Management Accounting Report

This report provides a comprehensive analysis of management accounting, covering its definition, essential requirements, reporting methods, cost evaluation techniques, planning tools, and its role in addressing financial problems. It uses Zylla Company as a case study to illustrate these concepts and provides a detailed understanding of management accounting practices.

MANAGEMENT ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and essential requirement of different type of management
accounting system.......................................................................................................................1
P2 Diverse methods used for management accounting reporting...............................................3
M1 Benefits of management accounting.....................................................................................5
D1 Evaluate how management accounting is system is integrated with accounting reporting. .6
TASK 2............................................................................................................................................6
P3 Evaluation of cost using appropriate techniques of cost analysis to prepare income
statement.....................................................................................................................................6
M2 Range of management accounting techniques and prepare accurate financial report..........8
D2 Financial reports which are applied and interpret data and activities...................................8
TASK 3............................................................................................................................................8
P4 Advantages and disadvantages of various type of planning tools used in budgeting control8
M3 use of various kind of planning tools and application for making and forecasting budgets 9
D3 How planning tools for accounting respond appropriately solve financial issues and
problems....................................................................................................................................10
TASK 4..........................................................................................................................................10
P5 How associations are implementing management accounting system to respond financial
problems....................................................................................................................................10
M4 How responding financial problems lead an organisation towards sustainable success ...11
CONLUSION................................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Accounting process which is undertaken by associations and organisations to manage and
control the operations and functions are considered as a management accounting. As per
changing business requirements and needs the concept of management accounting also has been
changed in organisational context (Lavia, López and Hiebl, 2014). Management accounting is
also known as managerial accounting. This remain the part of internal control and management
that is the reason this is used at managerial level. Management accounting assist the
organisational structure not only inner way but also on external way. Being a part of
management decisions and decision making process management accounting contains large
share in operational management in organisation.
This report defined the concept of management accounting and also highlight the
essential requirement of management accounting system in organisational context. Management
accounting reporting methods also elaborated in this report to manage the management
accounting reports. Cost accounting methods related to evaluate the profit also defined in this
context. Planning tools which are used to assist the budgetary control process also defined in this
context. Modes are found in which organisations are adapting management accounting system to
respond financial problems. Zyalla company is taken organisation to elaborate the concept of
management accounting.
TASK 1
P1 Management accounting and essential requirement of different type of management
accounting system
Management accounting
Management accounting is considered as an assumption, process, concept of managing
the operations and management subject to record the information which are related to
management and senior management level. There is a particular formate and structure is made in
terms of managing the financial resources and the operating the financial resources for better
execution management accounting is adopted by organisation. This contains overall process of
evaluation of business problems, analysing the management issues, critical measurement of
business strategies and plans (Kotas, 2014). With the help of management accounting system
managers be able to summarise the information and details in single format so that business
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issues and problems be able to sort out easily. There are type of management accounting systems
are used in business context to summarise the information and data for better management and
operations of business.
Corporate accounts information, reports, management accountants and working with
selected organisations and other subsidiary operations easily be managed with the help of
management accounting system. This mainly associated with analysing the profitability and
income with the help of creating plans and objectivity.
Job costing system: this accounting system mainly help to centralise the type of jobs and
the sections in single for better execution of task and projects. This is the accounting system
helps to consolidate the details and information form different sections and groups in one format
and helps to manage the individual groups and sections. It summarise the overall cost of
individual departments and cost sections subject to evaluate profitability form each section. It
effect the price of particular figures and information for each department and section. This is the
only system which helps to understand the departmental cost as operational and departmental
cost for particular job centre (Kober, Subraamanniam and Watson, 2012).
Price optimising system: this is the system which assist managers and accountants to
consolidate the price and value of products and services. Price of per product is evaluated on the
basis of summarising the overall manufacturing cost. There is a mathematical analysis done in
terms of price of different products and the prices which remain associated with analysing the
profitability of organisation and recording the price by considering the all relevant aspect in
organisational context. Comprise the cost and maximise the profitability is the main objective of
price optimisation system. This accounting sustem is mainly used by the organisations which
deals in multiple products in which price and cost remain bifurcated in separate parts.
