Management Accounting Concepts and Applications

This assignment delves into the core principles of management accounting, encompassing topics such as cost accounting methods (job costing, absorption costing), performance measurement frameworks (balanced scorecard), and the role of management accounting in strategy implementation. It draws upon various academic sources including journal articles and textbooks to illustrate key concepts and their practical applications.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................4
TASK 1......................................................................................................................................4
a. Explaining management accounting and its systems.........................................................4
1. Difference between management and financial accounting...............................................4
2. Stating the importance of management accounting as a decision making tool for
department managers.............................................................................................................5
3. and M1 Cost accounting system........................................................................................6
4 and M1 Inventory management system..............................................................................7
5 and M1 Job costing system.................................................................................................7
b. Presenting financial information........................................................................................8
1 and d1 Presenting different types of managerial accounting report....................................8
2 and d1 Stating why information presented in managerial reports must be understandable9
TASK 2....................................................................................................................................10
Question and D2 Preparing income statement for Tech Ltd as per marginal and absorption
costing system......................................................................................................................10
M2 Reconciliation statement................................................................................................13
TASK 3....................................................................................................................................13
A and M3 Presenting different kinds of budget along with their advantages and
disadvantages.......................................................................................................................13
b. Presenting budget preparation process.............................................................................15
c. Stating the importance of budget as a tool for planning and control...............................16
TASK 4....................................................................................................................................16
Question, M4 and D3 Comparing the effectiveness of management accounting approaches
undertaken by Tech Ltd in against to the other organization..............................................16
CONCLUSION........................................................................................................................18
REFERENCES.........................................................................................................................19

INTRODUCTION
Management accounting is the most importance part of finance which in turn provides
manager with valuable information for decision making. It lays high level of emphasis on
recording information about business operations and functions. In the recent times, each
business unit makes focus on employing management accounting tools as it enables manager
to make appropriate decisions within the suitable time period. Through maintaining financial
records pertaining to the operations manager can analyze business cost and thereby would
become able to prepare internal financial reports for decision making. This report is based on
the case situation of Tech Ltd which is involved in producing special charger for mobile
telephone. In this, report will present the manner in which aspects of management accounting
differ from the financial aspects. Besides this, it will provide deeper insight about
management accounting systems and reporting. Further, in this, how marginal and
absorption costing method helps in evaluating cost as well as profit margin will be assessed.
It also depicts how tools of management accounting can be used by the business for planning
purpose and responding monetary problems.
TASK 1
a. Explaining management accounting and its systems
1. Difference between management and financial accounting
Management accounting serves relevant as well as material information and thereby
assists management in formulating policies, planning, forecasting & controlling day to day
business operations (Macintosh and Quattrone, 2010).
Financial accounting system is highly concerned with the preparation of monetary
statements such as income, cash flow and balance sheet. All such statements assist both
internal and external stakeholders in decision making.
Both management and financial accounting systems aid in the decision making aspect
but they vary in the following manner:

Basis of difference Financial accounting Management accounting
Motive The main objective of FA is to
disclose financial performance
and position of the business at
the end of accounting year.
Goal of managerial accounting
is to assists manager in devising
plan by giving input for
decision making,
Audience or stakeholders Information produces by FA
helps both internal and external
beneficiaries in decision
making.
Unlike FA, managerial reports
only assist internal parties such
as manager and employees in
taking business decisions.
Requirement On the basis of legal aspects,
business unit is required to
prepare accounts and share
them with the investors.
In MA, there is the absence of
legal requirement pertaining to
account preparation (Otley,
2016).
Emphasis In this, focus is placed on the
evaluation of historical or past
figures.
Under MA, current information
is used by the managers for
making appropriate forecast or
prediction about the future
aspects.
Rules Companies follow rules and
guidelines such as GAAP &
IFRS while preparing statement
under FA (Management
accounting v/s financial
accounting, 2018).
Managerial reports are used for
purpose so there is no need to
follow specific rules.
Format Specific format is followed by
the listed companies for the
preparation of accounts.
No specific format exists in MA
Duration of reporting Annually and semi-annually As per the requirement
managerial reports are prepared
such as daily, weekly, monthly
etc.

