Management Accounting and Planning Tools for Synergy Manufacturing Co. Ltd.

This report analyzes the use of management accounting systems and reports, calculation of costs, advantages and disadvantages of planning tools, and a comparison of organizations for Synergy Manufacturing Co. Ltd. It includes a detailed explanation of different management accounting systems and reports, such as cost accounting system, inventory management system, job costing system, and price optimization system. The report also discusses the advantages and disadvantages of planning tools, including cash budget, production budget, and master budget. Additionally, it compares the financial problems faced by Synergy Manufacturing Co. Ltd. with other organizations.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management Accounting Systems........................................................................................1
P2: Management Accounting Reports.........................................................................................3
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
TASK 3............................................................................................................................................6
P4: Advantages and Disadvantages of Planning Tools...............................................................6
TASK 4............................................................................................................................................7
P5: Comparison of organizations.................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management Accounting refers to the use of the different types of methods and
techniques through which the organizations can ensure that they are able to take the appropriate
decisions in quite a proper and appropriate manner. Therefore, it becomes crucial and important
that the use of Management Accounting must be made in a right way (Ciambotti and et.al.,
2020). For this report, Synergy Manufacturing Co. Ltd. has been selected. It is a manufacturing
company which provides a wide variety of products to the different types of customers and
clients to satisfy their wide range of needs and requirements. In this report, there will be a
specific and detailed analysis on the use of Management Accounting for the particular purpose of
attainment of the necessary goals and objectives.
TASK 1
P1: Management Accounting Systems
Management Accounting refers to the use of the methods and techniques through which
the organizations are able to take the appropriate decisions which will benefit them a lot in
managing their funds in a proper manner (Golyagina and Valuckas, 2020). Synergy
Manufacturing Co. Ltd. can make its use for the particular purpose of ensuring an enhancement
in the overall level of efficiency and effectiveness. This will be quite useful for it in managing its
funds properly.
There are different types of Management Accounting Systems which can be used within
the organizations. An explanation of these systems can be made as follows-
Cost Accounting System- It is a system through which the assessment of the costs can
be carried out in detail. Therefore, it is necessary for the organizations that they are able to make
its right use (Hadid and Al-Sayed, 2021). Synergy Manufacturing Co. Ltd. can use it
appropriately for the purpose of assessing the overall level of costs in quite an appropriate
manner.
Essential requirements-
 In this system the assessment of the costs should be ensured so that the different types of
costs can be identified quite clearly which will therefore help a lot in taking the necessary
actions regarding the reduction of these costs.
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 In this system the use of different types of methods and techniques should be made so
that the identification of the overheads of the departments of the organization can be
carried out so that the right actions can be taken in order to ensure their reduction.
Inventory Management System- It is a system in which the detailed assessment of the level of
inventory in the organizations can be carried out (Jin, 2021). Therefore, for an organization like
Synergy Manufacturing Co. Ltd. It is important that this system should be used for the particular
purpose of keeping a better track record of the inventory items in the organization.
Essential requirements-
 It is a system in which the identification of the different types of inventory items can be
done so that the necessary actions can be taken regarding managing these inventory items
quite effectively and efficiently.
 In this system, the track record of the inventory items can be kept in such a way so that
the management of the specific needs and requirements can be done in quite a proper and
right manner.
Job Costing System- It is a system through which the proper and detailed assessment of the
different types of job costs can be carried out which will therefore be quite helpful for the
purpose of ensuring that the track record of the job orders can be kept in a right way quite
effectively and efficiently (Johnstone, 2020). In Synergy Manufacturing Co. Ltd. It will be useful
in managing the job orders quite appropriately.
Essential requirements-
 In this system, the identification of the way in which the management of the job orders
can be done should be done. This will lead towards ensuring a proper management of the
job orders.
 This system is useful for the particular purpose of the identification of the way in which
the tracking of the job orders can be carried out so that the excessive job costs can be
assessed and the right actions can be taken to reduce them.