MIS system: this management accounting system is also considered as a management
information system which helps to determine the cost of operations and management in
summarised and consolidating the accounting and information in single format. This is one of the
essential aspect in terms of managing the information related to system based accounting and
management. There is a particular format and structure designed under this management
accounting system. With the helps of software programs and applications the process of
designing the plans and strategies become more fluent and easy in organisational context.
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Inventory management system: this is the system which helps to manage the flow of
inventories and manage the order of inventories in organisational context. All the relevant
information and details remain associated with analysing the requirement of inventories and
managing the demand of raw material. ABC inventory management, EOQ (Economic order
Quantity) and material management are the essential inventory management systems which are
used to control and manage the flow of inventories with in the organisation (Hilton and Platt,
2013).
Cost accounting system: this is the accounting system which helps to analyse the cost of
manufacturing process or production process. This is mainly associated with analysing and
comprising the cost of manufactured products and services in organisational context. Cost
accounting is the only accounting system with the help of managers and accountants be able to
analyse the cost of operations and management be able to utilised in more better manner. It
contains type of methods and techniques to consolidate the information related to cost and cost
reports in single format to reduce the cost and analyse the comprised tasks in single format.
P2 Diverse methods used for management accounting reporting
Reporting is a key aspect in organisational context subject to analyse the information and
creating the challenges regarding the financial problems and the management challenges.
Management accounting reports contains the summarised information and data related to
management decisions and the strategies which are made for boosting the structure of business
and the operations at next level. These reports are also called as managerial accounting reports as
emphasising the cost of operations and the management in terms of deriving the applications and
related to defining the objectives and the strategies. These reports are mainly helps to prepare
strategies and plans for better execution and assistance of management and functions. At
management level these reports not only used for framing the plans but also used to keep the
records and analyse the financial challenges related to decisions and making plans for measuring
performance.
This is by all accounts most extreme critical viewpoint which incorporates gathering and
dispensing of information amid a bookkeeping time frame (Van der Stede, 2011). In each
business association, regardless of whether related generation of retail segments need culminate
bookkeeping detailing frameworks. This can helps chiefs to record all urgent data that are
profitable for settling on choice more viable in coming time. Based on different reports that are
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set up in Zylla Company, they can figure out how to record information according to their date of
event (Van der Meer-Kooistra and Vosselman, 2012). By the usage of revealing framework
would have wide number of points of interest to an association, for example, making
arrangements for future administration, designation of assets, assessment of worker execution
and to settle on change in up and coming basic leadership at inside level. There are different
kinds of bookkeeping detailing frameworks are accessible with Zylla Company. Out of which
some are examine as follows:
Job cost report: there are some reports associated This sort of report created by
bookkeeping supervisors. This will increase sufficient measure of assets to an association.
According to this report, comprises of particular information about aggregate costs Zylla
Company is causing amid the generation of specific items. These are the reports which basically
helps to determine the cost and of each departments. These reports presents a summary report
which contains the total cost represent a particular job and section. It mainly associated with
analysing the profitability and consistency of networks and management tools. More over the
information and details also remains apart form the job cost reports.
Operational budget reports: These reports give finish state of any pivotal basic
leadership so as to achieve most extreme increases amid the time. Such sort of report is set up by
an association to make investigation of all cost and costs that are acquire by the organization
amid the particular duration. This report likewise comprises of significant strategy for planning
spending plans with the goal that association can't get any decrease of capital amid the time.
These reports contains the information related how to expense and income form operating
functions utilised during the year. Moreover the information which remains related to exploring
the operations are also considered in these reports.
Performance reports: these are the reports which are used to measure and analyse the
performance of organisation. By the assistance of this report, appropriate coordination between
different elements of the division can be breaking down more adequately. According to this
specific report which depends on recording of organizations' execution about their general
budgetary circumstances (Suomala and Lyly-Yrjänäinen, 2012). It is essential part of
administrator to ensure that each data specified in the report must be precise and solid. In large
organisation some departments are made through which organisations functions and operations
managed in effective manner. Classification of management accounting techniques also based
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upon the effective management and operations. These reports consolidate overall performance
report form departments and sections and calculate average performance of organisation. This
can be breaking down by utilizing real or standard information which is being bring about amid
the time.
Inventory management reports: According to the Zylla organization, they can get more
significant results in not so distant future just in that condition, on the off chance that they are
having appropriate control of aggregate stocks that are being stayed with by the. There are
different apparatuses and systems which would be useful for an association to control stock.
