Management Accounting Project Report

The project report focuses on management accounting as a crucial aspect of organizational management, enabling companies to effectively manage their financial situations. Various accounting and reporting systems are explored, including costing methods that facilitate net profit calculation. Planning tools for budget control are also discussed, highlighting their potential for future enhancement.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1: Concept of management accounting and their essential requirement in an organization......3
P2: Various types of accounting reporting method......................................................................6
TASK 2............................................................................................................................................7
P3: Various types of costs that are used to calculate net income.................................................7
TASK 3..........................................................................................................................................10
P4: Various types of planning tools that are used to control budget..........................................10
TASK 4..........................................................................................................................................12
P5: Various ways to overcome all financial issues....................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is utmost crucial aspects that can assist an organization in order
to plan their operations in more reliable and accurate manner. This aim of managers is to make
continuous planning regarding regulation of financial transaction that is done within an
accounting year. This module used to target future goal and objectives which will be set by
Rowlinson knitwear after making all analysis regarding their overall business functions.
Accounting information is consider more crucial aspects for the investors and other shareholders
that are responsible for making valuable investment planning in their ongoing project (Klychova
and et. al., 2015).
The project report is all about various types accounting systems and reporting that are
needed for making crucial decision making in near future time. While all types of costing method
which are needed for calculating net profit for the company are discussed under this report.
Examine advantage and disadvantage of using planning tools that are needed to control budget
for the company. Lastly, comparison of various management accounting systems in respect to
overcome all financial issues that are arises in an organization is discussed under this report.
TASK 1
P1: Concept of management accounting and their essential requirement in an organization
In the present scenario, it has been determining that companies are producing maximum
number of products within an accounting period of time. During this process, they are incurring
various amount of transactions, whether related with financial or non-financial at the same point
of time. The role of managers is getting vaster as they have to make continuous planning for
recording all those transactions that are incurred in a single day. They are held responsible for
managing and controlling all vital aspects which are helpful for Rowlinson Knitwear company in
order to attain their future aims and objectives in more effective manner. Management
accounting plays a vital role in any business organization in current time and henceforth, they
can make sufficient decision making in context of future growth of the company (Klemstine and
Maher, 2014). It has been found that business in present time need to go with all kind of business
wants through analyzing overall performance information that are goes beyond using
management accounting system and other reporting methods those are valuable for the company
for the longer period of time. The role of management is to provide all necessary services and

standards those are crucial for an organization to increasing overall productivity of the
department. While accounting deal with recording, summering and analyzing all financial
information that are generated within a financial period of time. Mangers uses the provision of
accounting data in respect to make better inform themselves before they make any decision
within their organization. It is looks at those events that are going to be happen in and around a
business while considering the needs of enterprises. By using this, data and predication gets
emerged in proper manner.
Definition: Management accounting is the one of the systematic process of analyzing business
costs and data to formulate internal financial statements, records and account to assist managers
to make decision more effective (JOSHI and et. al., 2011). This will help them to attain their
aims and objectives in more crucial decision in coming future. In other words, this act of making
sense with financial and costing information for management officers can be more reflex to get
healthy return in near future period of time. There are certain important aspects which is needed
to be taken into account. Some of them are discussed underneath:
 For planning: It is an important part of planning which is needed for the future
estimation and budgeting process. It would make relevant contribution to the company’s
cash forecasting and long term financial planning.
 Controlling: On of the major role of financial managers is to gather all vital information
those are needed for planning. The management accounting system assist in setting
standard performance of Rowlinson with the actual outcomes and make analysis all those
variances out of them (Brewer, Sorensen and Stout, 2014).
 Decision making: The function of management accounting is to make valuable decision
in order to get reliable outcomes in coming period of time. These are capable enough to
make use of all resources those are crucial for the betterment of the company in near
future.
Types of management accounting system:
Cost accounting system: It is known as one of the effective system which is design by firm to
estimate the cost of their product for making profitability analysis, stock valuation and control all
those additions cost that are incurred by the company. The proper estimation of cost can be
major aspects for attaining profitable operations. It is mainly used by produrcers to record all

