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Management Accounting

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Management
Accounting
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Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Management accounting and essential requirements of management accounting system3
P2 Management accounting reporting....................................................................................4
M1 Management accounting benefits and their application within organisation...................5
Evaluation of management accounting system and management reporting system within
organisation............................................................................................................................6
TASK 2............................................................................................................................................6
P3 Cost calculation.................................................................................................................6
M2 Application of techniques for engage management accounting......................................9
D2 Production of financial report for apply and interpret in different range of activities.....9
TASK 3............................................................................................................................................9
P4 Advantages and disadvantages of different types of planning budgetary tools................9
M3 Planning tools and their use...........................................................................................11
TASK 4..........................................................................................................................................12
P5 Compare of two organisation on the basis of adoption of management accounting system
for overcome from different financial problems..................................................................12
M4 Financial problems analyse............................................................................................13
D3) Evaluation of planning tools.........................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Management accounting is the use of different accounting provisions, techniques and tools
which supports an organisation for formulation of effective decisions which improve or
maximise the organisation productivity. With right decisions an organisation enhance their
profitability that is used for formulation of competitive-edge in market. The report is written
from perspective of Snooker England Limited, an organisation that produces goods and
equipment for snooker industry (Charifzadeh and Taschner, 2017). Management accounting
system and management accounting reporting with their integration among organisation process
will be highlight in this report. Formulation of financial report to interpret information from
different range of activities will be included in this report. In the last, evaluation of planning
tools to solve financial problems is undertaken within the report.
TASK 1
P1 Management accounting and essential requirements of management accounting system
Management accounting is explained as a set of accounting system which is used for
completion of work with induce of right decisions. Snooker England Ltd. use management to
achieve their goals and objectives with no issue.
Management accounting system and its essential use are mention as follow:
Cost accounting system- Cost of products is managed and controlled through use of
right techniques and methods of cost accounting system. This aids an organisation and
also, England snooker Ltd. to accomplish its goals within decided budget.
Essential requirements
Cost accounting system is used for minimise the overall cost by controlling variable
expenses related with business and it results in increase of organisational profits.
With monitoring overall operational cost and manufacturing cost of Snooker Ltd.
management improve their cost controlling system by removing unessential cost factors
(Chiarini and Vagnoni,, 2015).
Inventory management system- All resources are utilised by manager in an organised
manner through induced of appropriate inventory system. Along with this Snooker Ltd.
organisation ensure to utilise all inventories with a proper system.
Essential requirements
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Inventory management system tracks the use of inventories so it helps organisation for
manage and utilise all inventories in an organised manner.
The inventory management system also control the number of resources and it helps to
manufacture snooker equipment with no problems (Flachère, 2014). Example- lack of
resource stop production system but inventory management systems help to overcome
from this.
Price optimisation system- The price optimisation system is utilised by organisation for
decided right and actual price of its products and services. Moreover, management of
snooker limited ensure that it profits are margins are maintained properly.
Essential requirements
Price optimisation system is required for decide right price of services and products that
help to cover operation cost and then add appropriate profit margin within business.
Profits are required by the organisation to increase their business size so it is essential for
Snooker ltd. to engage price optimisation system in proper manner.
Job costing system- This is primarily used by the organisation which performs their
roles in the manufacturing system. Snooker England Ltd. manufactures equipment so it
helps them for managing all jobs in a coordinated manner and also in minimum time-
period (Ghasemi and et. al., 2019).
Essential requirements
Job orders ensure all task are managed and completed in an effective manner and it helps
them for managing jobs in proper manner.
On the other side, another important requirement of job costing is used for satisfying
customers and clients needs in proper manner by improving values in products.
