Management Accounting and Control Report

The provided assignment is a management accounting and control report that requires the student to analyze and discuss various aspects of management accounting and control systems. The report should cover topics such as budgetary control, job costing, cost accounting, inventory management, and methods of management accounting reports. It also includes references to relevant studies and research papers in the field of management accounting.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Meaning of management accounting and essential requirements of its various types ........1
P2 Various approaches used for management accounting reporting ........................................4
TASK 2............................................................................................................................................7
P3 Costs using appropriate techniques and tools .......................................................................7
TASK 3..........................................................................................................................................10
P4 Advantages and disadvantages of certain types of planning tools ......................................10
TASK 4..........................................................................................................................................12
P5 Compare how business enterprise are selecting management accounting systems.............12
Management Accounting Tools................................................................................................12
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15
.......................................................................................................................................................17

INTRODUCTION
Management accounting is also known as managerial and cost accounting which is a
beneficial tool for company to identity their financial statements. It is a process of evaluating
business operations and cost to formulate internal financial records, accounts and reports which
assist the administrator in judgement activity to attain desired goals and objectives of an
organisation (Albu and Albu, 2012). It is also defined as an act of making costing and financial
information as well as interpreting data into valuable content for officers and management in
enterprise. It is an essential and important element for the managers because it provides short
term and day-to-day message to them.
This report is based on Bizdaq which is a small business organisation and established in
the year 2015. Annual turnover of this company is £100,000 and they have only 50 employees
who are working with each other. This assignment discussed about different types of
management accounting and its importance in solving financial issues in an effective manner.
Absorption and marginal costing along with the planning tools and their advantages as well as
disadvantages are also described here. Further, different tools which support the business
manager to reduce financial problems in company are also studied in this report.
TASK 1
P1. Meaning of management accounting and essential requirements of its various types
From: Management accounting officer
To: General manager of Bizdaq
Sub: Management accounting system
This report is mainly emphasised on management accounting system and its importance in
working process. Different systems of accounting are described in this report such as price
optimisation, job costing, cost accounting and inventory management, etc.
Management accounting system:
It is an essential approach for the business entity because it promotes and encourages
workers who are involved in judgement making activity of management. It will help managers
in defining planning and performance methods effectively (Bennett and et. al., 2011). It is
executed by the experts and professional employees in making financial records or reports. In
order to formulate and implement the business strategy, this approach assists in controlling all
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activities and strategies.
Various types of management accounting: There are different kinds of management
accounting which are considered in this system. Some of these are as follows:
Illustration 1: Different types of Management Accounting
(Source: Different types of management accounting , 2017)
Inventory Management System: It is the main type of cost accounting which is essential for the
company in order to identify value of inventory. It deals with methodology, finished goods and
raw material which is used each and every enterprise company for their production activity
(Bodie and et. al., 2014). It is required by all organisations to evaluate delivers and sales of the
products, amount of orders and inventory level. It particularly needed by manufacturing
organisations with purpose to monitor their procedures for achieving more profits from their
available materials.
Application
Inventory management approach could be followed by Bizdaq in order to monitor inventory
level as well as reduce wastages cost in an effective manner (Burritt and et. al., 2011). Due to
this, company could maximise its net profit through identifying its actual resources at
2
Inventory management
system
Job costing
system
Cost accounting
system

accurate level. It is essential for the business entity to acquire maximum worth and profit in
an effective manner. Company might understand those resources which impacts business
inventories values.
Price optimisation: It is another important tool which assists organisation in measuring price of
the product through applying mathematical approaches such as sensitivity, graphical and liner
equitations methods (Cadez and Guilding, 2012). It is highly required by the enterprise to
combine various data's of information's which is relate to demand and price of goods. With the
use of this tool, company achieves their desirable worth and profit. In today’s business, large
number of the organisation is struggling in order to analysis accurate price and cost which is
impose from buyers and vendors. Therefore, this method is imply those approaches, which
determines a point or value on a chart, where meets more profits use of demand curve.
Application
Bizdaq is a small organisation that could apply this tool to identify accurate optimal outcomes
for proper cost value through valuing a better point at which organisation is making more
revenue or profits and its need.