production related activities. The manager uses this system as internal reporting for an
organizations own management for making future decision.
Inventory management system: It is said to be one of the vital application uses by the company
in order to track stock level, orders and sales or deliveries detail. It can also be helpful in the
production units to formulate a work order, bill of goods and their manufacturing related
documents (Bennett, Schaltegger and Zvezdov, 2013). It uses to track all product through the
entire supply chain or portion of their business operation. There are certain aspects related with
this system are mentioned underneath:
 EOQ: It is known as a specific number of units that Rowlinson company used to include
to stock with each order to reduce the total cost of stock. Such as ordering cost, holding
and shortage cost. It seems to be one of the oldest method of scheduling model use by the
company’s
 ABC costing: It refers as accounting method that is used to categories cost to overhead
activities and assign those cost to products. All those cost such as staff salaries and other
vital expenses are few times hard to assign to a given product (Amoako, 2013).
Price optimization system: This happens to be the process of determine that pricing spot or
increasing cost against the customer perception to pay. It is mainly considering as mathematical
evaluation done by company to examine how customer would react to various prices for their
product and services from various channel. This is also used to analyses the prices that the
company used to consider will be more effectively assess them to attain maximum profit in
coming period of time.
Job costing system: It is simply used to accumulate cost at very minimum unit level. It is
appropriate system that is allotted to an individual product or group of product. Basically, the job
order costing is reliable to make use of only those products that are produces will be sufficiently
different from one another. There various techniques used in this process are batch costing,
process costing etc.
Benefits of using management accounting system: In order to attain more reliable profit in
coming period of time, managers need to make use of various accounting systems that are
profitable for the company. Looking into the facts, all the above mentioned accounting systems

are equally beneficial for an organization. Such as cost accounting systems is use by company to
control all additional costs that are incurred during production process. While, inventory
management systems are essential to manager and regulate their stock position in more effective
manner. Likewise, job costing and price optimization is more reliable for increase better
outcomes in coming period of time (Gond and et. al., 2012).
P2: Various types of accounting reporting method
Business reporting is one of the crucial reporting of operating and make financial data by
a business enterprises and regular provision of data to make appropriate decision making within
an organization to get more reliable outcomes near future time. By the help of report, a company
would be able to detect all essential aspects those are affecting the business can easily be
determining. It is considering more reliable aspect for investors to make proper analysis of
reports and financial position of the company. There are various sources from which data can be
collected those are considering for making future decision (Abdel-Kader, 2011). The reporting to
administration is a valuable process of providing data to various level of the department so as to
enable in budgeting the effectiveness of their role and responsibility centers and become a
valuable base for taking necessary steps in case any urgency arises in the department. It would be
well planned or organized so that better opportunities chances can be arises for the company for
longer period of time. All the reports prepared is for attaining more reliable outcomes in near
future. There are various sources of reporting systems which will be consider for analyzing
performance of the company. Some of them are discussed underneath:
Performance report: It is known as one of the effective report which is being prepared
for the determine overall aims and objective of actual and standard performance of an
organization. These are needed to be taken into account which will be essential enough to attain
more reliable outcomes in coming period of time. It consists of specific evaluation of
communicating project progress, disseminating project development and estimating future
progress of the management plan.
Investment management report: It is known as one of the vital report that is being
prepared for the purpose of managing and regulation which stocks that are being kept by the
company with them. There are various types of stock valuation methods which are needed to be