P2 Management accounting reporting
Management account reports are used by organisation for analyse as well as interpret all
information in an appropriate manner. On the other side, Snooker Ltd. interpret all data to
perform their task with no issue and problems with use of various management accounting
reporting system that are mention as follow:
Budget report- This report is based on the various segments that relates with budget and
it includes production budget, master budget, cash budget, etc. Snooker Ltd. improves
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their efficiency through completing task with use of right information system. Also,
budget report maximise company efficiency by performing task with a certain amount.
Account receivable aging report- With use of account receivable report management is
able to analyse the number of trade receivables. It results that appropriate number of
debtors is identified by organisation to collect all payments. Snooker Ltd. use account
receivable report for achieve their goals with ensure that there is no issue of monetary
factor.
Cost accounting managerial report- The cost accounting report is used by organisation
for analyse of all cost level. It is used for improve and interpret cost management system
by understanding the overall cost factors (Jinga and DUMITRU, 2015). On the other side,
cost accounting report reduces the operation cost by reducing unnecessary expense from
process. It results profits of Snooker ltd. are increased if cost is reduced.
M1 Management accounting benefits and their application within organisation
All systems that are related with management accounting system provide different benefits
to the organisation and all of them work with motive of improving organisation efficiency and
effectiveness. From the perspective of Snooker Limited it is identified that management is
focused for improve of overall financial perspective. So cost accounting system help
organisation to ensure that cost is reduced and controlled by management. Overheads cost
monitoring is one of the major advantages of cost accounting system. Inventory management
system also ensures stocks as well as inventory is managed by organisation in proper manner.
Snooker England limited ensure that at the time of manufacturing all resources are utilised in
proper manner. One the other side, job costing system ensure that job orders is tracked and
completed in proper manner. Along with this job orders also helps to complete and then deliver
order in minimum time (Kaminska and Kolesnikova, 2014). Price optimisation system benefits
the organisation by utilising all price factors including fixed and variable. In the last, right prices
benefit management for earn accurate margin on their products offering.
D1) Evaluation of management accounting system and management reporting system within
organisation
The term management accounting system is utilised by organisation for performing their
task according to the desired and essential level of efficiency. From the perspective of respective
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organisation management accounting is integrated among organisation process to increase their
profits level. Similarly, management accounting reporting is also integrated in the organisation
process of Snooker Ltd because this helps to perform all work with use of right and appropriate
information. It results that all task are completed by management according to systems that
enhance company performance and also maximise company profits. This results work is
managed to solve problems for managing task in decided budget.
TASK 2
P3 Cost calculation
Marginal costing- This is explained as the technique through which overall marginal cost
is managed by charging it from unit of cost. Snooker Ltd. utilise the marginal costing technique
because it helps for calculation of profits in proper manner.
Advantages
Marginal costing technique is simplified so this is easy to understand and it also helps
organisation for determine appropriate level of profits (Kharlamova and et. al., 2020).
This minimise the problems for completion of task according to decided goals.
Marginal costing technique determine all profits and it aids organisation for completion
of task in an accurate manner by engage of right approach within business. This is also
used for interpretation better decision by deciding accurate margins for organisation.
Disadvantage
It relies on various assumptions related with business so sometimes they not generate
right statement for organisation to perform business properly.
Sometimes marginal costing is not able for control overheads and it create problems for
organisation to perform all business in proper manner.
Absorption costing- This is explained as the technique by which organisation identify all
cost that relates with process of production (Lavia López and Hiebl, 2015). Snooker ltd. ensures
profits are utilised in proper manner and it also reduce all problems for treating or overcome
from the overheads related issue.
Advantages
This technique is more beneficial for organisation as it ensures that they are able for
identify of production cost. Snooker Ltd. calculates all cost by use of absorption costing.
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Absorption costing generate advantage for organisation for treat all overheads in proper
manner. Moreover, snooker ltd. calculate gross and net profit both separately by use of
absorption costing.
Disadvantage
This is complex to understand because absorption costing is difficult to engage in
organisation accounting process (Maas, Schaltegger and Crutzen, 2016).