Some of them are stock turnover proportion, EOQ and ABC costing. This report used to record
all information in regards to opening and shutting stock stay with by in their stockrooms.
Account receivable report: This sort of report is useful to an association to give
administration to settle on significant choice with respect to making alteration about the
recuperation of sums from the indebted individuals. Subsequently, these kinds of report are
planned to get instalment from the gatherings amid the time. As per this specific report, chiefs
would effectively ready to comprehend add up to arrangements of unpaid clients solicitations of
different account holders. These reports mainly used to compress the average collection process
which also measured the position of debtors. With the help of account receivable reports
managers and accountants be able to determine the credit limit for debtors (Soin and Collier,
2013).
M1 Benefits of management accounting
Role of management accounting and systems has been crucial in organisational context in
terms of assisting the management functions and the operations. As it is described that form
decision making perspective and forecasting process management accounting is widely used in
organisations. This is a part of internal control and management which helps to manage the
orders and instructions in general business context (Shields, 2015). This need to distinguish
appropriation of administration bookkeeping hones, hold benefit and make greatest accentuation
on future targets. As indicated by the previously mentioned bookkeeping frameworks, it has been
seen that Zylla Company must be turned out to be more compelling in the event that they use to
embrace bookkeeping framework in more viable way.
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D1 Evaluate how management accounting is system is integrated with accounting reporting
It is very important for every business organisations and associations to track the
information and data for more effective control and operation. Management reporting provides a
tool to track all the information and data which are produced under management accounting
system. The essential part of directors is to make utilization of best options that are connected
with the organization (Renz and Herman, 2016). While, value streamlining is a fundamental
frameworks to investigate general impression of clients with respect to costs of items that are set
by the organization. According to the specified reports, for example, execution report which is
more solid in investigation general execution of Zylla organization amid a bookkeeping time
frame. More over the information and details are appropriately addressed in report format. With
the utilization of cost bookkeeping framework every important datum in regards to expenses and
costs ought to be investigate all the more successfully.
TASK 2
P3 Evaluation of cost using appropriate techniques of cost analysis to prepare income statement
The expenses can be classifying into different parts either straightforwardly or in a
roundabout way. Each cost is having particular relationship among each other. It support
underway of successful items and administrations to separate clients. This is by all accounts most
extreme vital perspectives for achieving want results by utilizing more solid costs. Cost is
anything that is connected with the creation of item and conveyance administrations to an
association. It is financial valuation of endeavours, crude material and utility that are basic for
the development of an association. As it is said to be estimation of cash which will be paid by the
organization for getting something. It is a fundamental piece of an association which is use in
assembling process by the organization. Costing is said to be a basic procedure of cost
administration in an association with utilizing particular apparatuses and strategies. It comprises
of each one of those variable costs that are useful for increment benefit of an association. There
are different sorts of costing techniques which are use as essential apparatuses to figure net
benefit of an association. Some of them are examine underneath:
Marginal costing: this is one of the management accounting system which helps to
analyse the cost of production and manufactured goods and services (Wickramasinghe and
Alawattage, 2012). There are type of strategies and plans and made with the help of this
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management accounting technique. Marginal costing basically helps to consolidate the important
information related to subject to cost of production and operation. This is the cost technique in
which the variable cost is charged in proportionate in production units and fixed cost are charged
in the basic of periodic basis or written off in full against the aggregate. This costing techniques
also helps in decision making process subject to analyse the possible outcomes in terms of
managing the operations and manufacturing cost.
Calculation through marginal costing using
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Contribution 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Absorption costing: this costing techniques basically helps to demonstrate the costing
structure of organisation in terms of units produced during the year. According to this particular
costing method which is applicable to all manufacturing costs (Absorption costing, 2012.). Cost
of finished units and inventories contains the cost of direct material, direct labour, material
variance and fixed manufacturing overheads. This is the main aspect in terms of managing the
cost of production and manufacturing in organisational context.
Computation of Net profit by using absorption costing
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
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Gross profit 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Comparison:
Absorption costing Marginal costing
Under this specific costs, directors use to
consider both variable and settled costs.
In this, lone variable expenses are taken for
the count of commitment per unit.
