Management Accounting and Sustainability

This assignment delves into the crucial intersection of management accounting and sustainability. It examines various perspectives on how companies integrate environmental and social factors into their management accounting systems. The provided readings offer insights into theoretical frameworks, empirical research, and practical applications related to this emerging field. Students are expected to analyze these readings critically and synthesize their understanding of the complex interplay between financial performance and sustainability.

MANAGEMENT ACCOUNTING

Table of Contents
MANAGEMENT ACCOUNTING.................................................................................................1
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................3
P1 & M1 Explanation on management accounting and essential requirements of different
types of management accounting.................................................................................................3
P2 Explain different method used for management accounting reporting..................................5
P3 Calculate cost using appropriate technique and difference among marginal and absorption
costing techniques........................................................................................................................7
P4 Explain advantages and disadvantages of different type of planning tools for budgetary
control........................................................................................................................................10
P5Compare how organisation are adopting management accounting system to respond to
financial problems.....................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is combination of finance, accounting,and management with the
business skills an the techniques which are been added to any of the company. It is the process of
the preparing the financial and statistical information which is required to the managers. The
management accounting can be shown in the management- orientation accounting. In this it is
been shown that how the accounting function is been reoriented in the managerial functions
(Burns,Contrafatto, 2012). This technique is used by small and medium entities because they
have less finance or we can say less financial resources. In this type of technique cost and profit
is measured on prediction basis. Thus, it assist the Unicorn company to respond the major
problem of an organisation due to which they make a remedial action against this to attain the
objective in effective manner. Apart from this, There are major needs of traditional management
accounting for which this method is appropriately applied. Mainly this costing is used by an
organization for many big and indispensable projects through which they can easily calculate the
cost which is linked with such project. The first or the primary task of the managerial accounting
is to redesign the full accounting system so that it can it can serve it the operational needs of the
organization. And the financial data then devised and systematically developed so that it can
become the unique tools for the management. Unicorn grocery had become one of the largest and
successful whole food outlet in UK. Unicorn offers the best range of affordable and wholesome
foods of organic. This is the place where the people itself who are working over there is in it and
they had decided work place for it.

TASK 1
P1 & M1 Explanation on management accounting and essential requirements of different types
of management accounting
Management accounting is the process of analysis ,identify measuring ,interpreting to
collecting data to collecting information to communicate right information to organisation to
achieving goals and objective they decided matter to decision making. Another mean is ,a
managerial accounting financial and non financial decision-making to the organisation
management accounting extent various area (Tenucci,Cinquini, 2013). Thus, the management
accountant helps the company to make their daily routine decision making which facilitate to run
the business operation smoothly. Apart from this, this information are different from the
financial accounting as they are always based upon the forward looking. Therefore, it also aid
them to generate management reports which help them to provide information to the internal
stakeholders. Thus, it is the process of the preparing the financial and statistical information
which is required to the managers. The management accounting can be shown in the
management- orientation accounting. In this it is been shown that how the accounting function is
been reoriented in the managerial functions. Strategic managements:role of management
accounting
 Risk managements ;to managing performance ,decision making to regarding to achieving
organisation goals and objective
 Performance management;including performance identify and analysis measuring
reporting risk to decision making
There are various types of features
 To help decision making :decision making is the most important role play in the
organisation to help accurate relevant information to proving decision-making
 To providing data : to required more information how they utilizing the available
information to resolving the business problems
 Selective in natures :it is all collect those information from variety of alternative to crate
more benefits
 Achieving organisation goals:to management accounting proper information providing
and strength and weakness of organisation to easy may achieving goals and objective
 To increase efficiency : to managing techniques like budgeting ,control accounting