taken into account while analyzing the position of stock. All the opening and closing information
about the companies inventories are recorded into their respective statements.
Account receivable report: As per this particular report which is being prepared in
respect to determine total list of unpaid customers invoices and credit amount memo as per the
memo data. These are more reliable in respect to analyze total time period of retain all
outstanding amounts which are needed to collect from various debtors (Hiebl and et. al., 2015).
Job cost report: It seems to be more profitable for the company to make formulation this
reports which provide information about each individual products that are going to be prepare by
an organization during the period of time. All costs that are incurred during that period of time
are taken into account to make proper balances among each another cost that are incurred for
attaining operations gains for the company.
Analysis of various accounting reporting method:
All the above mentioned reports are equally responsible for attaining more benefits in
coming period of time. The role of accountant is to prepare report by taking information from
various departments that are operating in an organization for attaining future aims and objectives.
Performance report is prepared to analyze financial position of the company by using budgeted
and actual outcomes of the company. While account receivable report is formulate in order to
determine total outstanding amount that is collected from debtors. Job cost report is considered
for attaining maximum return from each job is examined effectively.
TASK 2
P3: Various types of costs that are used to calculate net income
Cost is considering one of the valuable aspects for the company. It is required for the
purpose of attaining future aims of the company that is charged for the production of product and
services. The manager of Rowlinson Knitwear need to make future planning for increasing
maximum sale for the company and increase profitability of the company. Costing is an essential
process which is being used to determine total cost is incurred during the process of producing
one additional unit. There are various types of direct costs which will be applicable during
production process. Such as direct cost of material, labor and other overhead costs that are
needed to be taken into account (Al and McLellan, 2011). It is more reliable process of

recording, categorizing, summering and evaluating total cost those are related with formulating
different course of action to manager all costs that are incurred within an accounting period of
time. The recording of every cost incurred in a business in the manner that can be used to
improve management systems of the company. There are various types of cost which are needed
to be taken into account for the purpose of calculating net incomes of the company. Some of
them are discussed underneath:
Absorption costing: It refers as all those cost which are incurred during with all
production cost that are use by manager. It consists of both variable and fixed cost in order to
calculate manufacturing of products. Because of this, it is known as full costing method. In spite
of having all the crucial benefits to an organization it is not taken into account for future decision
making.
Marginal costing: It is known as one of the effective costing methods which is being
used by an organization is order to determine all those costs which are incurred with the
production of one additional units (Laine, Paranko and Suomala, 2012). It used to consider only
variable cost and fixed cost generated during the manufacturing process gets written off. The
major benefits to this company is that managers used to consider this costing more effective in
terms of making decision making in coming period of time.
Comparison:
Marginal costing Absorption costing
It is consider as one of the effective decision
making tools which is used for ascertaining
cost of production.
Apportionment of cost in order to examine the
cost of good sold is termed as aborption
costing.
In this costing method, variable cost of product
is considered for calculating contribution per
units.
Under this both variable and fixed cost are
taken into accounts for evaluating gross profit
for the company.
In terms of calculation of net profit
classification of overhead cost can evaluated in
proper manner.
All production, administration and selling
expenses are taken into account.
Analysis of various management information techniques

There are various types of accounting techniques which are essential enough for attaining
more reliable outcomes in coming period of time. This will assist them to manage and regulate
all data or resources that are incurred within an accounting period of time. Marginal costing tools
are more accurately used to evaluate net income of the company. Standard costing techniques is
used to analyze actual performance that are related with financial stability of an organization
within financial period. All of these are more suitable enough to reach at their aims and
objectives those are set by the company for coming next year.
Computation of Net profit by using absorption costing Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500 8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Calculation through using Marginal costing Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500

Total Profit / Loss 7500
Interpretation of data collected from the income statements
There are mainly two important methods of costing selected for the purpose of
calculating net profit during an accounting period of time on the basis of collected information.
One is absorption and another one is marginal costing. The result is fluctuating for either of
them. In case company goes on to use absorption costing they are able to get 7500 of net income.
While in case they are using marginal costing they are getting 8000 of total gain. The major
fluctuation of determine because of fixed cost valuation. Instead of all the factors, manager needs
to select the one which is more profitable for longer period of time.
TASK 3
P4: Various types of planning tools that are used to control budget
Planning is an essential part of every business. It will assist an organization to attain their aim
and objectives in more reliable and effective manner. In this process, budget of the company
plays a vital role in regulating and controlling their cost and expense that are going to be incurred
in near future period (Klemstine and Maher, 2014). The effective procedure of planning events in
an organize manner so that they are effectively or happen on the decided timeframe. The main
objective of the company requires investment and planning, but it is possible that proper
arrangement of resources can be done in accurately. It is a kind of route map which is being used
to manage and plan their future activities through using certain tools and techniques.
Budget: It is known as one of the accurate financial plan which used for the period of time,
usually an accounting period of time. It can also consist of planned sales and earnings, cost and
expenses as well as cash flows. This seems to be estimation of profit and loss for a definite
period of time. It is an estimation of incomes for attaining overall growth for the company in
near future time. There are various planning tools which will be helpful to meet the goals,
managers that can develop plans like business plan or marketing planning. There are various
types of planning tools which will be effectively reliable for attaining more reliable results in
near future time. Some of them are discussed underneath:

