Sustainable Development through Management Accounting

This assignment delves into the application of management accounting practices to foster sustainable development within an organization. It emphasizes the use of benchmarking for comparison analysis, operational budgeting for cost minimization and productivity enhancement, sales budgeting for sustainability forecasting, and financial tools such as key performance indicators (KPIs) and benchmarking for profitability improvement.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Management accounting and its types:.................................................................................1
M1 Benefits of management systems under the cited company context:...................................2
D1. How MA system and MA reporting integrates within the firm process:.............................2
P2. Various methods used for management accounting reporting:.............................................3
P3 Calculation of net profits under marginal and absorption costing:........................................4
M2 Application of techniques:....................................................................................................7
D2. Interpretation of data:...........................................................................................................8
TASK 3............................................................................................................................................8
Budget and its advantages and disadvantages.............................................................................8
Advantages: ..............................................................................................................................10
D3 How financial tools are used for evaluating financial problems:........................................11
TASK 4..........................................................................................................................................12
P5 How management accounting tools are used by the firm for responding financial problems:
...................................................................................................................................................12
M4 How management accounting can lead to attain sustainable development:.......................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is the crucial tool which are used in order to make their business
decisions effective. These are the practices which are used by the management so that the they
could attain their pre-set objectives. Under this project research, Unilever plc having their
manufacturing units and it considers management accounting tools for lowering their products
costs. This will also provides sustainability so that their objectives can attain. Unilever plc needs
to make their business operations so effective so that competitive advantages can be attained by
lowering the costs of the product (Zimmerman and Yahya-Zadeh, 2011). Under this research
report, company will use various management accounting practices in their manufacturing
operations for lowering the product costs and with the help of this, company will take the
competitive advantages over the rivals. Under this research report, company will frame
management accounting reporting for making the decisions in an efficient manner. There are so
many business accounting tools which are used in order to get the business objectives effective.
TASK 1
P1. Management accounting and its types:
Management accounting is the procedure which is used in the firm for analysing firm
costs to make internal financial report, records and assist the managers to frame business
decisions effective and efficient in order to attain its pre set objectives. On the other way, this is
the act of framing sense of financial and costing data and converting those data and converting
that data into fruitful information for management and officers within the firm. There are various
management accounting systems which are used by the firms in order to make certain changes.
Cost accounting system: Under this system, management of the Unilever plc adopt cost
accounting system so that there pre-set objectives can be attained. This accounting system is
used by the firm in order to lower their operational expenses and also control them effectively.
This cost accounting is suitable for the manufacturing sector companies which main object are to
produce something in a effective price so that optimum profits can be gained (Ward, 2012). This
accounting system does not only considers various costs related matters but also make certain
assumptions on the basis of these resources. Which will be helpful for making business strategies
so effective.
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Inventory management system: This is used by the management in order to effectively
manage stocks of the firm. Stocks are the lifeline of any business as there is a need to manage
inventory so that the available resources can be used by the firm. The management accountant is
the main authority which uses resources in an effective manner so that maximum outcome can be
granted (van der Steen, 2011). This accounting system helps Unilever plc for managing
inventory in order to have their business operations effective. With the help of this,company is
able to track inventory levels, orders, sales and deliveries. This system is mostly used in
manufacturing sector to frame a work order, bills of materials and other manufacturing-related
documents.
Job-costing system: By applying this costing system, management is able to assign production
costs to each individual good or batches of products. Normally, this system is used by the firm at
the time when the goods produced are quite separate for each other. This assign overheads costs
to one or more cost pools. At the time of accounting period end, total amount in each cos pool is
assigned to different open jobs depends on few allocation methodology which is regularly apply.
This tools helps Unilever plc to assess the each job order costs so that they could fix prices for
them.
Price optimisation system: This is the implementation of mathematical assessment by a firm to
identify about the customers reaction at various prices for its goods and services via various
channels (Tappura and et. al., 2015). This is also implemented to identify the prices which the
cited firm will fix in order to attain its objectives like- optimising operating revenues.