Absorption costing relies on various assumptions so this is not appropriate for obtain
desired results.
Both techniques are useful for organisation and it ensure all profits are determined by
comparison of their previous and current year performance. Deviations and variances are
identified and it is improve for adoption of rectifying action.
Annual Total Sales 2.5 Million
Opening Inventory 275000
Closing Inventory 125000
Marginal costing method
Particulars Particulars
Sales 25,00,000
Less:
Direct labour
Direct Material
Opening stock 275000
-Closing stock 125000
less: Variable production
Variable selling overhead 400000
Contribution (A) 2250000
Less: Fixed cist
Prduction overhead 80,000
(B) 80000
Add: Over absorbed 70,000
Less: Under absorbed 10,000
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Profit (A-B) 22,30,000
Absorption costing method
Particulars Particulars
Sales 25,00,000
Less:
Direct labour
Direct Material
Opening stock 275000
-Closing stock 125000
Contribution (A) 26,50,000
Less: Fixed cist
Production overhead 80,000
(B) 80000
Add: Over absorbed 70,000
Less: Under absorbed 10,000
Profit (A-B) 26,30,000
Cash flow statement
Particulars Amount
Cash generated from operations 2750000
Less: Cash expenses
Tax paid 22000
Dividend Paid 40000
Interest paid 8000
Purchase of property 50,000
decrease long term borrowings 25000 145000
Cash surplus 130000
Opening Balance 1,20,000
Closing Balance 2,50,000
Total 5,00,000
M2 Application of techniques for engage management accounting
Techniques of management accounting perform a crucial role for accomplish of decided
goals and objectives. From the perspective of Snooker Limited Ltd. manager this is understand
.
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organisation consider and analyse all those factors which is used for achieving and interpreting
all detailed plans. Manager of Snooker ltd. aid towards interpret all details in proper manner with
use of all those techniques that implement better management accounting to accomplish about
better results. Along with this methods and techniques define about all those factors through
which techniques of management accounting ensure about all sustainable success to increase
growth related factors. In the last, sustainable success is achieved within future by use of
techniques through formulate of appropriate strategy. The competitive edge is achieved and it
defines by maximising all values related with product and services.
D2 Production of financial report for apply and interpret in different range of activities
Financial report is utilised by organisation for interpretation of all information and data in
an efficient and effective manner. This result towards formulation of techniques which helps of
accomplishing goals by adoption and implement strategy that create no issue and problem within
organisation growth. Moreover, financial report aid business management for improve the
company process and it also ensure sustainable success is achieved within future by analysing
and interpreting all information related with business (Mohamed and Jones, 2014). Also, proper
use of technique helps to accomplish competitive-edge in market by understanding current
market information. It is quite important for top authorities and financial division of organisation
to use financial report because this helps to formulate effective and appropriate strategy for
engage departments. It results all work is managed and complete according to decided
information and also all individuals works for a similar goal.
TASK 3
P4 Advantages and disadvantages of different types of planning budgetary tools
Different tools exist and some of them which is used by the organisation for managing the
budgets are mention as follow:
Cash budget-
A cash price range is prepared by using the different departments of company in order to
get an estimate of the general receipts and payments for the duration of a particular period of
time which is mostly a 12 months. The managers of snooker ltd. can use this budget so that they
may be capable of obtain their decided goals and targets and also, to manipulate their liquidity
level without problems and issues.
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Advantages
A cash price range can be utilized by the corporations in order that the liquidity stage is
maintained. This is a bonus for the managers of Snooker England Ltd.
Cash price range can be utilized by the groups so that they may be able to maintain the
desired stage of efficiency as well as effectiveness in their business operations.
Disadvantage
A cash budget does not offer the power to the corporations in their cash operations which
could create a drawback for the companies to use it properly.
Formulation of cash budget is a time-consuming process and also expensive so this is not
used by each company. This is also a disadvantage for the selected business enterprise.