2. Stating the importance of management accounting as a decision making tool for
department managers
Management accounting tools are highly significant in the context of Tech Ltd which
in turn assists manager in taking appropriate business decisions. For managing funds and
business activities manager has to take several decisions each day. In this regard, by using
calculations generated through management accounting tools manager of Tech Ltd can
improve decision making to a great extent. Significance of management accounting as a
decision making tool can be understood in the following manner.
 Manager of Tech Ltd can do relevant cost analysis by taking into account managerial
accounting information. It furnishes valuable information to the company and helps in
determining products that need to be produced (Reome and Sinclair, 2017). Along
with this, management accounting information provides assistance to the company in
assessing profitable areas and thereby helps in making marketing efforts in the right
direction.
 MA helps company in making forecast about income as well as expenses and thereby
helps in developing competent financial plan for the near future. Budgeting is highly
needed within the business unit for the purpose of making optimal use of financial
resources. Hence, using MA information manager of Tech Ltd can take decision
about future cash inflow and outflows.
 Along with this, MA assists company in taking decision pertaining to make or buy.
Usually, with the motive to save cost or reducing expense level company conducts
evaluation whether they should manufacture product in-house or buy from outside.
Hence, referring the outcome of such evaluation Tech Ltd can suitable decision.
3. and M1 Cost accounting system
This management accounting enables manager of Tech Ltd in making estimation
regarding the cost of product or services. It helps in ascertaining expenses incurred for
producing or generating specific output level. Using this system, manager of the company
can track the level of material in terms of raw and finished goods (Simons, 2013). It lays
emphasis on measuring and recording cost individually that is associated with the production.
Hence, by doing evaluation of input with output or actual results company can measure
financial performance. This area of MA mainly includes standard costing system which in
turn helps in assessing deviations. Moreover, such system of MA focuses on finding
deficiencies through comparing actual performance with the predetermined figures. Thus,

considering deficiencies and associated causes Tech Ltd can formulate suitable strategies and
policy framework.
For example: Standard costing
Particulars Actual figures Standard
figure
Deviation
(Actual –
Standard)
Causes Corrective
measures
Material cost
variance
2000 1800 (200) Due to the
incline in
cost of raw
material
negative
results are
occurred.
For exerting
effectual
control on the
cost of
material firm
needs to
approach
supplier or
distributor
who offers
raw material
at lower /
reasonable
prices.
Labour
efficiency
variance
1500 1700 (200) Due to the
lack of
having
enough
skills
labours of
Tech Ltd
failed to
attain
standards.
For making
improvements
in the labour
efficiency
variance Tech
ltd should
focus on
conducting
training &
development
session.

Advantages
 By undertaking the system of cost accounting Tech Ltd can eliminate waste, losses
and inefficiencies to the significant level.
 In this, focus is placed on the identification of reasons behind profit or loss.
 Assists management team in taking make or buy decision (Advantages and
disadvantages of cost accounting, 2018).
 Cost accounting system facilitates cost control and thereby helps in improving profit
margin
Disadvantages
 In this, only past records are available, whereas management is taking decision about
the future aspects.
 For the installation of cost accounting system firm has to maintain several costing
records. This in turn imposes high expenses and thereby impacts margin.
4 and M1 Inventory management system
Stock management is vital within the organization for ensuring smooth functioning of
the business activities and operations. Production and sales related activities are highly
influenced from the aspects pertaining to the availability of raw and finished goods. In
addition to this, ineffective stock management enhances holding & ordering cost level and
thereby overall expenses (Ward, 2012). Hence, under management accounting, several tools
are available such as EOQ, Just in time etc which Tech Ltd can use for inventory
management. Moreover, economic order quantity method clearly presents the time when
order for inventory needs to be placed. Along with this, there are several other methods such
as LIFO, FIFO & AVCO etc which can be used by Tech Ltd for recording and management
of inventory. IFRS emphasizes on the adoption of LIFO method which in turn helps in
reducing tax liabilities or obligations over the time frame. On the contrary to this, FIFO
method does not provide suitable value of stock under inflationary conditions. Thus, using
LIFO method manager of Tech Ltd can ensure proper inventory management. Apart from
this, under batch costing homogenous products are undertaken for the determination of cost
per unit.
Advantages
 Facilitates effective functioning of the operations