M1 Benefits of management systems under the cited company context:
By implementing management accounting tools, Unilever plc is able to run effectively so
that its objectives can meet in a best manner. There are various tools which are used by the firm
in order to make their business objectives in an effective manner. Under this, it has been
identified that the business can run smoothly by applying management accounting practices.
Management accounting benefits are used to increase profitability, cost efficiency for making
product cheaper.
D1. How MA system and MA reporting integrates within the firm process:
Management accounting system helps the cited firm in order to make MA reporting in
order to make efficient decisions so that Unilever plc could attain pre-set objectives. This is the
definite process which is used by the firm for smooth running of the operations. But, only one of
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them can not attain firm's pre-set objectives. Hence, both management accounting system and
management accounting reporting are required to be integrated for attaining their pre-set
objectives.
P2. Various methods used for management accounting reporting:
There are various tools which are used by the firm in order for attaining firm's pre-set
objectives. This also has been seen that the management of the cited company will use these
reports so that they would able to control expenditures and reduce the cost of the productions so
that company would able to sustain in effective manner (Setthasakko, 2010). There are few
reports which are explained hereunder:
Budget report: This reports assist small firms owners to review their firm performance. But, in
that case of operations are big, in that case, managers review their division's performance and
and manage costs. The forecasted budget is usually depends on the actual costs from previous
years. With the help of this, actual figure is compared to the budged figure and then analyse it in
an effective manner. This also has been seen that the management of the Unilever company
needs to form budget reports so that they could control the costs or expenses and also compare
their actual results with the anticipated outcomes. If the variances occurred in a favourable
manner then it is presumed to be good. But if, variances occurred in an adverse manner, then the
authorised person will overcome these issues effectively.
Job cost reports: This reflects the expenses for a specific project. They are normally matched
with forecasting of revenue in order to firm can assess job profitability. Which assist in
determining greater earning areas of the firm so that company could concentrates its attempts
rather than of wasting time and monetary resources on jobs with less profit margins (Quinn,
2011). Job cost reports are implemented to review expenses at the time of project running
henceforth, the mangers are able to rectify areas of waste before the costs increase.
Accounting receivable report: Under this report, all the earnings arises or presumed to be arise
in near future, are recoded. Whole earnings is recorded under this report and at the end, make
report which can assist the firm to get the sustainable development.
Performance report: Under performance report, management accountant assess it's company's
performance by taking financial and non-financial data. With the help of this, firm is able to
make strategies in a great manner. With the help of this, various stakeholders uses these reports
so that they would able to get pre-set objectives.
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Inventory management report: This is the report which is made by the firm in order to track
the inventory level stocks and make them accordingly in order to make successful business
decisions. The company will form inventory management report in order to make their business
decision accordingly. The inventory management report helps the management to make their to
adopt effective inventory management plan so that these can be attained in an effective
management plan.
TASK 2
P3 Calculation of net profits under marginal and absorption costing:
Marginal costing: This is the costing method under which variable cost is considered. This cost
of production is the vary in the total cost arise from producing one extra item (Parker, 2012).
The aim of assessing marginal cost is to identify the point where a firm can attain economies of
scale. This is the extra cost incurred in the manufacturing of production of extra unit of a product
or services. This is most crucial in economic theory as a profits optimising firm company would
manufacture upto the marginal cost equal marginal revenue.
Absorption costing: Absorption cost is used in order to make costs. The costs which are
concerned to the manufacturing of goods, considered under absorption costing. Under this, all
costs whether these are variable or fixed, is considered. On the other words, absorption costing is
characterized as a tool for gathering the costs linked with the production process.
Here are net profits as per marginal and absorption costing are given hereunder:
Calculation as per Absorption costing.
Working notes:
Absorption costing
Working 1: Calculate full production cost
Direct material £6
Direct labour £5
Variable cost £2
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Fixed cost £3
Total £16
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*19 = £13300 100*16 = £1600
Working 3: under/ over absorbed fixed production overhead
Actual fixed production: £2100
Fixed overhead: £2000
Total £100(over absorbed)
Administration Cost: In this budgeted cost is £800 and Actual cost is £700
Selling cost: In this budgeted cost is £400 and Actual cost is £600
Net profit using absorption costing £ £
Sales
(-) Cost of Sales:
Opening stock
Manufacturing
Closing stock
(Under)/ Over absorbed fixed prod.