Price Optimization System- It is a system through which the identification of the prices to be
set should be done through the use of mathematical and statistical models and techniques in quite
an appropriate manner (Kapiyangoda and Gooneratne, 2021). In the context of Synergy
Manufacturing Co. Ltd. It should be used for the particular purpose of management of the prices
quite effectively and efficiently.
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Essential requirements-
 In this system, the identification of the way in which the prices are required to be set
should be done so that the management of the needs and requirements can be done.
 This system is helpful in ensuring that the identification of the different types of methods
and techniques through which optimization of profits is done is carried out which will
help in ensuring an enhancement in the overall level of profits.
P2: Management Accounting Reports
Management Accounting Reports are those reports through which the Analysis and
Interpretation can be carried out in detail which will therefore be quite helpful in deriving of
conclusions and recommendations (Kontsevoy and et.al., 2020). Therefore, it is necessary for the
managers of Synergy Manufacturing Co. Ltd. That it makes the use of these reports quite
appropriately and properly.
The Management Accounting Reports which can be used by Synergy Manufacturing Co.
Ltd. are explained as follows-
Budget Reports- In these reports, a detailed and proper assessment of the different types
of Budgets is made so that the conclusions and recommendations can be derived quite effectively
and efficiently (Kreilkamp, Schmidt and Wöhrmann, 2020). Through making the use of Synergy
Manufacturing Co. Ltd. That it makes the use of these reports so that the attainment of the future
goals and objectives can be done in a right way.
Accounts Receivable Ageing Reports- These reports are useful because through making
their detailed use a thorough track record of the Accounts Receivables in the organization can be
kept (Krishnan, 2020). For Synergy Manufacturing Co. Ltd. It is essential that their use should
be made so that the conclusions and recommendations which are useful can be derived in a
proper and right manner.
Departmental Reports- In these reports, a detailed and thorough assessment of the
different types of departments within an organization can be done. In Synergy Manufacturing
Co. Ltd. It is quite important that the proper use of these reports can be made so that the
conclusions and recommendations can be derived. This will be helpful in bringing an
improvement in the overall level of performance in quite a proper and appropriate manner.
Performance Reports- In these reports, a proper and thorough assessment of the level of
performance can be carried out. Thus, in this way it can be ensured that the deviations and
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variations in the level of performance can be identified and the necessary actions can be taken to
bring an improvement in the performance level in a proper and appropriate manner. For an
organization like Synergy Manufacturing Co. Ltd. It is important that the right use of these
reports can be made in order to bring an improvement in the overall level of performance in quite
a proper and appropriate manner. Therefore, the managers of the organization should be able to
make a proper and appropriate use of these particular reports.
TASK 2
P3: Calculation of costs
It is important that the detailed assessment of the costs can be done within the
organizations for the particular purpose of ensuring an attainment of the necessary goals and
objectives (Ostaev and et.al., 2020). For this purpose, Marginal Costing and Absorption Costing
techniques can be used. The explanation of the use of these techniques can be done in the
following manner-
Marginal Costing-
It is a costing technique through which the variable cost can be charged to the units of
cost whereas the fixed cost can be written off against the contribution. Therefore, for Synergy
Manufacturing Co. Ltd. This is a very useful technique through which the level of profitability
can be determined.
Advantages-
 Through the use of this particular technique, the different types of decisions can be taken
in a proper way by the managers which will be particularly quite helpful for ensuring that
the conclusions and recommendations can be derived.
 In this technique, stock of finished goods and work-in-progress are valued at marginal
cost which is uniform in nature.
Disadvantages-
 Segregation of costs here involves technical difficulty and therefore creates a particular
level of impact on the different types of organizations.
 Pricing decisions cannot be made only on the basis of Contribution which therefore
creates an impact on the organizations.
Absorption Costing-
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It is a technique through which the link between the production costs to the cost unit can be done
so as to calculate a full cost per unit of inventories. Therefore, it is important that the use of this
technique can be made in a right way for the attainment of the goals and objectives in a proper
manner. In Synergy Manufacturing Co. Ltd., it is an useful technique which cab be used for the
purpose of attainment of the goals and objectives in the future.
Advantages-
 Through making the use of this technique the importance of fixed manufacturing costs in
product cost determination can be identified.