Forecasting tools: These are known for historic data to determine the overall direction of
future trends. Business can make utilization of forecasting to estimate about total allocation of
their budget or plan for anticipating expenses for coming period of time. This would assist
management to cop up with the uncertainty of coming event and issues those are related with the
business.
 Advantage: A company like Rowlinson knitwear which is using a wide range of
forecasting techniques to assess best possible results for the company. These method is
being used by an individual that are depend on data those are present in an organization’s
 Disadvantage: The main limitation of using forecasting tools is that it is not eventually
possible to predict future. This can be happening because of qualitative nature of
estimation (Soin and Collier, 2013).
Scenario planning tools: As per this aim of planning tools is to generate forecasts based on
certain specific kind of situation. In accordance with Delphi and forecasting methods in which
outcomes is intended to be more likely. In this planning process they are having a low
probability of happening. It is the structure based for an organization to think regarding the
coming future. A team of executive sets out formulation plans about future issue that can be
arises in an organization.
 Advantage: They need to be able to formulate scenario for market to enable them to
consider their implication for future as it remains unfolds. It is considering as
fundamental exercise and crucial for management planning (Scenario Planning, 2018).
 Disadvantage: As it has been used for facing any kind of situation which are affecting
the decision making of the department. The main drawback of using this tool is that it
does not assist them to make proper planning.
Contingency plan: It is known as one of the crucial plan which is devised for results other
than the usual strategies. This seems to be often used for risk management. It is operating in that
condition in which any unconditional risk those are affecting the profitability position of the
company can be removing by following these planning tools.
 Advantages: This will provide all the limitation and formulating to deal with all things
that cannot be avoided. Such as natural disasters, terrorism and other events. All the

business risk those are affecting the productivity of the company can be remove by using
this kind of planning tools.
 Disadvantage: There are various kind of limitation of using contingency tools such as
inadequate literature available with the company. It is also more complex and hard for
empirical testing.
Analysis of various planning tools
There are various effective ways that can make company more profitable for longer
period of time. All the above mentioned planning tools are sufficient enough for controlling
various budgets that are being prepared by the company within an accounting period of time.
Forecasting tools is liable to make estimation or control additional cost those are going to be
incurred by the company during the time. While contingency tools are helpful for removing all
financial risks those are affecting overall business of the company. All of them are equally
profitable for Rowlinson Company to manage their internal and external department (Christ and
Burritt, 2013).
TASK 4
P5: Various ways to overcome all financial issues
Finance is seen as most indispensable aspect for company success because it act as a
lifeblood for overall organization as business activities are managed with the use of funds. In
fact, selected firm is adopting modern method of managing all the business activities for
resolving the problem in suitable manner. However, it has been assessed that while managing
financial activities managers are encountering numerous of major issues and problems due to
which profit of an association is getting affected. Some of the major financial issue that is
identified is discussed as follows:-
Inappropriate cash inflow:- According to this element an organization is facing a major
problem of funds and issues at workplace while flowing the cash while entering into contracts.
Sometime, cash get increased and decreased due to fluctuation in several other factors. As a
result company is encountering major issue of capital and not able to perform any business
activities (Wickramasinghe and Alawattage, 2012).

