech Imda is investing over the production of their electronic
products. Balance sheet is said to be more reliable aspects of management because it indicate
about total profit and losses incurred during the period of time. Report would also consider some
sort of information which would related with the net worth which takes the form of liquid or
short term cash available for the company during the period of time. Sales report are also taken
into consideration for the purpose of making useful analysis of accounting because they indicate
the overall sources of Imda companies total revenue which will present avenues are more
successful in coming time (Tessier and Otley, 2012).
This business activities would be earn the most income such as wholesale versus in retail
sales or specific accounts are analyse in effective manner. There are various important source of
data collection in order to prepare a well organise report for the company. The primary reason of
doing so is to analyse performance of an organization in terms of total ability to maintain balance
in cash and earning during the time. This particular report is helpful for the inventors or various
stakeholder to make valuable decision regarding capital investment. Management accounting is
entirely different from financial accounting because of it produce report for a company's internal
stakeholder as opposed to outside investors. It would assist small business owners and managers
to monitor the company’s overall performance and prepared frequently during an accounting
period of time (Van der Stede, 2015).
There are various types of accounting reporting. Some of them are discussed underneath;
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Schedule report: It is an essential activities that lets as to analyse companies data from
one or more protection on continuous basis. It is more systematically used during the time of
reporting.
Exception report: According to this particular list which is related with abnormal goods
or items consists of external range of informations. Without taking prior permission of higher
authorities no one has the right to use this report.
Demand report: It is said to be an effective report that is not pre planned, but can be
develop as per the requirement of concern parties.
Performance report: It happens to be an important activities in any project
communication management. It consists of collection, utilisation of resource, coordination of
project progress and estimation of upcoming position of stakeholder. The progress report is used
to inform a supervisor, associate and growth of company are also taken into consideration. The
project would assist in designing and repair something effective that can assist in increasing
profitability for an organisation.
Account receivable report: It is an essential report that is being divide a company's
account receivable as per the total length of time an outstanding amount is going to recover. It is
a critical management techniques as well as an effective method that assist in evaluating the
financial position of the company. It is consider one of the important list of unpaid customers
invoice and unused credit memos those are being use by an organisation (Zoni, Dossi and
Morelli, 2012).
Inventory management report: It is known as one of the effective system which
encompasses all crucial aspects of managing overall stock of an organisation. Coordination and
guidance of total supply, storage, distribution and recording of inventory are kept by the
company. There are various stock evaluation tools and techniques which are use by an
organisation to control their misuse and wastage. The opening and closing inventory are taken
into account.
Job cost report: According to this particular report is known as initial place for all data
contained in respective manner. This specific report list consists of each job those are working on
and total cost incurred on the job occurs on the previous year. These costs are divided into
various categories such as labor cost, material cost and other associated cost (Lavia López and
Hiebl, 2014).
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Operating budget cost: It is known as an essential report which is related with income
and receipts that are incur during the period of time. All consists of all necessary information
about costs that are used during the time of production process.
Importance of using reporting system:
There are various aspects by which reporting systems are more importance for an
organisation. This can assist department of make valuable investment decision regarding their
future plans. Some of them are:
Visibility and control: with the use of report, manager can easily be able to determine
visibility of all vital information and their related implication those are crucial for an
organisation. It is use to make comparison of actual outcome with the standard one.
Optimising reliability: The primary role of manager is to collect data in more accurate
manner. By the help of this, company will have great chance to control mistakes that can make
impacts on the productive of Imda Tech.
Determine understanding and performance booster: As effective utilisation of data use
for preparing report can assess in analysing appropriate solution to a given problem that are
arises in an organisation (Klychova and et. al., 2015).
M1: Benefits of using various types of accounting system
It has been analyse that there are various types of accounting systems those are crucial for
an organisation. This will lead to increase the profitability by using resources in more effective
and quick manner. It has been determined that every types of management accounting system
those are helpful in analysing financial transaction of the company are vital. All the above
system use discussed above is having its own benefits. Such as cost accounting system can lead
to increase total costs and expenses those are benefits for the company in order to manage their
cost of production expenses. While inventory management accounting will lead to guide
company about their total stock those are being kept during the end of financial year. In case of
price optimisation system which is use to measure perception of customers those are using
products of Tech Imda in more effective manner (Bennett, Schaltegger and Zvezdov, 2013).