 Reduction in cost level in terms of holding and ordering
 Enhancement of profit margin
 Avoid situation pertaining to the shortage of stock
Disadvantages
 Inventory management software impose high cost
 Requires in-depth knowledge and understanding
5 and M1 Job costing system
Tech Ltd can manage its internal operations and functions by taking into account job
costing system. This system focuses on the accumulation of cost associated with the specific
products or services. In the case of having contract with the customers, using such system,
manager of the business unit can provide information to the customers about the areas where
cost reimbursed. Job costing system also allows firm to get reasonable profit margin by
quoting a suitable price. Hence, using such system manager of firm can take suitable pricing
decisions and thereby becomes able to get desired level of profit margin.
Further, job costing includes several other tools or methods which can be used for
price determination namely process, batch, contract and service. Under such costing separate
numbers are allotted and records maintained separately.
Contract costing may be served as the main part of job system which in turn highly
applicable on long term deals. Under such method, separate numbers are allotted to each
contract and records are maintained separately in relation to the same.
For example:

In addition to this, process costing is used when manufactured units vary from one
another to the significant level.
Service costing method is suitable for the companies which involve in the sector such
as hospitality, care homes etc.
For example: In the context of hotel unit, which falls under the category of service
sector, per unit cost can be determined in the following manner:
Total number of meals: 5000

Total expenses: £67000
Cost in relation to per meal served: 67000 / 5000
= £13.4
Advantages
 It enables manager to ascertain cost at any stage of job completion. Hence,
considering such information suitable steps can be undertaken by the manager for cost
control.
 Under job costing, management team can make estimation about cost by taking into
account past records.
 Job costing tool helps in doing trend analysis and thereby provides assistance in
making prediction about the near future (Advantages and disadvantages of job
costing, 2018).
 It does not include aspects in relation to under and over recovery of overhead.
Disadvantages
 Job costing method demands for close supervision because in this there is no job
standardization
 It is time consuming process and requires more clerical work
 Along with this, in job costing there is no possibility in relation to controlling cost
because large number of small jobs is executed at a time in job costing.
b. Presenting financial information
1 and d1 Presenting different types of managerial accounting report
Managerial accounting reports contain information about day to day business
activities and functions. In the context of business unit, managerial accounting reports are
highly significant which provides assistance to the owners and managers in monitoring
performance. There are several types of managerial reports which Tech Ltd can prepare for
getting information about decision making such as:
Budget report: By preparing and using job cost report manager of Tech Ltd can
analyze company’s performance. This report helps owner in analyzing departmental
performance and controlling cost level. In this, manager records deviation and reasons behind

the occurrence of same by comparing actual financial figures with the budgeted aspects.
Hence, by taking into account such report owner of Tech Ltd can make appropriate
estimation about future expenses and thereby would become able to prepare competent
financial plan (Kaplan and Atkinson, 2015). Further, manager of Tech Ltd can also use
budget report for providing incentives to the employees.
Accounts receivable ageing: For the purpose of cash flow management, accounts
receivable ageing report is highly suitable. Receivable reports furnish information to the
company about the balances of customers by how long they have been owed. Through
undertaking such report owner of Tech Ltd can assess issues associated with the collection
process. For instance: If business unit finds that most of the customers are not in position to
pay due amount on time then focus needs to be placed on tightening policies.
Job cost report: It presents cost or expenses that are associated with specific projects.
For evaluating job profitability usually expenses are matched with revenue. Using this report,
firm can assess high earning areas of business unit and thereby become able to allocate
resources in an effectual way. In other words, job costing report helps in making efforts in the
right direction rather than wasting time in low profit margin areas. Hence, job cost report
offers opportunity to Tech Ltd in improving the areas of waste before cost escalation.
Inventory and manufacturing: Tech Ltd can make its manufacturing process more
efficient by taking into account in stock report. Moreover, this report serves information
about inventory wastage, per unit overhead cost etc. Hence, getting information about such
aspects manager can take suitable decision for improvement purpose (Wijaya and et.al.,
2015). Along with this, such report also gives indication whether company needs to take
suitable measure for controlling holding and ordering cost or not.
Hence, by taking into account all the above depicted aspects it can be presented that
managerial reports are highly prominent and aid in significant decision making.
2 and d1 Stating why information presented in managerial reports must be understandable
In the current times, company prepares managerial accounting reports more
frequently with an objective to take quality and appropriate decision which makes
contribution in the attainment of goals. In accordance with the aspects of managerial
accounting reporting, information must be reliable, comparable and need to be presented in a