Different types of managements accoutring: these are various types of managements accounting
Operational budgets :a master budget is process of all low level budgets to including various
area to provide monthly and quarterly formats to cover a fiscal years. the master budget explain
strategies direction .and how the master budget accomplishing specific objectives a master
budget is [planning of central team direct the activities of a corporates various types of master
budget including : direct production budgets ,finish good budget ,sales budge,labour
budget ,administration expenses budget (Christ, and Burritt,2013).
Cash flow budget : cash flow budgets to mange the cash flow of a company to developing
expenditures are already made the cash budget of expected expenses given period of time that is
called operating budget
Financial budget :financial budget revenue and expenses of a particulate period of future time
in the budgets profit are anticipated and revenue are equal expenses that is called administrative
tools to measuring performance and adverse situations
Static budget : type of budget anticipated values inputs or outputs does not volume change to
standard for measuring performance and adverse situations to provide difference between actual
results and static budgets ,flexible budgets and static budgets to provide sales volum variance
and static budget variance
Essential requirements of different types of management accounting
There are some important requirements of management accounting which managers have to
assure that they are fulfilled or not. These are as below:
 Traditional accounting techniques: This technique is used by small and medium entities
because they have less finance or we can say less financial resources. In this type of
technique cost and profit is measured on prediction basis (Cinquini,and Tenucci, 2010. ).
 There are major needs of traditional management accounting for which this method is
appropriately applied. Mainly this costing is used by an organization for many big and
indispensable projects through which they can easily calculate the cost which is linked
with such project.
There are following main accounting system:
Inventory management system: This is one of the most usable system which deals with providing
order in the company. the main aim of such system is to reduction in overall cost and increase
turnover of the company. In a business, this is one of the complex task that how much level of

inventory needed at the minimum cost. If the inventory is high, it will lead to increase
operational cost. Therefore, this system helps to determine the balance between order and cost.
There are various tools and techniques can be used by the cited firm. These are EOQ and JIT.
Both approaches help to maintain balance between inventory and cost so that business firm can
meet its long tern targets.
Job costing system: This is essential in several industries to monitor manufacturing cost in an
appropriate manner which can be categorizes in to overhead, direct material and labour cost. The
main objectives of this system is to control operational expenses and boos firm’s profitability
which is common goal for each and every business organisation.
Price optimization system: Each and every business is main objectives is to reducing cost and
increase profit by using variety of approaches. Therefore, price setting is one of the task which
need careful analyses of overall cost. Further, there are various factors which influence price of
the product such as demand, supply and other element. If demand is increase company need to
reduced their price and leads to increase in sales and profits.
Cost accounting system: This is basically used by the manufacturing and production units to tract
all direct and indirect expenses relating to their products and services. The main motive of such
approach is to monitor all expenses relating to raw material to the finishing process. So that they
can identity new techniques to control overall cost.
P2 Explain different method used for management accounting reporting
There are various types of management accounting reporting that are used by the unicorn
that are as described as follow-
Job cost reports- It is that type of reports under which it gives important information that
are relating to the present status of a particular job and it assist the firm to aid them in estimating
completion on each job. Thus, it mainly came from revenue and cost as there are so many jobs
that are difficult in maintain so, these job reports help them to effectively identifying issues in
effective manner. It also gives information regard to each job that assists the management
accountant to allocating the cost that are directly to the job. Unicorn grocery used job cost
reports for the purpose of focusing on the task it ignore the actual numbers. The main role of this
report is that it is a procedure of allocating and coding the expenses that are relate to the project
for the purpose of tracking the firm’s profitability and efficiency (Fullerton, Kennedy and

