Analysis of Accounting Problems using BSC

M4 Analysis and Interpretation of Accounting Problems

MANAGEMENT
ACCOUNTING
Table of Contents

INTRODUCTION............................................................................................................................3
TASK 1............................................................................................................................................3
P1 function of the Management accounting................................................................................3
P2 Various types of Accounting system......................................................................................4
M1 Benefit to the IMDA Tech Ltd.............................................................................................5
D1 Critical evaluation of the system...........................................................................................5
TASK 2............................................................................................................................................5
P3 Calculation through Absorption and the Marginal costing....................................................5
M2 Tools and techniques for the financial report ......................................................................8
D2 Data interpretation of the company activities........................................................................8
TASK 3............................................................................................................................................8
P4 Tools for planning the budget ...............................................................................................8
M3 Application of the forecasted budget....................................................................................9
D3 Tools to overcome these issue...............................................................................................9
TASK4.............................................................................................................................................9
P5 Balance score card and they are respond to financial problem..............................................9
M4 Analysis and the interpretation of the accounting problems...............................................10
CONCLUSION..............................................................................................................................10
REFERENCES...............................................................................................................................11

INTRODUCTION
The topic of this project report includes all the belongings related to the management
accounting of the IMDA Tech Limited, which is largest producer of the mobile chargers and
other gadgets for the various marketing outlets in the British capital. The Report contain all the
point about the management accounting with importance to the company and the various
decision related to the division. The absorption and the marginal costing are also explained under
this report (Kaplan and Atkinson., 2015). The project contains the accounting procedure and the
inventory management part of the IMDA Tech . The company is also come up with the Balance
card approaches used by them. It also contains the various budgets and their use in the
performance of the company growth and its expansion in the coming future. On the basis of the
calculation various suggestion and the findings have been given to the company which help them
in achieving their goals.
TASK 1
P1 function of the Management accounting
The Management accounting refers to the combination of the various steps of financial
services and the Management which they are using their skills and knowledge in to generate
value to the company Objectives (Ward., 2012). The accounts of the company cant reflect the
image of the reality . It consist of mostly mathematical calculation and the maintaining of the
double entry system in the books of account of the company IMDA Tech Pvt Ltd. When the
market grows up in the economic system because the earnings of the firms are optimistic.
S.NO Management Accounting Financial Accounting
1
2
3
The account which provide various
information by analysing , collection
about the data of the company.
It is related to the Monetary and non
financial transaction.
It help the team management in the
planning and the decision making by the
higher authority.
The company has not to follow any kind
It is associated to the preparation of the final
accounts of the company according to the
performance.
It is associated to only monetary transactions.
It is basically related to the data collection
about the financial flow by the organisation.
It has to be a specified format which the

4
5
of format to analysis the performance .
The time period is decided by the
management as it has to be half yearly or
yearly.
company has to follow to analyse the budget.
The financial data is calculated in the financial
year.
Importance
 Easy to proceeds judgement – On the basis of management accounting ,company can
make essential decision and decides that which policy and procedure is best for the
company (Burritt, Schaltegger and Zvezdov., 2011).
 Effective accounting control – With the help of management accounting , company can
do planning with success and it also helps in organizing the business activities that
contributes in the achievement of desired goals.
 Cut down expenses – Accounting system helps in reducing the expenses of company
related to operational expenses and increase the profitability. With the help of
it ,company can manage or evaluates cost of economic resources and other business
operation.
 Future forecasting : The basic reason of the accounting system is to make the budget in
such a way that it will benefit the company in the future generation. The Planning has to
be perfect during the preparation of statements.
P2 Various types of Accounting system
For the Decision making on the basis of the accounting system used by the company
IMDA Tech. the internal system is supported on the message provided by the manager who
design the plan for the achievement of the goals and the objectives of the company (Parker.,
2012). These accounting systems help to calculate the outflow and the inflow of the cash
transaction in the one financial year. The various accounting systems are :
 Cost Accounting system :It is used by the company and the organisation to know the
total cost incurred of their Products that are Profitable to the company. It is design to
calculated the basic cost incurred by the company on their expenses . It basic concision of
actual cost which is based on the actual prices of the items. The normal cost under this the
actual cost for the labour and the material are estimated and the standard costing is the
substitute to the expected cost on the actual cost.
 Inventory Management system :It refers to the management of the stocks of the
company by using the appropriate techniques like there are three categories of the stock
which is divided on the basis of their durability. These categories are used on the basis of
the quality or the durability of the products. A is based on the high quality of the stock , B
is medium categories and the C is for the low based inventory products.
 Job Costing System : It refers to the type of order assigned to the cost of manufacturing
the each unit of the items by the company. It is mostly used where there are difference in