understandable manner (Nieman and Fouché, 2016). Moreover, formulation of strategies and
policy framework is highly based on the information contain in MA reports.
For instance: Managerial reports provide information about the deviations occur in the
departmental performance. In this, only presentation of figure pertaining to deviations will
not assist manager in understanding overall trend and performance. Hence, budget or
performance report must contain information about the reasons due to which deficiencies are
occurred in different areas such as sales, expenses etc (Perin and et.al., 2016). Considering
such clear, precise and understandable information manager of Tech Ltd can develop
competent policy framework for the near future. Along with this, other decisions such as
employee’ incentive plan, training & development activity, financial forecasting etc are
highly dependent on managerial reports. Thus, by keeping all such aspects in mind it can be
presented that managerial account reports must be presented in a understandable manner.
TASK 2
Question and D2 Preparing income statement for Tech Ltd as per marginal and absorption
costing system
Absorption and marginal costing are the main two methods that are undertaken by the
large number of business units for the assessing profit margin. However, both such costing
tools vary on the basis of several aspects mainly in terms of considering fixed and variable
expenses. Under, absorption costing method, focus is placed on cost accumulation associated
with the production process and thereby apportionment of the same into individual products
or services (Absorption costing, 2018.). Accounting standards also support such method for
inventory evaluation and assessment. In this, manufacturing costs are absorbed by all the
produced units. In accordance with this, cost of finished stock includes material, labour as
well as fixed and variable manufacturing overhead.
In contrast to this, under marginal costing technique, variable cost is charged to per
unit, whereas periodical fixed costs are written off in against to the contribution. Marginal
cost presents an additional cost which will be charged on the production of one extra unit.
Equation or aspects of marginal costing are as follows:
Marginal cost: Direct material + labour + expenses + variable overhead

Differentiation between marginal and absorption costing method can be presented on
the basis of cost recognition criteria, overhead classifications, per unit cost etc. Marginal
costing method divides cost into two aspects such as fixed and periodical. On the other side,
absorption costing method recognizes both fixed and variable expenses as a product cost. In
marginal costing method, overheads are classified on the basis of fixed and variable expenses
(Marginal and absorption costing, 2018). Apart from this, absorption costing method
presents overheads as production, administration, selling and distribution. Marginal costing
method presents contribution per unit, whereas absorption costing method helps in
determining net profit margin associate with per unit. On the basis of all the above depicted
aspects marginal and absorption costing differs from each other.
Absorption costing
Particulars
Figure
s (in £) Figure
s (in £)
Sales 52500
Production cost (2000 * 20) 40000
Less: closing stock (500*20) 10000 30000
GP 22500
Less: Under absorption 5000
Net GP 17500
Less: selling, distribution and administration
expenses
Fixed 10000
Variable 7875 17875
Net loss (375)
Computation of manufacturing cost per unit
Particulars Figures (in £)
Direct labour 5
Direct material 8
Variable production overhead 2

Fixed production overhead 5
Total manufacturing cost per unit 20
Sales−Cost of goods sold
52500−30000
¿ 22500
Gross profit −Selling , distribution∧administration expenses
Marginal costing
Particulars
Figures
(in £)
Figures
(in £)
Sales 52500
Less: Variable cost
Direct labour 10000
Material 16000
Variable production overhead 4000
Less: closing stock 7500 22500
Contribution 30000
Variable selling & distribution expenses (52500 *
15%) 7875
Net contribution 22125
Less fixed cost:
Fixed Production Overhead 15000
Fixed Selling, distribution and administration
expenses 10000 25000
Net loss -2875
Computation of variable cost per unit
Direct labour: 5.00
Direct material: 8.00
Variable production overhead: 2.00

