Management Accounting Assignment : Unilever
Added on 2020-10-05
16 Pages4811 Words157 Views
Business DevelopmentFinanceLeadership Management
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Management Accounting
Introduction:Considering the concerns of business accounting is a crucial term directly related toproduct development and profitability. There are two broad categories of accounting and they aremanagerial accounting and financial accounting. The financial accounting manages the externalfactors for the organizations including the stakeholders and investors while the managerialaccounting deals with the internal factors of the organization. Moreover, managerial accountingevaluates and identify processes required for the internal system of the organizations. So, themost important tools for this accounting system include budgets, different performance reportslike ROI, sales analysis etc. In this paper, the organization Unilever is selected to discuss themanagerial accounting systems, cost determination process, planning tools as well as theresponses to the financial problems by the tools. The first section explains different types ofaccounting systems while the second section applies management accounting techniques for thecost analysis of Unilever. Again, the third section explains the planning tools for budgetarycontrol while the fourth section compares Unilever with Nestle in terms of responses to thefinancial problems.1. Understanding management accounting systems:Company Background:According to the annual report of Unilever is one of the most popular consumer goods companywho is dealing with 400 brands in 190 countries. The market statistics confirms that "every day2.5 billion people" use Unilever products and the major household brands (included) are "Lipton, Knorr, Dove, Axe, Hellmann's and Omo". Apart from including 13 of the 50 worldleading brands the company also has "13 billion Euro brands". The business portfolio isspecialized to use local brand per consumer preference and geographical locations. As anexample, Pureit and Suave in India and USA have a high grip on the local markets and theoverall market position provides 58% of the annual turnover covering all the emerging markets.According to the recent reports the company works in four business categories. They are"personal care, foods, home care, and refreshments". The latest business plan in 2017 hascombined the food and refreshment categories and also intended to expand the business.Moreover, the global value chain of the company works with 161,000 global population and thecode "policies support" the business standard (Unilever.com, 2017). With 70% local market
leadership teams in 90 countries the company are focused on the consumer relevant innovation.The organizational structure is changed with the implementation of "change 4 growth"framework which provides a faster and simpler business structure. The key purpose of thecompany is to serve " a sustainable living commonplace" where sustainable living plan (USLP)has low-cost waste, product and packaging policies. The organisation identify managementissues in inventory management system is re order level, re order quantity and managementsystem must integrated with suppliers system to ensure for smooth running. For solving thisissue proper apply inventory management system in effective way and track all records onvarious level of production. Different types of management accounting:With time the different types of management accounting have been evolved and thechanges, in this case, were observed since the early 1980s. In this context, it is significant thatinnovative accounting techniques like "activity-based management, strategic managementaccounting or balanced scorecard" are somehow compatible with the changing technologicalfactors. These comparatively new accounting types are highly supportive of the moderntechnologies and new management processes. As an example, the new business cases todayrequires quality management with just-in-time productions where activity-based managementcan be an efficient influencer. However, there are arguments that the whole process ofmanagement accounting including planning, control, communication, and decisions haschanged with these new processes into an overall resource based value creation process whichis way complicated than the previous roles of simple cost determination and financial controls.Moreover, all the accounting techniques have specific requirements and they are given below.Prize optimization system: This is a formal mathematical model to identify demand variation with different pricelevels. The inputs are collected from cost and input levels and MA can use different types of POmodels. As an example, a/b testing experiments with different price structures using trial & errormethod while analytics work with historical data. Again, yield management is based onindividual transactions.Cost accounting system A cost accounting system is a procedure of preparation and controlling production cost inmanufacturing. This system mainly prepared for manufactures to track their routine activities of
inventory. It helps to managers to take effective decision regarding to cost of business and thissystem is applied on evey kind of business. In this system including fixed cost and variable costbecause these cost are relaed to different level of production. Inventory management system Inventory management system is used to track goods with the help of supply chain or theportion of it a business operates in. The system covers different aspects such as production toretail, warehousing to shipping and all movements between stock and parts. A system isidentifying every inventory item and its related to information like as barcode label and tags ofassets. The system of inventory management is keep a detailed record of products that is enteredin company and leaves a warehouse. Management accounting reports Apart from the processes, there are different methods used for management accountingreporting and they are discussed below - Budget report: This report helps both managers and companies to understand the performance andrequirements of cost control. The budget estimation for a financial period depends on thehistorical data (actual expenses) of the previous financial periods. Moreover, the managers usethe same to determine incentives, financial goals for the future and to negotiate terms withsuppliers. Accounts receivable aging: This is a cash flow management tool in terms of customer credit extension phases. Thecustomer balances are broken into separate columns per time and ownership and the analysisdetermines issues in the resource and other collection processes. It can also identify the numberof customers still remained unpaid in terms of balances which means the credit policies can beimproved by the tool. Moreover, it can settle the old debt and equity issues too (Bobryshev, A.N. And et. al, 2015).Inventory & Manufacturing report: This report will focus on the inventory because the report used by the manufacturingdepartment for budgeted production units. The report track to material and keep detailed relatedto used material, wasted material and normal loss or not. The report helps to management tounderstand fluctuations of costs and planned pricing strategegy according to report.
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