O/h
0
11200
(1600)
21000
(9600)
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Gross Profit
Less Expenses
Variable sales expenditure
Fixed administration expenses
Fixed selling expenditure
Over absorption
Net Profit
600
700
600
(100)
11400
(1800)
9600
Working 1: Calculate variable production cost £
Direct material 6
Direct labour 5
Variable production O/h 3
Variable production cost 14
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*14 = 9800 100*14 = 1400
Net profit using marginal costing £ £
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Sales value
Less: Variable costs
Opening stock
Manufacturing
Closing stock
Contribution
Less Fixed costs
Variable Production expenses
Administration cost expenditure
Selling cost
Net Profit
0
9100
(1300)
2000
1300
600
9600
From the above calculation, this has been seen that the management concluded that
absorption costing makes more profits rather than the marginal costing. There is the tool by
which by which the business uses their operations effectively. Net profit as per absorption
costing is 9600 which is more than the profits calculated as per marginal costing. Henceforth,
absorption costing is used (Otley and Emmanuel, 2013).
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M2 Application of techniques:
In the cited question, Unilever plc is needed to implement management accounting tools in order
to get the maximum outcomes. Such also need to frame the running so smooth that carry the
operations in effective manner. Above mentioned tools are used by the firm fo getting
sustainable development.
D2. Interpretation of data:
The profits attained accordingly marginal costing and absorption costing reflects various
value. This basically assists the firm for making the business sustainable (Malmi, 2010). As per
the absorption costing, firm earn 9600 profits. On the other hand, as per the marginal costing,
company earns 9300.
TASK 3
Budget and its advantages and disadvantages
Budget is the report or statement made on the basis past financial data for a set of period.
Budget is a tool which is used by the firm in order to make thier business effectively. This is the
report which is used in order to make decisions effectively. A budget assists the manager to
make plans in an effective manner (Macintosh and Quattrone, 2010). There are is a need to make
planning, priortizinring, regular enhancement, forecasting so that there business can run
effectively. The budget process is the main thing which helps the firm to make their business
plans accordingly, and on the basis of that business, manager would able to achieve its pre-set
targets. However, the budgeted results is compared with the actual outcome so that they would to
analyse them and find out the variables effectively. The manager of the Unilever plc would
makes efforts for eliminating that variances in a proper manner. There are so many budgets
which helps the overall firms for assisting the firm to get pre-set objectives. Some of them are
opertaing budget, sales budget, cash budget and so on.
Operating budget: This is the budget which is used by the firm for attaining firm's pre-set
targets. All the expenses which are related to the operations, need to consider. The outcome
which is extracted by using operating budget needs to be considered by the firm for analysing the
actual budget and then frame policies in order to eliminate these variances.
Advantages:
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 By applying budgetary tools, firm would able to attain their operations related objectives
in an effective way.
 Operating budget helps the managers to control operating related expenses effectively so
that operational profits could enhanced. This is the main task which are useful for making
their business sustainable.
 This also stimulates coordination and communication.
Disadvantages:
 Operating budget does not easily to reconcile personal/individual and corporate goals.
 This is not always to produce reliable outcomes in an order to get the reliable outcomes.
 Managers might overestimate costs which is not able to produce outcome business
outcome effectively (Lukka and Modell, 2010).
Sales budget: Sales budget is the main budget which is used in order to predict the sales figure
and the basis of that figure, company would able to make certain strategies for attianing its pre-
set objectives. Sales budget are required to make their business plans effective and in this
manner, the company makes certain tools that will be done in an effective manner. However,
company needs to make thier business operations so effective. There are so many tools which is
used in the make their sales budget in an effective manner.
Advantages:
 Sales budget is helpful for estimating sales outcome and then react in order to attain
firm's objectives.
 Sales budget also assist the firm to control the sales related expenses in an effective
manner so that the sales price can be lowered and also make certain changes in the cost
price.
 It also enhance the allocation of available resources.