the product. At the end of the financial year the various job are being assigned by the
IMDA Tech . All the cost of the job must be assigned in the particular time period which
help to achieve the desire outcome for the company (Granlund., 2011).
 Price Optimising system : To calculated the various demand of the product by taking the
help of statistical and the numerical program. It includes all the data with the proper
information on the cost and the inventory levels at which the prices will benefit in
maximising the profit for the company.
M1 Benefit to the IMDA Tech Ltd.
As the above accounting system used by the company will help to take major decision
regarding the financial planning and the development through the proper report evaluation. The
accuracy and the durability of the company performance is completely depend on financial
statements whic are based on the decision taken by the company.
D1 Critical evaluation of the system
According to Weißenberger and Angelkort., (2011), the accounting system can provide
clear image and growth potential to plan their activity and control their financial transaction in
the company. It also help to control the cash inflow and outflow which are performing in the
different activities . It will increase the performance of the internal department.
TASK 2
P3 Calculation through Absorption and the Marginal costing
Marginal Costing: It refers to the total change in the opportunity cost when one extra or
less output is produced for the cost of producing an extra unit .It includes an additional cost
required for the production of the more unit of goods.
Absorption Costing:
Absorption costing is a managerial accounting cost method of expenditure all the cost associated
with the manufacturing of the commodity and is required for generally accepted accounting
principles. It includes all the direct cost used in the production of the goods and the services.
On the basis of the these two costing methods which are related to the company statement are
calculated to from the net profit from the various sources can help in the financial
planning.
Income statement as per marginal costing :
Working 1: Calculate variable production cost £
Direct material 8

Direct labour 5
Variable production 2
Variable product cost 15
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 2000*15 = 30000 500*15 = 7500
Net profit using marginal costing £
Sales 52500
Less Variable costs
Opening inventory
Production 30000
Closing inventory (7500) (22250)
Variable sales (10500)
Contribution 12000
Less Fixed costs
Fixed Production overhead 10000
selling & admin cost 10000 (12000)
Net Profit nil
Income Statement as per absorption costing :
Selling price £35
Unit costs
Direct Labour £5
Direct Material £8
Variable Product overhead £2
Variable sales overhead £5.25
Budgeted product for the period is 3000 units
Actual product for the September is 2000 units

Fixed costs for the month are given below
Budgeted cost Actual cost
Product overhead £15,000 £15,000
Administration cost £10,000 £10,000
Working 1: apportioned of fix cost per unit:
£25000/2000=£12.5 per unit
Working 2: Calculate full production cost
Direct material £8
Direct labour £5
Variable cost £2
Prime cost £15
Fixed cost £12.5
Total £27.5
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 2000*27.5 = £55000 500*27.5 = £13750
Working 3: under/ over absorbed fixed production overhead
Actual fixed product: £25000
Fixed overhead: £25000
Total nil
Net profit using absorption costing £
Sales £52500(1500*35)
(-) Cost of Sales:
Opening inventory 0
Production £55000
Closing inventory ( £13750)
Total cost 41250

Net Profit £11250
M2 Tools and techniques for the financial report
There are so many methods used to calculate the financial statements by using these
report only the absorption and the marginal costing can be sources of techniques for managing
the performance of the company. All are based on the income statement and how they are
beneficial for the growth of the company performance (Bisbe and Malagueño., 2012).
D2 Data interpretation of the company activities
As from the above calculation we have come to know that the net profit for the company
is high in the absorption cost but it is Nil in the marginal cost. The outcome of the company is
not sufficient as to meet the financial requirement .
TASK 3
P4 Tools for planning the budget
Budget : It is the overall estimation of the total cost ,and the profit which are used by the
IMDA Tech Ltd. in their financial operation. It helps to reflective the future financial conditions
and the objectives of the organisation (Coad, Jack and Kholeif., 2015). There are various budget
that a company is followed while planning their financial resources.
 Master Budget: It is the main budget or the combination of all the budget which includes
the financial activity of the business that has to be performed in the next coming year.
Advantage : It help in the estimation of the total finance need to be used in a year.
Limitation to this is misinterpretation can leads to dis balance of the company performance.
 Operating Budget : It refers to the company income and the expenses which are company
using at the time of production of the goods and services . It is based on the cost of
labour,overhead and the sales.
Advantage : It will provide the knowledge and information about the daily expense done by the
company.
Disadvantages It has some difficulties that all the expense are not recorded.
 Cash flow budget : It simply used to know about the different activity of the business
were they are investing and how much they are earning for those activities.
Advantages to this is to get the cash and cash equivalent information from all the activity.