The fundamental thought process behind
utilizing this expenses is to dissect per unit
cost on add up to venture done by the
organization amid the time.
Under this, per unit costs are assessed by
utilizing general effects which are seen over
additional units creation done by
organization.
M2 Range of management accounting techniques and prepare accurate financial report
Types of management accounting techniques used to prepare financial reports. As there
are two costing methods are defined above in terms of preparing income statement and analyse
the profitability of organisation (Parker, 2012). By the assistance of minimal costing more
dependable outcomes can be achieve in light of the fact that it think about just factor costs.
Standard costing is a critical apparatus that aids improvement of an association. Apart form it job
costing and batch costing techniques are the main elements which are used to make financial
reports. For this reason certain sort of bookkeeping instruments are additionally useful to decide
net benefit an organization is creating amid the time.
D2 Financial reports which are applied and interpret data and activities
There are type of financial reports are produced in terms of understand the financial
reports in more effective and easy manner. Interpretation and description helps to analyse the and
understand the main aspects of management techniques which remain associated with
management reporting (Merchant, 2012). It has been discovered that outcomes are unique in
relation to both of the techniques. As per above profit statement statement profit form marginal
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costing was measured as £7800 and £7500 by the absorption costing. From the above table,
retention is more exact and giving more positive outcomes as far as benefit. In this way, it will be
more solid for the organization.
TASK 3
P4 Advantages and disadvantages of various type of planning tools used in budgeting control
Planning tools are analysed in terms of forecasting the future plans and strategies are
analysed in this context. There are different arranging apparatuses that are useful for an
association to deal with their execution and future expenses and costs. In any benefit intention
business, it is important to have appropriate arranging which will be useful to create more
positive outcomes in coming time with the utilization of assets in more viable way. Some of
them are talk about underneath:
Contingency planning tool: This strategy is more important in the event that issue is
harder to director. This is by all accounts one of the essential devices which are use by chiefs to
outline successful destinations keeping in mind the end goal to create firms in any basic
circumstances. In this organization use to make earlier intending to control their up and coming
ramifications that can influence execution of an association.
 Advantage: In that specific circumstance it will work all the more viably. This arranging
instrument is more precise and dependable for little and medium size association since
they tasks are very little and odds of oversights can be high as well.
 Disadvantage: In some sort of circumstance, it doesn't take as more solid as a result of
their mind boggling and dynamic nature.
Forecasting tools: By the utilization of these specific instruments Zylla Company can
have the capacity to appraise add up to procuring and misfortunes done by the organization and
measures to control them. This is by all accounts one of the more compelling devices which are
powerful in future arranging of an association assets.
 Advantage: By the assistance of this, directors can without much of a stretch have the
capacity to appraise future expenses and costs. This is taken into accounts as most
extreme critical systems for the organizations to assess pre-decide general vision of an
association.
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 Disadvantage: As it is observed that future are unpredicted so the shot of oversights can
be more in some sort of circumstances.
M3 use of various kind of planning tools and application for making and forecasting budgets
Forecasting is a process of evaluating the essential aspect in terms of managing the
financial accounting in terms of deriving the strategies and plans in sustainable development and
success of organisation (Lee, 2012). There are different sorts of instruments, for example,
determining devices which is in charge of expanding general benefit through controlling
expenses and costs for the organization. Planning tools support the budgetary control process
and reduce the burden of analysing and evaluating the future circumstances. In agreement to
expand general profitability for an association, chiefs need to make utilization of arranging
devices in more successfully. Another is situation instruments which are useful for the
organization in any sort of circumstance to control hazards in more compelling way.
D3 How planning tools for accounting respond appropriately solve financial issues and problems
Financial issues as managing the financial challenges in organisational context. There are
type of strategies and plans are made in order to manage the flow of order of resources for better
understanding and elaboration (Bromwich and Scapens, 2016). These are connected with the
organization specifically or by implication to control gigantic ramifications on general profitable
of an association. These are should have been resolve by utilizing key execution markers and
benchmarking apparatuses. Forecasting and planning mainly helps to make the assumptions and
aspects in reality. In each business there are sure sorts of issues that are connected with an
association.