D1: Critical evaluation of various accounting reporting system
In accordance with using different accounting system and report are considering more
importance benefits for an organisation for longer period of time. There are various aspects those
are benefits for the company during the time. Each information those are collected during the
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time are taken into account in more effective manner. It has been analysing that just like
accounting system, reporting are too important aspect for an organisation. They are responsible
for making valuable decision by analysing overall performance and position during the time.
some of them are performance report which is prepare by making proper evaluation of actual
performance with the past on about the financial stability of an organisation. Whereas account
receivable report can help in examine total list of unpaid customers from which outstanding
payments are still due. While operating budget and job costing report are available to analyse
overall growth for an organisation during the time. Both accounting system and reporting are use
as more valuable financial tools to record necessary information incur during the period of time.
From these two reports investors need to analyse overall performance of the company in present
time by taking data of past.
TASK 2
P3: Various types of costing method uses for calculating net profit
This has been determining that cost is one think which is needed to be taken into
consideration because it would make direct impacts on overall production process of an
organisation. Cost will be use to evaluate total cost and expenditure those are going to be incur
during the time. Costing is a systematic procedure of recording, classifying and allocation of
various alternative aspects related with actions for controlling cost for an organisation. It consists
of assignment related with fixed cost which stays the same, irrespective of stages of activity.
The primary objective of cost accounting are ascertain of cost, fixation of total selling cost,
recording and presentation of data to management for evaluating efficiency and cost control
aspects. It is consider more simple and significant purpose of cost accounting in order to
determine total selling prices (Bovens, Goodin and Schillemans, 2014).
This will be use to determine best possible inefficiencies stage which is essential for
making modification to control costs. There are various types of costs those are beneficial for an
organisation. Some of them are helpful in increasing goodwill as well as profitability during an
accounting period of time. In an analysis, it has been found that cost is consider to be more
valuable part of every business organisation, whether operating at small or large business
organisation. Out of various types of costing method some of them are discuss underneath:
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Absorption costing: This seems to be all important aspect which is use during production
costs that are absorbed through the units produced during the production process. On the other
hand, the cost of a closing unit in stock will consist of direct material, labour and both variable
costs as well as fixed (Absorption costing, 2018). This is known as full costing method because
of flexible nature. In accordance to make valuable decision regarding future decision are not
suitable tools for the company.
Marginal costing: It refers as one of the crucial methods used in management accounting
is more valuable aspect for an organisation. It is said to be important accounting system in which
only variable cost are taken into consideration. The fixed costs during the period get written off
in total in respect to aggregate contribution. This costing is an effective account by which it is
known as period costing method. The primary objective of this system is taken as more effective
costing method for making future decision for an organisation (Abdel-Kader, 2011).
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M2: Analysis of various management accounting techniques
In accordance with various types of accounting tools and techniques those are helpful for
an organization to control and manage their day to day business operations. In order to make
appropriate decision, managers need to make use of accounting techniques for the purpose of
increasing overall growth for an organisation. Some tools are beneficial for the company to
enhance future productivity during the time. Financial accounting is primary focus is toward
accuracy of accounting data towards outside report. Historical cost are another important tools
which can be use to analyse the performance of an organisation. Standard costing is more
valuable techniques to evaluate net profitability during the period of time.
D2: Critical analysis of data collected from income statement
A company can only attain reliable and accurate growth, if they are using right method to
manage and control their overall income statements of an organization. The Manager of Tech
Imda can have two important costing methods to analyse total performance during the time. Such
as absorption and marginal costing method. These two costing are more valuable aspect for an
organisation in order to analyse total return or profit they are going to get during an accounting
course of action. In case the company is going to use marginal costing they are able to get
negative loss of 2875. While in accordance with using absorption method, company would incur
negative 375. The point of difference are arises because of fixed cost treatment those are not
taken into account while computing net profit through marginal costing.
TASK 4
P4: Merits and demerits of using various budget
It has been seen that the company wants from their department manager to have more
involvement and can take maximum responsibility for their department budgets. It is essential to
take step is providing effective data and training on the basis of using budget for planning and
control their upcoming objectives. Budget is an estimation of total cost and expenses a company
is going to incur over the production of products and services (Klychova, Faskhutdinova and
Sadrieva, 2014). There are various types of budget those are helpful to control various issues
those are making impacts on the growth and stability for an organisation. Some of them are
discussed underneath:
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Operating budget: It is known as one of the primary budget which is use to forecast and
analyse projected income and expenses over the course of particular period of time. In order to
formulate an accurate image of Tech Imda a company need to prepare operating budget which
consists of sales, production and material cost as well as other administrative costs (Bobryshev
and et. al., 2015).
Advantage: This budget is helpful in create data or information on a weekly, monthly
and annually basis. This can assist in analysing companies total spending during the time.
Disadvantage: It seems to be more time taking report because every day operation record
are analyse by the company.