 Quality of products and services:- As per this element if an enterprise is facing an
obstacle of goods quality then it might create problem by increasing the funds of
manufacturing department. As requirement of additional expense is getting requisite as
company get failed in fulfilling the client’s needs and demands.
Hence, all these above three financial problem is affecting an organization in various
manner but at the same time company is having number of factors that helps in overcoming this
problems in a defined time frame. Some of the major factor that is used by company for reducing
financial issue is discussed as follows:-
 Benchmarking:- It’s all about the company needs to set an organizational target for
assisting all the company members towards their job role as well as enforce staff
members to gain maximum benefits. Additionally, it aids in directing staff towards set
targets in a defined time frame.
 KPI: - It stands for key performance indicators which will be consider for analyzing
performance of the company by using past and present year finance data.
Comparison
Rowlinson Knitwear Zylla company
As this company is operating at very small
scale so they need to face various financial
issues those are affecting their operating profit.
While this organization is operating at large
level they need do various transactions in a
single day time.
To deal with all kind of financial issues they
need to make use of key performance
indicators.
With the help of financial governance that
consists of internal and external audit can help
them to resolve financial issues of the
company.
Critical analysis of financial problems
It has been determine that there are various aspects which will be affecting the growth
and stability of the company. Some of the financial issues those are related with cash flow of the
company, product and service quality that are related with financial position. These are helpful
for an organization to completive with all other competitors those are operating their business at
large scale.

Analysis of financial issues
There are various important aspects those are affecting overall growth and sustainability
within an organization. There are various financial tools that can help the company to overcome
financial issues those are arises in an organization. Some of them are key performance indicators,
benchmarking and financial governance that are more reliable for future enhancement.
CONCLUSION
From this particular project report, it has been concluded that management accounting is
an essential part of an organization which will be helpful for the company to manage their
financial situations which are arises in the department. For this purpose, various accounting and
reporting systems is being taken into account those are discussed in the above. With the help of
costing methods a company would be able to calculate net profit for the company. In order to
control their budgets some planning tools will be more desirable in coming time. All analysis is
done to attain more reliable outcomes for the company in near future.

REFERENCES
Books and Journals:
Abdel-Kader, M. G. ed., 2011. Review of management accounting research. Springer.
Al, S.F.A. and McLellan, J. D., 2011. Management Accounting Practices in Egypt--A
Transitional Economy Country. Journal of Accounting, Business & Management. 18(2).
Amoako, G.K., 2013. Accounting practices of SMEs: A case study of Kumasi Metropolis in
Ghana. International Journal of Business and Management. 8(24). p.73.
Bennett, M.D., Schaltegger, S. and Zvezdov, D., 2013. Exploring corporate practices in
management accounting for sustainability (pp. 1-56). London: ICAEW.
Brewer, P. C., Sorensen, J. E. and Stout, D. E., 2014. The future of accounting education:
Addressing the competency crisis. Strategic Finance. 96(2). pp.29-38.
Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of
contingent variables for adoption. Journal of Cleaner Production. 41. pp.163-173.
Gond, J.P., and et. al., 2012. Configuring management control systems: Theorizing the
integration of strategy and sustainability. Management Accounting Research. 23(3).
pp.205-223.
Hiebl, M.R., and et. al., 2015. Family Influence and Management Accounting
Usage. Schmalenbach Business Review. 67(3). pp.368-404.
JOSHI, P.L. and et. al., 2011. Diffusion of management accounting practices in gulf cooperation
council countries. Accounting Perspectives. 10(1). pp.23-53.
Klemstine, C. F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A
Review and Annotated Bibliography. Routledge.
Klemstine, C.F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A
Review and Annotated Bibliography. Routledge. Parker, L.D., 2012. Qualitative
management accounting research: Assessing deliverables and relevance. Critical
perspectives on accounting. 23(1). pp.54-70.
Klychova, G.S and et. al., 2015. Management aspects of production cost accounting in horse
breeding. Asian Social Science. 11(11). p.308.
Laine, T., Paranko, J. and Suomala, P., 2012. Management accounting roles in supporting
servitisation: implications for decision making at multiple levels. Managing Service
Quality: An International Journal. 22(3). pp.212-232.
Soin, K. and Collier, P., 2013. Risk and risk management in management accounting and
control.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Online

Scenario Planning. 2018.[Online] Avaliable through: <
https://sloanreview.mit.edu/article/scenario-planning-a-tool-for-strategic-thinking/>.