TASK 4
P5 How associations are implementing management accounting system to respond financial
problems
Managing the financial resources and handling the rosk of finance are the main motive of
organisations. Organisations are adapting management accounting systems to respond financial
problems and the challenges. With the changing business environment and changing trends there
are type of financial challenges faced by organisations. It has been seen that in each association
different sort of issues are emerges those are connected either with back or non-fund. Every one
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of these issues are full of feeling general productivity of an association. Some of them are
specified as follows:
 Profit level issue: If the organization is missing behind of money deficiency they can't
have the capacity to create more benefit amid the time.
 Product and quality issues: This must decide by absence of budgetary backings. There
are sure angles those are connected with quality and administrations gave to client are not
viable.
In setting to expel these issues, administrator needs to make utilization of specific
instruments that are useful in expanding profitability and proficiency at a similar purpose of
time. Some of them are:
Financial governance: These sorts of apparatuses are made based on decide and
directions that are made by government to manage business in more compelling way (Banerjee,
2012).
KPI (Key Performance Indicators): According to these specific devices, each one of
those issues related with budgetary solidness of the organization can without much of a stretch
be settled.
Comparison of two companies
Zylla company Sainsbury
Zyalla is one of the small business
enterprise in which lots of financial
transactions and the challenges occured
during the year.
This is one of the largest retail industry
which is operating large market chain.
Stock control and valuation is one of teh
main challenge which was faced by
organisation in this context.
M4 How responding financial problems lead an organisation towards sustainable success
This is by all accounts more essential parts of bookkeeping information by which
administrators that would get the chance to decide imperative data about aggregate deals profit,
debt claim and all payables done amid the time. By managing the financial challenges and
problems an organisation be able to manage the operations of business in more effective and
efficient way (Bagautdinova, Kundakchyan and Malakhov, 2013). This can be higher, if certain
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measure can't be contemplated. This can be resolve by utilizing different budgetary apparatuses,
for example, KPI, Benchmarking and operational spending procedures. This not only align the
overall functions in the direction of common goal but also assist to attain core competence within
organisational context.
CONLUSION
This report defines the overall concept of management accounting and manage the flow
of operations and management in well organised manner. This is one of the essential aspect in
order to attain desired aim of business. Meaning of management accounting and types of
management accounting systems are defined in this context. There is a relation between
management accounting system and management accounting reporting defined in this context.
Costing techniques to measures profit and loss are also defined in this report for better
understanding. Use of planning tools for better forecasting and analysing the risk illustrated in
this context. Role of management accounting in terms of handling the financial problems and
issues also described in this report.
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REFERENCES
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enterprises: current knowledge and avenues for further research. Journal of
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Kotas, R., 2014. Management accounting for hotels and restaurants. Routledge.
Kober, R., Subraamanniam, T. and Watson, J., 2012. The impact of total quality management
adoption on small and medium enterprises’ financial performance. Accounting &
Finance. 52(2). pp.421-438.
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Van der Stede, W.A., 2011. Management accounting research in the wake of the crisis: some
reflections. European Accounting Review. 20(4). pp.605-623.
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and the practical relevance of management accounting knowledge. Qualitative Research
in Accounting & Management. 9(3). pp.245-264.
Suomala, P. and Lyly-Yrjänäinen, J., 2012. Management accounting research in practice:
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Soin, K. and Collier, P., 2013. Risk and risk management in management accounting and
control.
Shields, M. D., 2015. Established management accounting knowledge. Journal of Management
Accounting Research. 27(1). pp.123-132.
Renz, D. O. and Herman, R. D. Eds., 2016. The Jossey-Bass handbook of nonprofit leadership
and management. John Wiley & Sons.
Parker, L.D., 2012. Qualitative management accounting research: Assessing deliverables and
relevance. Critical perspectives on accounting. 23(1). pp.54-70.
Merchant, K. A., 2012. Making management accounting research more useful. Pacific
Accounting Review. 24(3). pp.334-356.
Lee, B., 2012. New public management, accounting, regulators and moral panics. International
Journal of Public Sector Management. 25(3). pp.192-202.
Bromwich, M. and Scapens, R. W., 2016. Management accounting research: 25 years
on. Management Accounting Research. 31. pp.1-9.
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt. Ltd..
Bagautdinova, N., Kundakchyan, R. and Malakhov, V., 2013. Development of management
system of manufacturing companies on the basis of management accounting elements.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
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