Job costing system: It is an essential type of management accounting which is needed by each
and every organisation in their business operations (Callahan and et. al., 2011). This approach
assists an enterprise in capturing manufacturing product’s costs which is connected to specific
job as well as reduced process price. Who's business organisation selected this system with
purpose of evaluating particular job cost by retaining feasibility of business information and
data.
Application
Bizdaq follows this approach for tracking various kinds of jobs like material, direct labour and
wages cost which is assigned overhead costs or price. An organisation could follow this tools
to evaluate entire activities and plans connected to profitability that would support company in
evaluating its loss and profit during a year.
Cost Accounting system: It is an important part of the management accounting which is needed
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by an organisation. This tool describes the financial framework through measuring product cost
in a systematic manner. It assists enterprise in measuring cost budget or fund for the upcoming
year.
Application
Bizdaq follows this approach in doing all their activities in a long period. Business could refer
absorption and marginal costing aspects to calculate its net worth in the recent year.
P2 Various approaches used for management accounting reporting
From: Management accounting officer
To: General manager of Bizdaq
Sub: Management accounting report
In this study, various kinds of management accounting systems have been determined in a
detailed manner. In order to make this report, business organisation can make better decision
which is valuable for them in achieving the desired objectives and goals.
Management Accounting Report
This report assists companies through determining the business functionality in an effective and
efficient manner (Chan and et. al., 2014). It is not same with financial accounting because
accounting report prepare company's external and internal stakeholder essentially. It has to be
supplied sporadically for understanding actual status of organisation and monitor financial
performance or execution of business. This report considers for providing casuistical and timely
data to manger so due to this, they make short term and day-to-day judgements in an effective
and systematic manner. Main aim and purpose of applying this approach is to achieving
statistical and financial data from day to day (Chenhall and Smith, 2011). Due to this, manager
of the business follow this is to making short-term and time to time managerial judgements.
Various kinds of management accounting approaches: There are different types of
management reporting system which are determined under this:
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Illustration 2: Different types of Management Reporting
(Source: Different types of management Reporting , 2017)
Budget Report: It is very essential and beneficial tool fore each and every organisation which
help them in evaluating actual performance of the enterprise (Chiwamit and et. al., 2014). It is
also identify as a mixture of internal records or reports which is highly used by administration
in order to compare their current execution with accurate figures.
Application
Bizdaq applied this kind of approach in order to achieving long term goals and objectives in
an effective manner. In this business changes which identify as an actual and estimated cost of
business. In regards to fulfil gap, an organisation is utilising sound approach to acquire
accurate estimations.
Accounts Receivable Aging report: This kind of method is receives by business organisation on
given time period. It is very important and essential part of the business success and
development (DRURY, 2013). With the use of this aspects company can identify their
performance in an effective and systematic manner. In this, an enterprise also identify financial
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Methods of Management Accounting Report
Budget Report
Accounts receivable
Aging Report Job costs Reports Inventory reports
Income statement
report Cash flow report

position of its buyers. It is complete in an effective way which is being gathered more slowly.
Application
Bizdaq company apply this approach in identifying minimum amount balance which
permitted for giving allowance on debts. Business organisation made this kind of budget
technique's through grouping sales sound which are never provided yet. It is mainly based on
buyers and ledger date's. This are made to update for grouping data and information in sales
invoice regularly.
Job costs reports: It is identify as a process and activities of clarifying and simplifying those
costs which are linked to specific work of organisations (Fourie and et. al., 2015). Construction
industries are mainly used this approach in order to assign costs of personal tasks of business
construction.
Application
Bizdaq apply this tool through developing various categories of plans of fund utilisation. It is
sort out the all activities which acquires maximum funds and capital than to another. Best and
valuable example of this tool is selling, distribution, production costs reports.
Manufacturing and Inventory reports: It is valuable type which involves joining values of
different inventories such as retailing, whole-selling and manufacturing. It is highly needed by
the business organisation because it combination of total sales and revenues at above all
production stages (Hiebl, 2014). It is entirely valuable for superior in order to do their inventory
management.
Application
Company follow this approach to determine present source or factor for combination of
different productivity activities and process. It will help business in regular cycle time and its
information towards variances which is present in monthly, weekly and daily basis.