Hence, VC per unit: 5 + 8 + 2
= £15
The above depicted evaluation presents that as per marginal and absorption variable
cost per unit accounts for £15 & £20 respectively. The rationale behind such difference in
unit cost is the inclusion of fixed production overhead in absorption costing method. On the
basis of absorption costing method, Tech Ltd will get net loss of £375. In against to this, due
to the inclusion of high fixed production overhead net loss of £2875 found under marginal
costing method. Tech Ltd should make focus on undertaking absorption costing method as it
presents solution by considering both fixed and variable cost associated with the
manufacturing aspects. Thus, it can be presented that Tech Ltd will get loss by producing
mobile charges and other carry on gadgets. Thus, business unit is required to develop suitable
strategies for cost control and generation of profit margin.
M2 Reconciliation statement
Particulars Amount
Net loss as per absorption costing method (375)
Less: Fixed production overhead on ending inventory (500 units @ 5 each) (2500)
Net loss as per marginal costing method (2875)
TASK 3
A and D3 Presenting different kinds of budget along with their advantages and disadvantages
Budget may be served as financial plan that includes both income and expenses
associated with the future business activities. There are several techniques which can be used
by Tech Ltd for the preparation of budget such as incremental, zero and activity based
budgeting. Now, modern techniques of budgeting are undertaken by the managers of firm
with the motive to make effectual use of financial resources (Fullerton, Kennedy and
Widener, 2014). Different types of budget that can be developed by the manager of Tech Ltd
are enumerated below:
Cash budget: This implies for the financial plan that includes cash receipts and
expenses pertaining to the specific time frame. Hence, cash inflow and outflow of the
company mainly includes revenue collected, expenses paid as well as loan receipts and

payments. Company prepares such budget with the motive to make estimation about future
cash position regarding future aspects. Cash budget is prepared after the development of
financial framework regarding purchase, sales and capital expenses.
Advantages
 Cash budget provides high level of assistance in co-ordinating the activities al the
departments in an organization
 Assists in cost reduction and profit enhancement
 It improves communication, better understanding and ensures harmonious
relationship among the personnel
 Cash budget offers opportunity to the management team in making their attention on
highly valuable matters which are not going as per the plan.
Disadvantages
 This budget is based on subjective estimates
 In the case of unrealistic targets, cash budget negatively impacts employee morale
and productivity
 Success of cash budget is highly influenced from the aspect of staff co-operation.
Fixed budget: Financial plan or framework that does not change in line with the increase
or decrease in sales output known as fixed budget. In other words, fixed budget refers to the
one where costs are largely fixed. On the basis of this, expenses do not change as per revenue
level (Otley and Emmanuel, 2013). Hence, fixed budgets are suitable for the industry where
revenues can be predicted in an appropriate manner. Thus, companies operating in the
industry which are not subject to high changes can use fixed budget.
Advantages
 Assists in measuring profit and performance
 Helps in keeping cost down and increasing the level of profit margin
 Facilitates prioritization of business activities
 Easy to prepare and less time consuming
Disadvantages
 It does not consider unpredictable events

 As compared to other budgets, fixed budget does not provide assistance in tracking
expenses
Flexible budgets: Flexed budgets are the one which changes as per sales volume. In
comparison to fixed budget, flexible financial plan is considered as highly sophisticated or
prominent. Moreover, flexible budgets assess different expenditure level for variable cost on
the basis of changes take place in actual revenue (Goddard and Simm, 2017). This kind of
budget highly suits to the modern era where changes take place in the environment, market
trend etc more frequently.
Advantages
 Flexed budget enables management team to assess deviations by comparing actual
output with budgeted figures
 Helps in fulfilling objective pertaining to cost control
 Assists in adapting change and facilitates control as well as evaluation
Disadvantages
 Time intensive activity as it includes continuous monitoring
 High complexity level leads inaccurate adjustments
 Lack of appropriate information affects appropriateness of financial plan.
b. Presenting budget preparation process
Manager of Tech Ltd undertake below mentioned process for budget preparation such
as:
 Estimation of inflows and outflows: In the very first step, manager lays emphasis on
making estimation about sales, production level, expected cost and availability of
resources. Hence, departmental heads or manager makes estimation about future
conditions and activities for the development of financial plan.
 Co-ordinating estimates: Once estimations have been made thereafter budget
committee makes evaluation of different plans submitted by various organizational
units. Hence, such committee focuses on determining the potentiality of plans
available to them (Granlund, 2011). Hence, they assess the kind of resources available
and thereby fairly allocate the same in various units of the organization.