Limitation: Difficult to maintain because of the limited information.
Tools used while planning the budget
1. Cost Aggregation : It refers to the calculation of the single cost based on work
breakdown structure (MacDonald and Richardson., 2011).
2. Reserve Analysis : It is a technique that involves revaluation of the project management
and the project plans. It will help to identify the total reserve of the company which they
are used in the planning.
3. Expert Analysis techniques : It refers to the technique in which the judgement is based on
the specific criteria or by the experts who have some special knowledge and ability
regarding the market.
4. Historical data: The facts which are available form the past which are to be used in the
current project while preparing the budget(Balanced Scorecard Basics 2017). Historical
data is facilitative in predicting the future of the company and the market as it encourage
predictive analysis.
M3 Application of the forecasted budget
The budget of the company is based on the future growth and dependability it will help to
estimated the total value of the company that they will earn during the next financial year by
using the timelines and multiple sources of funding. The time period to manage the factors and
get the outcome from it.
D3 Tools to overcome these issue
As per the above mentioned tools used by the company in the management accounting for
the financial statement of the current year they need to make strategies regarding the risk
management and the performance as being the benchmarking tool for other aspect of the
accounting which are used in the budget prepartion.
TASK4
P5 Balance score card and they are respond to financial problem
It is the strategies of the management which are based on the semi standard report of
various methods of designing and the various tools that can be used by the manager to know
about the activity performed by the company. The Imda Tech Ltd is using the balance scorecard
which is used to maintain the structure between the financial order of the internal and the

external position of the company (Jakobsen., 2012). It was considered in the case of the company
that are not profitable and which have the low size customer base .
There are various ways in which they can respond to the financial problems
 Accounting system gather all the relevant data and information through which a
company tries to solve their business problems((Ball., 2013).
 Availability of proper resources so that there is no deficit of useful resources while
working in their project and activity
 one of the main requirement of the standards is to connect the basic standards to link the
risk and control the major actions that are designed by the company .
 The company can track their assets that are related to the inventory and the major
equipment . Through the balance score card the non profit making company and manage
their business in the right direction with the proper planning and scheduling of the
activities (Ossadnik and Kaspar., 2013).
Strategies for improving financial governance:
IMDA Tech Ltd has created a solid base in the governance strategies which are benefit the
company in the following ways:
 Safer and secure data: by establishing the effective information can help to improve the
accessibility,reliability,security of the data.
 Fast and the simple business access: It is to obvious that the critical operations should be
fast and simple for the user.
 Data sharing and Decision making : For the success of the business the data and the
information must be exchange between the team member and the authority .
 Reduce cost and the risk : The basic things that the manager is seen in there business is to
control the cost and the risk associated to the planning of the budget. It will help to
increase the productivity and make use of the resources in the efficient manner.
M4 Analysis and the interpretation of the accounting problems
By using the balance score card approach the accounting problems in the account book
has to be control and that can be beneficial for the company in managing the risk and make the
necessary planning for the development of the company by taking some corrective measures .
CONCLUSION
This has to be concluded that the information collected from the this report about the
company IMDA Tech Ltd. That the financial statement of the company is prepared through using
the data from net profit as it was shown through the absorption and the marginal costing. The
report also contain the benefit and the limitation of the various budget and the balance score card

and the issues can be solved through it. On the basis of which various interpretation has been
done to know the reaction of the final outcome of company performance.
REFERENCES
Books and journal
Kaplan, R.S and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Ward, K., 2012. Strategic management accounting. Routledge.
Burritt, R.L., Schaltegger, S and Zvezdov, D., 2011. Carbon management accounting: explaining
practice in leading German companies. Australian Accounting Review. 21(1). pp.80-98.
Parker, L.D., 2012. Qualitative management accounting research: Assessing deliverables and
relevance. Critical perspectives on accounting. 23(1). pp.54-70.
Granlund, M., 2011. Extending AIS research to management accounting and control issues: A
research note. International Journal of Accounting Information Systems. 12(1). pp.3-19.
Weißenberger, B.E and Angelkort, H., 2011. Integration of financial and management
accounting systems: The mediating influence of a consistent financial language on
controllership effectiveness. Management Accounting Research. 22(3). pp.160-180.
Bisbe, J and Malagueño, R., 2012. Using strategic performance measurement systems for
strategy formulation: Does it work in dynamic environments?. Management Accounting
Research. 23(4). pp.296-311.
Coad, A., Jack, L and Kholeif, A.O.R., 2015. Structuration theory: reflections on its further
potential for management accounting research. Qualitative Research in Accounting &
Management. 12(2). pp.153-171.
MacDonald, L.D and Richardson, A.J., 2011. Does academic management accounting lag
practice? A cliometric study. Accounting History. 16(4). pp.365-388.
Ball, R., 2013. Accounting informs investors and earnings management is rife: Two questionable
beliefs. Accounting Horizons. 27(4). pp.847-853.
Jakobsen, M., 2012. Intra-organisational management accounting for inter-organisational control
during negotiation processes. Qualitative Research in Accounting & Management. 9(2).
pp.96-122.
Ossadnik, W and Kaspar, R., 2013. Evaluation of AHP software from a management accounting
perspective. Journal of Modelling in Management. 8(3). pp.305-319.
Online
Balanced Scorecard Basics 2017. [Online]. Available
through:<http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-
Scorecard>. [Accessed on 15th May 2017].