Production budget-
Manufacturing price range may be utilized by the agencies in order that they may be able
to forecast their numerous types of necessities which they have to get while match with the level
of manufacturing inside the decided time period (Pelz,, 2019). The managers of Snooker England
Ltd. can use this budget for making correct forecasts for the future term.
Advantages-
Production budget can help the corporations to identify their various kinds of
requirements which they have concerning the production of products. For this reason it's
work as an advantage for organisation.
Production budget can assist the companies in ensuring that the production occurs on
time and consistent with the necessities. Therefore this creates an advantage for the
businesses like harmless liquids.
Disadvantages
Production budget is based on various assumptions for the cause of forecasting the
statistics that may bring about unreliable conclusions. Accordingly this is a drawback for
the selected organisation.
Production budget can't be adjusted in step with the future modifications in demand and
supply and accordingly in dynamic enterprise surroundings this leads to a drawback for
business.
Master Budget
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This is used by the organisation for formulation of better and effective operating as well
as financial plans that work better for the future. One of the most important factors consider
about all techniques and it summarize about all details due to which work is managed with
decided financial budgets.
Advantages
Master budget support organisation for preparation of budgets related with all
departments by forecasting overall operations and functions (Phan, Baird and Su, 2017).
It work all operations are tracked in proper manner.
Goals and objectives are accomplished by organisation through induce of master budget.
This also defines about all tasks which are accomplished without issue in proper manner.
Disadvantage
Master budget is a time-consuming process and this is because it relates with overall
organisation operations.
Master budget are not flexible so this is a disadvantage for organisation because it create
problems to adopt quick changes.
M3 Planning tools and their use
Planning tool that is related with budgetary control is used by organisation in an efficient
and effective manner and it helps for completion of task according to desired level. With the
analysis of all above task an organisation leads towards accomplishment of goals by adopting
productivity related factors (Procházka, 2017). This define future performance is improved by
the management and it helps to engage company functions and operations as per the goals. The
main role of budgetary tools is to complete their work in decided budget and values. It results
organisation profits is improved by reducing issue related with budgets.
TASK 4
P5 Compare of two organisation on the basis of adoption of management accounting system for
overcome from different financial problems
Financial problem- This is explained as the situation in which organisation face
challenge or problems for performing their work in proper manner. It results management is not
able for accomplish of their goals and objectives in an accurate manner due to financial problems
.
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and challenges. It also impacts on the profit level of organisation so some techniques to minimise
the financial problems are mention as follow:
KPI- Key performance indicators are financial as well as non-financial in nature. The
main use of KPI is to identify the deviations and variances that exist in business and
impact on financial departments of organisation. From the perspective of Snooker
England Ltd. this is identified by management that KPI aid towards formulation of
methods that helps to overcome from the excessive cost problem (Quattrone, 2016). For
minimise the challenge related with excessive cost KPI indicator measure all
performance due to which it is to identify the problem.
Benchmarking- This technique is used for deciding the financial standards of respective
organisation so they are achieved in future. In simple terms, excessive cost financial
problem is solved by management through deciding the standards and numbers by which
all issues are controlled. It refer all work is completed in a decided amount of budget so
excessive cost will not generate problems for organisation.
Financial governance- It is explained as a set of action and measures which is implemented by
the organisation for maintaining financial discipline. This ensure all work is completed by
management by adopting and maintaining techniques that helps for minimising the problems of
excessive cost.
Comparison between two organisations
Basis Snooker England Ltd. FcSnooker
Financial problem Excessive cost is the major
problem that creates challenge
for organisation to perform
work in proper manner.
Due to mismanagement of job
orders FcSnooker face
problems to perform their its
operations properly.
Accounting system Inventory management system
is used for controlling the cost
by tracking use of all
resources.
Job costing system is
appropriate for the business
because this helps in
minimising problems of job
order.