Widener, 2013). Apart from this, the cost reports are often used for the purpose of cost control
and also monitor the progress by make comparison among the planned progress with the data. It
shows that where the job is at the particular point of time. It also assists the Company to finding
out the deviation and also takes remedial action regard to this.
Sales reports- It is one of the another type of management accounting reporting that help
the sales manager to effectively tracking the sales activities spend by the sales team. It help them
to understanding that the company productivity level and how much improvement in the firm’s
sales. Thus, the sales reports of Unicorn grocery show the picture of the success of sales team
and it easy to finding out the problems that are occur in particular areas. Apart from this, the
sales analysis reports show that the company actual sales and help them to know the current
position by compared them with the previous year sale figures. Thus, the report also provides
information through which sales managers analyse and identifying the growth opportunities to
increase sales. The report is generated at a quarter, weekly and annually in which there is all
sales activities are included in it. It facilitates the company to effectively tracking the sales
activities spend by the sales team. It help them to understanding that the company productivity
level and how much improvement in the firm’s sales.
Budget reports- It is an internal report that are used by the management for the purpose of
comparing the actual budgeted performance with the estimated budgeted performance at the
particular time period. It is mainly design for the purpose of make comparison with the actual
number with the budgeted numbers at a financial accounting period by the company managers.
The main advantage from the budget reports is that to finding out the main problems that many
affect the company’s financial position. Thus, according to that the company can make
prediction so, they can make carry out the business activities in that manner. Thereafter the main
benefits from the budget report is that the Company can effectively estimating the expected sales
over a certain time period. Furthermore, it also assists the company to know the variance which
is arise from the actual budget with the estimated budget. It can be of two types that are
favourable variance that means the actual numbers are more than budget numbers. Beside this,
the unfavourable variance that can be define as when the budget number is more than actual
numbers. It shows that company financial position is bad due to which company takes the
effective measure reduce the variation or deviation that occurs within the organisation.

P3 Calculate cost using appropriate technique and difference among marginal and absorption
costing techniques
Income statement can be prepared by the organisation in the financial or accounting period.
Therefore, there are two types of management costing techniques that are marginal and
absorption costing method. Thus, the organisation adopts one of the technique among both that is
highly depend upon their choice of the firm. There is a difference among both techniques regard
net profit and expenses that are incurred during the sales activities as well as business activities.
It can be of two types that is fixed and variable expenses (Bhimani, 2013). Therefore, the fixed
expenses cannot be changes over a period of accounting with the production and variable
expenses can be vary time to time. It highly depends upon the firms activities and there sales due
to which the expenses are incurred in various types are the administration, selling, production
and overhead expenses. Unicorn grocery limited adopts both types of management costing
techniques are the absorption and marginal costing that are presented into table 1 and table 2
which are as described below-
From the table 1 and table 2 there is a income statement has been prepared by the company
with the help of marginal and absorption costing. The data and figures that are mentioned below
which indicate that there is a little difference among the net profit of both the table1 and 2. Let
talk about the table 1 the calculation of net profit is highly based upon the marginal costing
technique that is £ 12600.Thus, it can be estimated through the steps in that first sales revenue
are to be taken that is £21000 and after that cost of goods sold are determine. The formula of cost
of goods sold under this are the sum of direct material, labour, variable expenses are the
overhead and administration that is £ 6600.Thereafter from these cost of goods there are required
to deduct from sales revenue to estimate gross profit. Net profit is calculated when all the
variable expenses and ignore the fixed cost are to be deduct for the gross profit that is. On
contrast to this, the calculation of net profit under income statement has been prepared by the
Unicorn Company through absorption costing technique. Thus, to calculate cost of goods sold in
which it is a sum of direct material, labour, all types of variable expenses and fixed expense.
Gross profit can be calculate by deducting cost of goods is from the sales revenue is then the

value GP is...Furthermore, all the variable expenses such as administration, selling and
production expenses as well as all fixed expenses are to be taken that are deduct from the gross
profit to calculate the net profit that is £9300. Therefore, it has been analysed from the whole
discussion in which the net profit that has been prepared by the marginal costing techniques is
more than the absorption costing that is £12600 Thus, the main reason the absorption costing net
profit is lower than the marginal costing is that it take all type of expenses that are fixed and
variable expenses.
Most of scholars are studied on this particular topic of management costing techniques to
prepare the income statement. Thus, the conclusion has been made under this subject in that the
absorption costing technique is the best methods while preparing the income statement of
company. It is due to because it gives the accurate profit as it estimated the accurate total cost to
the firm in effective manner.
Table 1: Marginal costing technique
Particulars Amount £
Sales
35*600
(-)
Cost of production
6+5+6=2
Closing Stock
(100*13)
Variable overhead
Contribution
(-)
Variable overhead (Sales)
600*1
Fixed Cost
21000
(-)9100
(-)1300
(-)7800
13200
(-)600
(-)2000