Cash flow budget: It means that projection about total cash comes in and out from the
business during a particular period of time are taken into consideration. This can be helpful in
examine whether company is able to manage their cash in more effective manner.
Advantage: It use to consider factors such as account payable and receivable to assess,
whether a company has plenty of cash to meet their operating ability.
Disadvantage: Through this, company cannot be able to estimate total upcoming cost a
company is going to incur during a specific period of time.
There is various process of budget that is being followed underneath:
 Updating budget assumption: It is important to make review of company’s environment
that was used as the primary aspect before making budget plan.
 Check available funds: The next target of the company is to make identification of
availability of funds that are present during the period of time.
 Create budget package: It is necessary to copy forward the basic budgeting data from the
instruction packet which are used in the proceeding period of time (Bebbington, Unerman
and O'Dwyer, 2014)
 Obtain revenue forecast: This seems to be earning forecast from total sales manager and
distribution of various department managers.
 Collect capital budget request: It is necessary to make capital budget request and forward
them to the upper level department with valuable suggestion.
 Update budget model: In this particular step proper evaluation of budget information into
the form of master budget is taken into consideration.
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 Review of budget: In order to meet necessary requirement of managers, company need to
make proper evaluation of budget.
Pricing policy: It is said to be an essential method which a company can use to implement
various price for their products or services during the time (Sisaye and Birnberg, 2012). Some of
them are:
Price skimming: It includes setting up of prices in the initial phase would be high. After that,
they need to keep it low in order to compare them in accordance with all competitors those are
already present in the market.
Cost based pricing: It is said to be easier and simple techniques by which product can be placed
in more specific costs. It includes two aspects such as full costing and direct cost.
Importance of budget tools and purpose:
It is use to control overall impacts those are going to happen in near future. The primary
objective of using budget is to control spending plan which allow company to examine advances
whether they are able to earn valuable amount of return in near future.
M3: Analysis of various budgetary tools
It has been determine that budget is said to be an important aspect for every company. This
would help in attaining valuable amount of gains during the period of time. Budget is mostly
used in planning future growth and stability. Operating budget is more important aspect for
production manager to control their daily expense those are incur during the time. Balance
scorecard method is necessary planning tools which are held responsible for controlling overall
finance related problems those are arises during the period of time.
D3: Critical evaluation of financial issues
It has been observed that every business organisation is dealing with various types of problems
those are making huge impacts on the overall performance during the time. By the help of
various financial tools like, balance scorecard which is used to analyse overall stability for an
organisation.
TASK 4
P5: Balance scorecard to overcome financial problems
According to the mentioned case of Tech Imda Ltd which is recently establish in their
financial account for the last financial year which is indicating total loss of £1.5million. The
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company is analysing ways in which an organisation would use management accounting system
in order to respond various financial issues. Balance scorecard is a planned idea through which
they can perform specific performance during the time. Some of the key important issues those
are happen to be primary reason for those losses are discussed underneath:
Profit level: It has been seen that loss can arise because of inappropriate amount of
financial to produce product with the available resources. Through this, they are not able to earn
sufficient amount of profit during the time (Amoako, 2013).
Product and services quality: Another crucial reason of downfall can be arises because of
bad quality of product that is produce because of not having valuable amount of capital to
generate sufficient amount of results.
In order to deal with all the financial issues those are arise in an organisation can be rectify
by using appropriate tools. Those are mentioned underneath:
KPI (Key performance indicators): It refers as one of the primary tools which is use to
measure financial issues by analysing actual performance with standard one. This can assist in
removing all barriers those are affecting the profitability of an organisation.
Financial governance: This is another important tools which is consider to be more
specific tool to manage the local government rule and regulation those are being set by the
company to regulate their business in more effective manner.
M4: Analysis of Financial problems
It has been examine that mostly of the financial issues are affecting overall efficiency and
growth for an organisation during the time. To deal with all sort of issues manager need to
identify various aspects those are helpful in increasing overall growth in coming time.
Benchmarking and financial governance would be primary tools to face all financial issues.
CONCLUSION
From this particular project report, it has been concluded that management accounting is an
important part every business enterprise. This would assist in increase overall stability and
growth for an organisation during the next coming future. For this purpose various accounting
and reporting system are taken into consideration. Whereas some costing method is also use to
analyse total net profit for Imda Ltd. Some important budget are discuss which are use for the
purpose of control overall performance of an organisation are utilise under this projects in more
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effectively. All the data collected will be helpful to increase valuable growth opportunity in
coming time.
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REFERENCES
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Online
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Absorption costing. 2018.[Online]. Available through:
<http://www.businessdictionary.com/definition/absorption-costing.html>.
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