Disadvantages:
 Budget could be oversight as pressure instrument improvement which is imposed by the
management, hence, wrongful strategies would be made after analysing sales budget.
 Sales budget also extract the policy for considering better spendings or ignoring
opportunity. Hence, this will create difficulty (Hutaibat, 2012).
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Cash budget: This is based on the estimating cash inflows and cash outflows for a specified
period of time. There are so many tools which are used by the firm in order to make their
business operations so effective.
Advantages:
 Cash budget is helpful for assessing cash inflows and outflows of the firm. Company
would help out the firm for making business operations effective.
 Cash budget is also helps the managers and top level management to analyse all the
outgoings and incoming of the firm arise due to operating, financial and investing
activities. These are related to the costs.
 Cash budget assist the firm to make their business operations in an effective manner.
 This budget also enable to regulate over company's cash requirements (Hiebl, 2014).
 With the help of cash budget, firm is able to display the feasibility of management plan
as per cash term.
 This budget also assist the firm to take precautionary actions and adjust in advance for
investment and loan amount at the time of cash surplus or cash crunch arises.
Disadvantages:
 Cash budget does not always produce sufficient details so that the decisions can not
render enough data.
 Sometimes, there are also some constraints which cannot be resolved by using cash
budget.
 Cash budget is rigid. Hence, ant forthcoming issue after the budget made can not be
incorporated under this.
Production budget: It is measured in quantitative terms only and is engaged to the company's
sales budget. Under production budget, managers' duties will be consider: review of plant
utilisation, work-in-progress budgets.
Advantages:
 For estimating production related requirements, company consider production budget.
 This also helps to know about the budget products so that budget can made effectively.
 Also able to know about the estimation of raw material which is used for making final
budget.
Disadvantage:
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 Production budget not always represents the exact value for making business strategies.
 Production budget does not always render effective implementation in order to make their
business operations.
Planning methods used in budgetary control:
Capital expenditure budget: Under this budget, company's assets is either takeover or upgrade
physical properties. However this is totally concerned to the new project which are framed by the
firm.
Cost plus pricing: This is depend on the tools which are implemented by the firms to fix price
of the product. Under this, whole direct cost are required at the time of manufacturing are taken
into consideration (Granlund, 2011).
Advantages:
This is the simple tool to fix the price for a product. As, Unilever plc implemented own
information to identify the cost.
Disadvantage:
This also seen that cost plus pricing can not take into consideration as the competitors accounts
and entire effect on the price.
M3: Use of various planning tools for making budgets:
There are various tools which are used for making business plan in an effective manner. Planning
is made in order to make budget properly (Giovannoni, Maraghini and Riccaboni, 2011). There
are so many activities which are to be considered while forming a plan. Review of current
financial year results is only made after making business plan. There are certain tools which are
used by the firm before going to make plan:-
 Objectives and strategy
 Action plan
 resource required
 Results anticipated
By applying these techniques, company makes budget. In accordance to any business
organization, it is important to correct planning tools so that better results can be achieved. The
manager of the cited company is responsible for creating more opportunities that how a company
can attain its sustainability. In that context, operational budgets and cash flow budgets are used
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by the company in relation to minimize the cost and increase productivity in future. Sales
budgets are required to be implemented in forecasting future sustainability.
D3 How financial tools are used for evaluating financial problems:
There are so many financial tools which are used in order to evaluate financial problems.
Benchmarking, Key-performance indicator, financial governance, budgetary plans are used in
order to make identify and respond the financial problems. Under this, the company uses various
tools which are used by the firm (Fullerton, Kennedy and Widener, 2013). By applying these
tools company would able to identify any financial risk and also assist in responding them in
proper manner.
TASK 4
P5 How management accounting tools are used by the firm for responding financial problems:
There are so many tools which are used by the firm in order to have financial related
problems. The Unilever plc uses these tools in order to respond these problems with the help of
determining financial related problems by implementing benchmarking and budgetary targets,
key performance indicator and financial governance.
There are various points where benchmarking could fix complexity in the firm and this could be
implemented to protect and enhance the firm system (Figge and Hahn, 2013).