Adm. Cost
(700+600)
Total
(-)1300
(-)3900
9300
Table 2: Absorption costing technique
Particulars Amount £
Sales
(35*600)
(-)
Cost of Production
GP
(-)
Fixed and variable cost:
Variable expenses
(600*1)
Admin. Expenses
(700+600)
(-) Over Absorbed fixed production Expenses
21000
9600
11400
600
1300
(-)100 (-)1800
NP 9600
Difference among the marginal costing and absorption costing technique
Marginal Costing Absorption Costing
It can be defines as when there is an additional
unit of production are under taken due to which
an opportunity cost produce that is a marginal
costing.
In this technique when there is a full cost is
produce that are fixed and variable for this
reason it can be also said as a full costing
method.

The formula of cost of goods sold under this
are the sum of direct material, labour, variable
expenses are the overhead and administration.
Under this variable expenses such as
administration, selling and production expenses
as well as all fixed expenses are to be taken
that are deduct from the gross profit to
calculate the net profit
Net profit is calculated when all the variable
expenses and ignore the fixed cost are to be
deduct for the gross profit.
Net profit is calculated through which it takes
both all fixed and variable expenses that are to
be deduct from the gross profit.
Marginal costing techniques in which net profit
is more than the absorption costing
Absorption costing techniques in which net
profit is less marginal costing.
P4 Explain advantages and disadvantages of different type of planning tools for budgetary
control
Budgetary control- There is a various types of control that are financial and budgetary
control. Therefore, under this present study the report is mainly concentrated on the budgetary
control that can be defined under the institute of cost and management accountants. The
company develop budgets regard to the executive responsibility which assists them to make
comparison among regard to the actual number with budgeted results. Budgetary control is that
techniques that help the Unicorn Company to measure the actual results with the budgeted
performance. Thus, it can be defining in other words in which the Company make variance
among the actual number with the budgeted numbers. The main advantages of budgeted control
for the company is that they can effectively control the organisational activities in effective
manner. Thus, the demerits of budgeted control is that it does show the detailed of construction.
The benefits of budgeted control is that it help company to know about the future which assist
them to control and plan in effective manner (Pilleboue, 2015). Apart from this, it also aid them
to set the plan in accordingly due to which it attain the target of each department of a company in
effective manner. Thereafter, it also promotes the communication and coordination as well as
clearly shows the area of responsibility. The Unicorn limited adopt the planning tools that have
various advantages and disadvantages that are as described as below-
 Responsibility accounting- It is that type of accounting under which it involves a
budgeting and firm’s internal accounting. The main objective of responsibility accounting

is that it can help the organisation to effectively make the plan and control the business
activity. It effectively assisting the firm’s actual transaction through the responsibility
centers. Thus, it majorly includes each responsibility centres under which organisation
transaction can be done in effective manner and it assist them to make the monthly report.
Apart from this, this monthly reports assist the company to establish the actual numbers
for each budget. It assists the Company to know the variance among the budgeted
numbers with the actual numbers. Thus. There are some advantages and disadvantage of
responsibility accounting are as follows-
Advantages
 The main advantage of responsibility accounting is that it assist the company to
effectively make comparison among the actual numbers with the budgeted numbers.
 The another benefits from the responsibility accounting is that it help the company to
make variances that are from the budgeted planning. It assists them to evaluating the fix
responsibility regard to the each responsibility centre.
 They can effectively take the corrective action through the management that help the
company to effectively communicating to all the responsibility individuals.
Disadvantages
 The main disadvantage of responsibility accounting in the practical situation its becomes
difficult at the time of it designing the specific organisation chart under which the
responsibility are to be assigned in effective way (Li, Choi and Cheng, 2014) .
 The another demerit of responsibility accounting is that it create conflicts among the
organisational interest and individual interest that resultant into that it create problems at
the time of implementing policies.
 Organisation face the passive resistance under which the objectives of the firm are to be
lost
 Variance analysis-. It is mainly design for the purpose of make comparison with the
actual number with the budgeted numbers at a financial accounting period by the
company managers. The main advantage from the budget reports is that to finding out the
main problems that many affect the company’s financial position. Thus, according to that
the company can make prediction so, they can make carry out the business activities in