Income statement report: It is also very important and vital part of the management accounting
report which is used by the financial administration in regards to measure and identify the net
worth in actual financial year (Ihantola and et. al., 2011). It will assist business entity in
determining its actual performance through business previous and current year statements.
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Application
Business organisation follow this approach in order to determine actual performance and profit
of the company in during a year. In this, Bizdaq also understand about payments, arrears and
outstanding expenses etc. All these are important sources where entity can attain more income
in future period.
Conclusion: As per the above discussed all types of management reporting is very important
and essential for the business in order to identify their financial resources in an effective
manner. Useful and valuable kind such as cash-flows, inventory management which are needed
by the business manager in an effective manner. All these are define the how much income,
expanses of the company are present in during the year. These reports and systems are needed
for the distribution and allocation of unicorn capitals between various functions division.
TASK 2
P3 Costs using appropriate techniques and tools
Management accounting: It is useful and valuable tool of the financial which objective
is to making proper reports. In this marginal and absorption cost are very important part for
identifying net worth and income of the company (Kotas, 2014). Cost is identify as an amount
which is created by business for manufacturing services and products. It is mainly presented in
non-financial as well as financial terms which covers changes effects, utility consumed risk
associated and resources with that specific goods.
Marginal Costing: This type of cost mainly emphasis on additional expenditure, due to
this, business organisation has to build extra profit in during the year. It is mainly and
fundamentally focuses on variable costs which is essential for the company because with the use
of this they can decrease their product price. It is used by the business managers in order to make
essential and effective judgement towards items cost which is high for applying this tool.
Absorption Costing: It is also known as traditional approach of measuring product costs
in an effective way. One of the main benefits of using this method is to show the actual expanses
and income of the business entity (Li and et. al., 2012). In this methods certain aspects are
includes such as labour, wages and direct material, all these are added to the sum of
manufacturing goods.
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Difference between Absorption and Marginal costing
Basis Marginal Costing Absorption Costing
Meaning It is define as a decision-
making activity and tool for
ascertaining or insuring the all
production cost.
It is identify as a total
production cost which is
determine in an appropriate
manner.
Cost recognition In this variable cost is highly
involved as per the product
value. When fixed cost and
prices is identify as period
costs which is important for
business performance (Lukka
and Vinnari, 2014).
In this both cost such as
variable and fixed are involved
as per the product cost.
Classification of overheads With the use of this approach,
product cost is mainly
classified into variable and
fixed.
With the use of the methods,
company classified their
overheads in administration,
distribution, selling and
production etc.
Profitability Profitability of the company is
calculated by profit volume
ratio.
Profitability of the company is
being effected by the fixed
cost which is being included.
Cost per unit With the use of this tool,
closing and opening stock
variance not effects on cost per
unit.
Closing and opening stock
variances affected the per unit
product cost (Morales and
Lambert, 2013).
Highlights Manager of the company
mainly highlights the per unit
of contribution.
Manger of the business entity
is fundamentally highlights the
net profit per unit.
Cost data It will presented contribution This approach will presented
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per unit. in way of conventional.
Below is the measurement of income statement with the use of absorption and marginal costing
technique's are determine under this:
Net profit calculation on the basis of marginal costing
Per unit price(£) No. of units Amount(£) Amount(£)
Sales revenue 35 600 21000
Less: Marginal cost
Opening Inventory Nil
Total Variable production cost 14 700 9800
Less: Closing Inventory 14 -100 -1400
8400
Contribution 12600
Less: Fixed overhead
Production overhead -2000
Administration cost -700
Selling cost -600
-3300
Net Profit 9300
Direct materials 6
Direct labour 5
Variable production Overhead 2
Variable sales overhead 1
Total Variable production cost 14
Net profit on the basis of Absorption costing
Per unit price(£) No. of units Amount(£) Amount(
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£)
Sales revenue 35 600 21000
Less: Cost of Production
Opening Stock Nil
Cost of goods Produced(700*16) -16 700 -11200
Less: Closing Stock(100*16) -16 100 -1600
-9600
Gross Profit 11400
Less: Selling and Administration cost
Selling and Administration cost per
unit(1300/600) -2 600 -1200
Sales Overhead -1 600 -600
-1800
Net Profit 9600
Closing stock = (Production cost –
Actual sales) * 16 (700-600)*16 1600
Cost of goods produced:
direct M + direct L + VP overhead +
(overhead/700)
£6 + £5 + £2 + £3
£16
Interpretation: As per the above mentioned measurement of income statement by using of
absorption and marginal costing approach. All these methods are interpreted that company
should follow all those tools for evaluation of net profit and revenues. Due to this, profits of the
product is mainly emphasis on per unit cost of total production. This technique reflects accurate
calculation and measurement of the business profits in an effective manner. Bizdaq is a small
business organisation would emphatically acquire a advantage which present maximum revenue
in its income statements or account. With the help of absorption cost approach, net profit is
£9600, which is high of marginal costing by £300. Changes in net profit and revenue, various
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tools are used for fixed and variable overhead cost treatment. So both are important for
calculating business performance and financial condition in marketplace.