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M4 Financial problems analyse
With detecting all financial problems according to the decided time and also with use of
appropriate techniques to overcome from them all problems are minimised. This ensures all
effective results are obtained by the organisation by adoption of methods that improve overall
efficiency to gain longer results through reduce problems and issue (Quinn, Strauss and
Kristandl, 2014). On the other side, Snooker England Limited manager focus on identifying the
solutions instead of wasting resources. It also results competitive-edge is achieved by
management through reducing problems and also by allowing person to complete task with
budget.
D3) Evaluation of planning tools
With use of different planning tools an organisation is able for improving their
performance and according to manager of Snooker England Ltd. induced of planning tools in a
systematic manner helps the organisation for performing their work in an accurate manner. Also,
it results that management achieve goals and objectives by implement of right plans. For this
organisation consider that strategies are generated according to project. This results organisation
is able for perform their work properly through deciding future growth factors and also, the
strategies to perform task in an advanced manner as compare to competitors.
CONCLUSION
With the analyse of above report, it is concluded that management accounting helps the
companies for select and take right decisions related with business project. To achieve high
position an organisation utilise the management accounting system in a right manner. Further,
there are different management accounting system such as cost accounting system, inventory
management system, etc. are used to improve the financial position of business. Similarly,
management reporting system like, budget report, production budget and many more are also
used for performing work with use of right and appropriate information.
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REFERENCES
Books and Journals
Charifzadeh, M. and Taschner, A., 2017. Management accounting and control: tools and
concepts in a Central European context. John Wiley & Sons.
Chiarini, A. and Vagnoni, E., 2015. World-class manufacturing by Fiat. Comparison with Toyota
production system from a strategic management, management accounting, operations
management and performance measurement dimension. International Journal of
Production Research, 53(2), pp.590-606.
Flachère, I., 2014. Management accounting tools as mediators of a new organisational
construction: A study of the interaction between tools and ‘physician-managers’ in a
French public hospital. In Performance Measurement and Management Control:
Behavioral Implications and Human Actions. Emerald Group Publishing Limited.
Ghasemi, R and et. al., 2019. The effectiveness of management accounting systems: evidence
from financial organizations in Iran. Journal of Accounting in Emerging Economies.
Jinga, G. and DUMITRU, M., 2015. THE MANAGEMENT ACCOUNTING TOOLS AND
THE INTEGRATED REPORTING. SEA: Practical Application of Science, 3(1).
Kaminska, T. and Kolesnikova, O., 2014. Financial risk management accounting. Accounting
and Finance, (1), pp.20-25.
Kharlamova, O and et. al., 2020. Management accounting using benchmarking tools. Academy of
Accounting and Financial Studies Journal, 24(2), pp.1-7.
Lavia López, O. and Hiebl, M.R., 2015. Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of
Management Accounting Research, 27(1), pp.81-119.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production, 136,
pp.237-248.
Mohamed, A.A. and Jones, T., 2014. Relationship between strategic management accounting
techniques and profitability–a proposed model. Measuring Business Excellence.
Pelz, M., 2019. Can management accounting Be helpful for young and small companies?
Systematic review of a paradox. International Journal of Management Reviews, 21(2),
pp.256-274.
Phan, T.N., Baird, K. and Su, S., 2017. The use and effectiveness of environmental management
accounting. Australasian Journal of Environmental Management, 24(4), pp.355-374.
Procházka, D., 2017. The unintended consequences of accounting harmonization in a transition
country: A case study of management accounting of private Czech
companies. Contemporary Economics, 11(4), pp.443-458.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research, 31, pp.118-122.
Quinn, M., Strauss, E. and Kristandl, G., 2014. The effects of cloud technology on management
accounting and business decision-making. Financial Management, 10(6), pp.1-12.
Vakhrushina, M.A and et. al., 2018. Integrated management accounting in the financial
management system. Research Journal of Pharmaceutical, Biological and Chemical
Sciences, 9(3), pp.808-813.
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