 Through the use of this technique the managers can become more responsible for costs
& services which are provided to their centres.
Disadvantages-
 This technique is not useful for the purpose of managerial decisions which can therefore
create a particular level of impact on the company.
 The validity of product costs under this technique is dependent upon the correct
apportionment of overhead costs.
Absorption cost per unit-
Particulars Product A Product B
Sales revenue 828000 480000
Variable cost (423200) (211200)
Contribution 404800 268800
Fixed cost (264000) (264000)
Net profit 140800 4800
Income statement using
marginal costing
Particulars Quarter 2 (GBP)
Sales revenue 828000 480000
Variable manufacturing cost (423200) (211200)
Contribution 404800 268800
Less- fixed cost (276000) (128000)
Net profit 128800 140800
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TASK 3
P4: Advantages and Disadvantages of Planning Tools
A Budget refers to the statement in which the overall estimation of the receipts and
expenditures can be made so that the right decisions can be taken in the future. For the managers
of Synergy Manufacturing Co. Ltd. It is therefore useful so that the decisions can be taken by it
in quite a proper and appropriate manner.
There are different types of Budgets which can be used by the company for the purpose
of taking of important decisions. These Budgets are explained as follows-
Cash Budget-
A Cash Budget is an estimate of the overall cash receipts and expenditures over a certain
period of time. Synergy Manufacturing Co. Ltd. should make sure that it can be used for the
particular purpose of taking of decisions which are related with liquidity of a particular
organization.
Advantages-
 The use of this budget is quite helpful for the purpose of determining whether too much
cash is being retained and can be used in productive activities.
 Through making the use of this budget the optimal utilization of cash can be carried out.
This can be quite helpful for the different types of companies.
Disadvantages-
 These budgets can be manipulated which can therefore create a particular level of impact
on the different types of organizations.
 In these budgets there is reliance on the use of estimates. Therefore this can create a
particular level of impact on the organizations.
Production Budget-
A Production Budget is a Budget in which an overall estimation of the different types of
units to be produced during a particular time period can be made which will be quite useful for
the organizations to take important decisions (Sari and et.al., 2020). In this way, it is useful for
Synergy Manufacturing Co. Ltd.
Advantages-
 Through the use of this Budget better coordination between the various functional units
can be established.
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 By using this Budget the maximization of profits can be carried out which will be highly
important for the organizations.
Disadvantages-
 In this budget, it is not possible to estimate accurately which can therefore create an
impact on the organizations.
 There are various factors which can create an impact on this Budget and therefore affect
the organizations.
Master Budget-
It is a Budget which includes all the lower-level budgets within the organization.
Therefore, for an organization like Synergy Manufacturing Co. Ltd. It is quite useful and should
be used properly and appropriately for the purpose of taking of the important decisions in the
future.
Advantages-
 Through the use of Master Budget the idea about financial status of a company can be
established.
 Master Budget can be used for the particular purpose of providing a clear sense of
direction and approach.
Disadvantages-
 The Master Budget cannot be changed over a course of time. Therefore, this creates a
particular level of impact on the organizations.
 It involves a holistic approach and therefore this makes figuring out the mistakes and
errors a hard task.
TASK 4
P5: Comparison of organizations
Financial Problem- This refers to the situation where an organization is impacted due to
the lack of presence of the funds for the particular purpose of management of operations in a
proper and detailed manner. Synergy Manufacturing Co. Ltd. Is also impacted by the financial
problems just like other organizations. These financial problems are explained as follows-
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 Excessive costs- In the organization there is an impact which is created by the excessive
costs. Therefore, for Synergy Manufacturing Co. Ltd. It can create a particular level of
impact and therefore can affect its level of operations.
 Mismanagement of the inventory items- In the company, the tracking of the stock
items is not being done appropriately. For Synergy Manufacturing Co. Ltd. It can
therefore create a particular level of impact.
The use of the following techniques can be made for solving financial problems-
 KPIs- These are the Key Performance Indicators. Through making their use an
organization like Synergy Manufacturing Co. Ltd. Can solve the problem of Excessive
costs and therefore this will be quite helpful for the organization.