TASK 3
P4 Advantages and disadvantages of certain types of planning tools
Budget: It is define as a total cost which is assigned in various ways of organisational
development after calculating future expenditure and revenues which is incurred in the activity
of gaining desire objectives and goals in an effective manner (Nixon and Burns, 2012). It mainly
forces administrator in order to identify business situation that may be modify in working
atmospheres as well as promotes him to analysis issues before occurring.
Budgetary-control: In regards to monitor or handle budget, business manager require to
set effective standards for upcoming time. Thereafter, it is compare real performance and
execution with the regular performance with assist in order to determining main reason behind
success and failure of business operations and functions. In this needs and require of employer is
to plan regarding resources utilization efficiently and effectively that will identify as a positive
effects.
Process of budgetary-control: There are certain phase which are includes in controlling budget
of the company in an effective and systematic manner (Tucker and Parker, 2014). All these are
determine under this - Consult with company manager: In regards to attain long term objectives and goals,
business administrator require to present their point of view with each other as well as
determine whether it is needed to handle expanses and cost in their division. Do effective and great assumption: In the organisation, there various department are
work with each other, so in this they require to built supposition on the way of gathering
comments in order to ignore future risk and losses effectively (van der Steen, 2011). Fixed data of organisation for budget to achieve goals and objectives: In respect to help
managers in order to make better plan as per business standard. It is required and needed
to gather necessary data and information which assist in gaining desired and long term
targets and objectives in a given time period. Calculation of data and information with budgeted: It will support the employer of then
organisation to make effective plan which is enables the Bizdaq manager to evaluate
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overall business performance in a systematic manner. This will support an enterprise in
acquiring opportunities of growth and success with few resources. Review Analysis: It is last phase which is important and essential reviewing all steps
where they are applied in accurate manner. In this, employer of the organisation can
analysis all issues and its solutions in a better way.
Planning tool: These are define as an instrument that support to guide business entity about
action steps which are connected to formulation of a program, intervention and initiatives. These
are may give description regarding the county formulation plan in a detailed manner
(Zimmerman and Yahya-Zadeh, 2011). It mainly includes three types of technique's and its
advantages and disadvantage which are determined in an effective manner:
1: Forecasting Tools: With the use of this tool, company can identify their past data and
information in direct manner. So it said as forecasting is complete on the basis of knowledge,
skills and behaviours of management, it is needed in managing and handling future plans and
activities in an effective manner.
Advantages Disadvantage
It will supports the business organisation in
order to identifying long term objectives and
goals. With the use of this tool employer can
predict the sale amount which are attaining in
upcoming period.
It will fails in order to built real estimation link
to expenses and revenues which is incurred by
business entity in upcoming period which
makes negative effects on the company
profitability.
2: Scheduling planning tool: It is another important technique's for the business in order
to achieve long term goals and desire objectives in an effective manner (Albu and Albu, 2012).
In this all department are use in completing different activities and plans in an enterprise.
Advantages Disadvantage
It support in helping business managers
through operational, functional and planning
management to evaluate alternative views as
per the needs of solutions.
This approach consume maximum time period
and have different changes of acquiring proper
output.
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3: Contingency planning technique's: It will help the business manager in order to face
different and complex conditions in regards to attain desired and long term objectives in limited
time period (Zimmerman and Yahya-Zadeh, 2011).
Advantages Disadvantage
One of the main advantages of this approach is
to save product cost for an enterprise.
Related to difficult condition, in this
complicated plan are highly effects on
mangers.