that manner. Thereafter the main benefits from the budget report is that the Company can
effectively estimating the expected sales over a certain time period. Furthermore, it also
assists the company to know the variance which is arise from the actual budget with the
estimated budget. It can be of two types that are favourable variance that means the actual
numbers are more than budget numbers (Lauth, 2014). Beside this, the unfavourable
variance that can be define as when the budget number is more than actual numbers. It
shows that company financial position is bad due to which company takes the effective
measure reduce the variation or deviation that occurs within the organisation.
Advantages
 The company develop budgets regard to the executive responsibility which assists them
to make comparison among regard to the actual number with budgeted results.
 The Company make variance among the actual number with the budgeted numbers. The
main advantages from the variance analysis to the organisation is that they can effectively
control the organisational activities in effective manner.
 It assist the company to set the plan in accordingly due to which it attain the target of
each department of a company in effective manner.
Disadvantages Anticipated values inputs or outputs does not volume change to standard for measuring
performance and adverse situations to provide difference between actual results and static
budgets ,flexible budgets and static budgets to provide sales volum variance and static
budget variance .
P5Compare how organisation are adopting management accounting system to respond to
financial problems
Key performance indicators: It is related with the measurable value of the company
performance and provide guidance to the archived target. Then high value of KPI are concentrate
on the entire performance of the enterprise, low level of performance related to the tactical
operations and lower level of performance are related day to day operations of the company.

Benchmarks: These are targets which set by the company for a limited period of time. The main
aim of these targets is to compare historical aspects and meet their short and long term objectives
in an effective manner:
Financial governance: This is one of the modern business practices where company needs to
follow all financial guidelines and fulfil legal compliances in an appropriate manner. In this
approach, they provide all relevant financial information to their stakeholders such as employees,
staff, government, investors and so on.
CONCLUSION
Summarizing the whole report it has been concluded that management accounting is
different from the financial accounting as it help the firm to look forwards as it avoid the
historical based information. Unicorn grocery adopts the management accounting information
that helps to make their day to day operation in effective manner. Therefore, there are various
types of information available in from of management reports that include budget reports, job
cost report, sales and cash reports etc. Apart from this, there are various essential requirements of
management accounting are the lean accounting, throughput accounting, traditional cost
accounting and also transfer pricing. Apart from this, it has been also analysed that there are two
types of management costing techniques are the marginal cost and absorption cost technique.
Thus, it is also analysed that the absorption costing technique is the best methods while preparing
the income statement of company. It is due to because it gives the accurate profit as it estimated
the accurate total cost to the firm in effective manner. Furthermore, Income statement can be
prepared by the organisation in the financial or accounting period. Therefore, there are two types
of management costing techniques that are marginal and absorption costing method. Thus, the
organisation adopts one of the technique among both that is highly depend upon their choice of
the firm. There is a difference among both techniques regard net profit and expenses that are
incurred during the sales activities as well as business activities. It can be of two types that is
fixed and variable expenses. Therefore, the fixed expenses cannot be changes over a period of
accounting with the production and variable expenses can be vary time to time. It highly depends
upon the firms activities and there sales due to which the expenses are incurred in various types
are the administration, selling, production and overhead expenses