 Benchmarking- It is a technique through which the various types of Benchmarks and
Standards can be set (Taschner and Charifzadeh, 2020). Synergy Manufacturing Co. Ltd.
Can make sure that through making its use the problem of inventory can be solved.
Comparison of organizations
Basis Tesco Sainsbury's
Financial Problem In the company the job orders
are not being managed in a
proper manner and therefore
this is leading towards increase
in the overall job costs.
In the company the prices are
not being set properly and
therefore this is creating an
impact on the overall level of
profits.
Management Accounting
System Used
Job Costing System Price Optimization System
Application of the System Through making the use of this
system the job orders can be
managed in a proper manner.
Through making the use of this
system the prices can be set
quite properly for the purpose
of maximization of profits in a
proper manner.
From the above discussion, it can be concluded that learning from the examples of Tesco
and Sainsbury's, the managers of Synergy Manufacturing Co. Ltd. can learn the right way of
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solving the financial problems in quite a proper and appropriate manner. Through making the use
of Cost Accounting System, the problem of costs can be solved and Through the use of
Inventory Management System the problem of inventory can be solved. Thus, in this way it can
be stated that the appropriate steps can be taken so that the financial problems are solved in a
proper way.
CONCLUSION
From the above report, it can be concluded that Management Accounting refers to the use
of the different types of methods and techniques through which the attainment of the goals and
objectives can be done in a right way. It is important because through making its use a proper
and detailed analysis and interpretation can be done in a right way. This will be useful in the
deriving of conclusions and recommendations. Therefore, it can be stated that it is quite
important that it should be used so that the enhancement in the efficiency and effectiveness level
can be done through making its use.
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REFERENCES
Books and Journals:
Ciambotti, M. and et.al., 2020. Factors promoting and hindering the adoption of management
accounting tools: evidence from Italian manufacturing SMEs. Factors promoting and
hindering the adoption of management accounting tools: evidence from Italian
manufacturing SMEs. pp.19-38.
Golyagina, A. and Valuckas, D., 2020. Boundary-work in management accounting: The case of
hybrid professionalism. The British Accounting Review. 52(2). p.100841.
Hadid, W. and Al-Sayed, M., 2021. Management accountants and strategic management
accounting: The role of organizational culture and information systems. Management
Accounting Research. 50. p.100725.
Jin, H., 2021. The Cultivation Research of Management Accounting Talents in Universities
Under the Background of Artificial Intelligence. In 2020 International Conference on
Data Processing Techniques and Applications for Cyber-Physical Systems (pp. 131-
137). Springer, Singapore.
Johnstone, L., 2020. A systematic analysis of environmental management systems in SMEs:
Possible research directions from a management accounting and control stance. Journal
of Cleaner Production. 244. p.118802.
Kapiyangoda, K. and Gooneratne, T., 2021. Management accounting research in family
businesses: a review of the status quo and future agenda. Journal of Accounting &
Organizational Change.
Kontsevoy, G. R. and et.al., 2020. Management accounting of agricultural production: improving
planning and standardization of costs in the management information system. Amazonia
Investiga. 9(27). pp.284-293.
Kreilkamp, N., Schmidt, M. and Wöhrmann, A., 2020. Debiasing as a powerful management
accounting tool? Evidence from German firms. Journal of Accounting &
Organizational Change.
Krishnan, R., 2020. Across the Great Divide: Bridging the Gap between Economics-and
Sociology-Based Research on Management Accounting. Journal of Management
Accounting Research. 32(2). pp.21-25.
Ostaev, G. Y. and et.al., 2020. Accounting agricultural business from scratch: management
accounting, decision making, analysis and monitoring of business processes. Amazonia
Investiga. 9(27). pp.319-332.
Sari, R. N. and et.al., 2020. Effect of environmental management accounting practices on
organizational performance: role of process innovation as a mediating variable.
Business Process Management Journal.
Taschner, A. and Charifzadeh, M., 2020. Management accounting in supply chains–what we
know and what we teach. Journal of Accounting & Organizational Change.
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