TASK 4
P5 Compare how business enterprise are selecting management accounting systems
Management Accounting Tools
When a company faces issues regarding finance, then in order to solve them there are
certain tools and techniques and this can be stated as management accounting tools. These kind
of issues mainly affects the performance level of a company for long period of run.
Below described are various issues regarding finance which are faced by Bizdaq:
Profitability: The main cause behind facing of financial issues are that there is increment
in the cost due to the profit level and also there has been increment in cost of variable units.
Beside this, they are not even using the right tools and techniques for resolving these kind of
problems. The most appropriate solution towards this kind of issue is the adoption of zero based
costing approach. Company get support with by diversifying the expenses on certain time frame.
This kind of method would help in reducing the overall cost which is applied.
Price-Maximisation: There is an issue which is being faced and that is the low price due
to the failure of Unicorn grocery of enhancing their profit ratio. The main cause is variable
overheads and there is difference between fixed cost of the company. The solution can be
provided through optimisation of prices because this will enable company to measure out the
actual cost which is applied for specific events and thus profit margin can be determined by
managers.
Performance and Controls: this issue can have drastic impact on the business of Bizdaq
as they are not able to perform and neither they are able to mange their operations in effective
manner. Along with all that , their demands of product is lower in market (Albu and Albu, 2012).
They can have appropriate solutions by applying application of inventory management system as
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this will help in solving the issues of poor performance along with the control which is lost over
essential activities. This in turn will provide appropriate guidelines of Unicorn and other
methodologies which can aid company to enhance their financial status and under this there will
be control over the issues and sack controls as well.
There are some tools and technique's in order to solve above all issues in an effective and
efficient manner. These are determine under this:
Key performance Indicators: It is one of the best tools in regards to solve all financial
issues in a systematic way (Chan and et. al., 2014). These approach sets the long term target and
goals which is measure by the company. It is also require by Bizdaq with motive of reducing all
financial issues and problems effectively.
Benchmarking: Each and every business entity has their own standard link to pricing
strategies and product quality. If organisation will adopt these standard on regular basis which
decrease all issues relating to cost of capital and cash-flows also.
Financial Governance: With the use of this tool, company follows different rules and
regulation connecting to ethical standard and accounting that would enhance business image in
customer mind and marketplace (Bennett and et. al., 2011). It will also assist them in facing and
reducing various kind of financial issues.
Comparison between two organisations
Zylla Bizdaq
It is a small company which face different
financial issues in the organisation. So in order
to reduce all issues, business follows key
performance indicators in an appropriate
manner (Burritt and et. al., 2011).
It is also small business that give different
services to their buyers. They are also face
various financial issues such as productivity,
cost efficiency and other. So reduce all
problems company mainly focuses on
benchmarking.
All three tools are important for the business
organisation in regards to easily sort out all
issues and achieve desired objectives.
Financial governance and benchmarking assist
in increasing productivity and performances of
the company effectively.
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CONCLUSION
As per the above mentioned report, it can be concluded that management accounting
support the business manager in order to identifying its performance and productivity in an
essential manner. Types of Management accounting and reporting help the manger to achieve
long term objectives and desire goals in a given time period. Absorption and marginal costing
also assist the business manger in regards to identify their net income and worth in systematic
way. Planning tool is very essential and valuable for the business because with the use of this
technique, company can easily identify their financial issues. Company face different issues
regarding profitability, price maximisation and other problems. Due to this, manger decide to
solve all problems in limited time period, they use key performance indicators, financial
governance and benchmarking. All these are important for the organisation because it will
increase business productivity and effectiveness in an effective and efficient manner.
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REFERENCES
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Chan, H. K., Wang, X. and Raffoni, A., 2014. An integrated approach for green design: Life-
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Chenhall, R.H. and Smith, D., 2011. A review of Australian management accounting research:
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Chinese and Thai state-owned enterprises. Accounting and Business Research. 44(2).
pp.144-180.
DRURY, C. M., 2013. Management and cost accounting. Springer.
Fourie, M. L. and et. al., 2015. Municipal finance and accounting. Van Schaik Publishers.
Hiebl, M. R., 2014. Upper echelons theory in management accounting and control research.
Journal of Management Control. 24(3). pp.223-240.
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