 Communicating budget: In the third stage, information regarding budget is
communicated to the responsible managers of concerned department after getting
approval from the higher authority. Moreover, modifications which are incorporated
in the final budget must be known to the managers. Hence, for convincing
departmental managers about changes effectual communication is highly required.
 Execution of budget plan: At this stage, budget is executed by the managers while
spending money on material, labour, facilities and other resources.
 Giving report about the interim progress: Feedback is also the main parts of
budgeting process. Hence, in the last stage, performance reports are prepared for
informing departmental managers and top management team for assessing the extent
to which budgeted figures are met. Hence, such feedback system enables manager to
make necessary changes in the financial plan and thereby gets success.
c. Stating the importance of budget as a tool for planning and control
Budget may be served as the most effectual tools which aid in the competent planning
and control. Moreover, budget gives input and thereby helps in comparing actual outcome
and performance. In other words, by using budget Tech Ltd can compare actual revenue &
expenses with the budgeted figures and thereby would become able to assess deviations.
Hence, on the identification of deviations manager makes effort in relation to assessing
reasons that associated with the same (Macintosh and Quattrone, 2010). Thus,
considering the results of deviations manager would become able to take strategic measure
for improvement and develop suitable financial plan for the upcoming time period. In this
way, budget gives indication in relation to taking competent action for performance
enhancement and control. For example: Tech Ltd has found deviation of £300 by doing
comparison of actual labour cost incurred with the standards. Through assessment, it has
identified that due to the decreasing efficiency level of personnel Tech ltd has failed to get the
desired level of outcome. In this regard, by conducting training session for personnel firm
would become able to fulfil goals. Thus, by taking suitable measure on time business unit can
improve and control performance more effectually. Further, it has assessed that due to higher
allocation of sales figure negative results occurred. Hence, referring the current outcomes
manager can set appropriate plan for the near future.
M3 swot analysis of Tech Ltd
Strengths Weaknesses

 Sound financial management
 Competent personnel
 Effective supply chain
 Lack of training session
 Lack of effectual R & D activity
Opportunities
 Explore operations in the emerging
countries
 Enhance sales by laying focus on
online presence
Threats
Company is facing threat from the changing rules
& regulations.
TASK 4
Question, M4 and D3 Comparing the effectiveness of management accounting approaches
undertaken by Tech Ltd in against to the other organization
On the basis of cited situation, Tech Ltd showed a loss of £1.5 million which in turn
considered as an undesirable situation. Hence, with the motive to improve such condition
auditors suggested balance scorecard approach to the manager of Tech Ltd. This approach of
Tech ltd is highly effectual that aid in strategic management. Hence, using such metrics Tech
Ltd can make evaluation of performance from several perspectives such as financial,
customer, internal process, learning and growth.
 Under financial category, focus is placed on assessing the extent to which effectual
use of financial performance and resources have made. By measuring and evaluating
performance over the years or standards Tech Ltd can set suitable strategies and
policies for the near future.
 In addition to this, other element of such metric emphasizes on evaluating
performance from the view points of customers and other stakeholders. On the basis
of this, by providing customers with suitable products or services as per their
requirement Tech Ltd can boost sales and profitability to a great extent.
 Along with this, internal process places emphasis on evaluating quality and efficiency
level of products or services (Otley, 2016). Through making assessment of business
process Tech Ltd can identify how well products are manufactured. Thus, by focusing
on such aspect business unit can track bottlenecks, shortage and wastage effectually.
Considering this, appropriate measure can be undertaken for improvement.