Budget plays a key imperative role in an firm, this could estimate and manage the financial
problems and this could fix targets and objectives for the firm to attain.
Financial governance: This means to entire responsibilities and procedures which are
being implemented for a sound running of of a firm. The company is required to adopt a skilled
management accountant who is required to have a sound communication skills, teamwork skills,
business knowledge in order to reslove the financial constraint at the time of arising.
Key performance indicators: This is the method which represents about whether the
firm objectives or not. Many of the firms use KPI in order to measure their success for attaining
firm's targets. This is implemented to eliminating financial problems and to assess their success
for attaining pre-set targets. With the help of SMART objectives in order to make their business
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in order to make their business objectives in an effective manner. By implementing KPI,
company is able to determine their firm objectives in order to identify their performance and
identify where the area where company is performing well and where it needs to improve their
performance. It can be implemented across the firm or divisions' to identify targets and
determine how best to cope up with its main operational practices to attain the optimum
outcomes (Contrafatto and Burns, 2013). KPI can also be implemented at the time of working
with outsider clients, when company incorporate a contract with one of their customers, the two
firms could agree on particular KPIs to track how to track prospering the agreement has been. By
using KPI, firm smart objectives is assessed in an effective manner.
SMART Tools:
Specific: The key requirement of implementing this tools is to eliminate fiscal problems with the
well specific set of objectives.
Measurable: The consequence of company execution could be receive with implementing
essential steps that are applied by the firm to standard its execution.
Attainable: The objectives that is fixed by the firm is designed in such a manner which would
attained at the time duration.
Realistic: The accessibility of resources under the organisation could be real and accurate.
Time- based: The execution of the firm can be find with the time and variation can be made
accordingly (Bodie, 2013).
Benchmarking: This is the positive tools that is implemented by the management for
attaining an specified standard outcomes. In this procedure, manger fix an example before
production team and then manufacturing is required to done. This assist in attaining desired
outcome in an effective manner. This assist in attaining the desired results with a least variation.
With the help of benchmarking, company is able to make comparison in an effective manner that
further assist in analysing the variations and address the find out the findings behind changes can
also be addressed effectively. Under this manner, accurate actions is required to taken in most
effective manner and also have the capability of an individual is required to taken under this
procedure that helps in attaining the sustainability.
M4 How management accounting can lead to attain sustainable development:
Keeping in mind the end goal to expand the execution of an undertaking, organization
can utilize various systems through which the coveted destinations can be accomplished. These
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methods will additionally help with dispensing with the circumstance of inaccessibility of
satisfactory assets, non satisfaction of targets and varieties in the yield created (Baldvinsdottir
and et. at., 2010). Through these strategies conceivable hazard can be distinguished through
which it turns out to be anything but difficult to give arrangements. Management accounting
tools can help the firm in order to have sustainability. Above mentioned tools are used by the
cited firm in order to make their business operations effective for getting sustainability.In
accordance to any business organization, it is important to correct planning tools so that better
results can be achieved. The manager of the cited company is responsible for creating more
opportunities that how a company can attain its sustainability. In that context, operational
budgets and cash flow budgets are used by the company in relation to minimize the cost and
increase productivity in future. Sales budgets are required to be implemented in forecasting
future sustainability. There are various financial issues which are arises in an organization. It can
increase the profitability and future stability of the company. Some of the financial tools are key
performance indicators which is used to analyse the financial performance of an individual and
company as well. Other one is benchmarking and financial governance which is used to solve
financial problems of a company.
CONCLUSION
From the previously mentioned report, this has been seen that the Unilever plc picks
different administration bookkeeping framework keeping in mind the end goal to make their
operations viably. Under this report, different administration frameworks are utilized and
administration bookkeeping detailing are in like manner executed with a specific end goal to acts
adequately so their pre-set destinations can accomplished. Under this report, different arranging
devices are additionally joined so as to make their business operations powerful and restrict
different spendings with the goal that their pre-set targets are achieved. Under this report,
different devices received for reviewing money related issues. These all are conceivable by doing
their business operations viably.
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REFERENCES
Books and Journals:
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