 Further, organizational capacity element of balance scorecard approach focuses on
evaluating performance from the perspective of human capital, infrastructure,
technology, culture and other capacities.
Thus, by taking into account all such aspects it can be presented that balance
scorecard approach assists in measuring as well as evaluating performance from several
aspects and thereby aid in decision making. Hence, using such four aspect strategic measures
can be undertaken by Tech Ltd which in turn helps in mitigating the loss of 1.5 GBP million.
On the other side, Dixon Carphone company, operating in UK telecommunication
sector undertakes variance analysis technique for responding financial problems. On the basis
of such technique manager makes comparison of current performance with budgeted figures.
Hence, such periodical evaluation enables manager to investigate causes behind deviations
and thereby takes suitable measure for improvement. Hence, such tool gives timely and quick
indication about performance improvement (Reome and Sinclair, 2017). However, along with
the positives, some negative aspects are also associated with such management accounting
tool. Sometimes, unrealistic targets setting down by the managers of firm may result into high
deviations. This in turn leads inappropriate changes in the financial plan. Further, high
variances derived through unrealistic plan also impacts employee motivation in a negative
manner.
By taking into account overall evaluation, it can be mentioned that balance scorecard
approach will aid in the better strategic planning of Tech Ltd. In addition to this, such MA
tool also facilitates high level of integration between projects and initiatives (Benefits of
balance scorecard approach, 2018). In addition to this, by employing balance scorecard
approach Tech ltd would become able to set suitable KPI’s and thereby evaluates
performance. BSC provides management team with high quality information and aid in better
decision making. Further, using such approach management team can design dashboard and
thereby becomes able to respond monetary issues. It also helps in aligning organizational
process, risk management and analytics with the strategic goals or priorities Hence, all these
aspects clearly exhibit that balance scorecard helps in dealing with financial problems more
effectually over other tools. Thus, by employing such technique Tech ltd would become able
to get the desired level of outcome or success.

M4
Link between financial problems, management accounting tools and organization’s
sustainable success can be understood in the following manner:
Planning tools Management’s response Sustainable success
Balance scorecard Evaluates performance
considering all the four aspects
such as stakeholders, financial,
internal process as well as
learning & growth
Assists Tech Ltd in developing
competent framework and
gaining competitive position
over others.
Variance analysis Enables management to
compare actual performance
with the standards and thereby
helps in evaluating performance
within the suitable time frame.
Referring the outcome of
variance analysis, manager of
Tech ltd would become able to
formulate competent strategic
and policy framework and
thereby contributes in the
sustainable success.
D3
Planning tools which help Tech ltd in responding monetary problems are enumerated below:
Balance scorecard
Advantages Disadvantages
 Facilitates effective communication
and understanding about business
goals
 Assists in integrating both monetary
and non-me
 Considers mainly four perspectives
whereas there are several other factors
which closely impact business
performance.
 Highly time consuming process
Variance analysis
Advantages Disadvantages
 Gives indication in relation to taking
corrective measures on time
 Sometimes high standards negatively
impacts performance

 Helps in assessing departmental
performance
 Time consuming process
CONCLUSION
From this report, it has been concluded that management and financial accounting
systems vary on the basis of several perspectives such as time, stakeholders etc. It can be seen
in the report that using management accounting tools and system manager of Tech Ltd can
take appropriate decisions. Besides this, it can be inferred that cost accounting system
provides high level of assistance to Tech Ltd in taking pricing decisions. It can be
summarized from the report that effective inventory management system helps in reducing
cost level pertaining to holding and ordering. Along with this, it has been articulated that by
preparing and using managerial reports manager of Tech Ltd can track as well as evaluate
performance. Considering the findings of report manager can take appropriate decision
regarding future aspects. It can be stated from evaluation that absorption costing method is
highly prominent over marginal. Moreover, absorption costing method emphasizes on
undertaking both fixed as well as variable cost at the time of inventory valuation. In addition
to this, it can be presented that using modern budgeting tools Tech Ltd can develop
competent financial plan. It has also assessed from the evaluation that using the techniques of
MA manager of Tech Ltd can cope with the financial problems in the best possible way.

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