Management Accounting: Principles, Techniques, and Applications

This comprehensive report delves into the fundamental principles of management accounting, exploring its role in decision-making, planning, and control within organizations. It examines various management accounting systems, including cost accounting, inventory management, and job costing, and analyzes their benefits and applications. The report also discusses different types of budgets, pricing strategies, and the significance of financial governance in preventing financial problems. Furthermore, it explores the use of planning tools like SWOT analysis and PEST analysis for preparing and forecasting budgets. The report concludes by evaluating how management accounting can contribute to sustainable success by addressing financial challenges and optimizing organizational performance.

Management Accounting
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Contents
Introduction.................................................................................................................................................5
TASK 1.......................................................................................................................................................6
1.1 Define and explain management accounting.....................................................................................6
1.2 What is management accounting system and why it is important to integrate it within the
organisation.............................................................................................................................................7
1.3 Distinguishing Management Accounting from Financial Accounting...............................................8
1.4 Define and explain different types of management accounting systems and their benefits within the
organisation.............................................................................................................................................9
1.5 Explain the different types of management accounting reports and methods used for reporting.....10
1.6 Discuss why the information needs to be accurate and understandable to the user..........................10
1.7 Evaluate the benefits of management accounting systems and their application in the organisation
context. (M1).........................................................................................................................................12
1.8 Critically evaluate how management accounting systems and management accounting reporting is
integrated within the organizational processes. Provide justifications to your proposed methods and
benefits in the organizational context. (D1)...........................................................................................13
TASK 2.....................................................................................................................................................14
2.1 What is the meant by cost? Explain different types of cost and cost analysis?................................14
2.2 define following terms with their explanation:................................................................................15
2.3 income statement with the helps of marginal and absorption costing..............................................17
2.4 What is the minimum number of unit that Zak needs to sell per year for X products? Use formula
product?.................................................................................................................................................19
2.5 Prepare a flexible budget.................................................................................................................19
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2.6 Prepare a financial reporting document...........................................................................................20
2.7 produce financial report that apply and interpret the range of business activities............................20
Task 3........................................................................................................................................................21
Introduction...........................................................................................................................................21
3.1 What are budgets and how are they prepared. (P4)..........................................................................22
3.2 Discuss different types of Budget....................................................................................................24
3.3 Discuss different pricing strategies and how do competitors determine their price.........................25
3.4 What is meant by supply and demand consideration and how does demand and supply affect
pricing...................................................................................................................................................26
3.5 How does cost system differ depending upon the cost activity........................................................27
3.6 How SWOT analysis improve financial position of organization....................................................28
3.7 Analyze the use of different planning tools for preparing and forecasting budget (M3)..................29
Conclusion.............................................................................................................................................30
TASK 4.....................................................................................................................................................31
4.1 Identify financial problems using indicators such as:......................................................................31
4.2 Define financial governance and how these are used to prevent the financial problems. How do we
use it to monitor strategy.......................................................................................................................32
4.3 Discuss characteristics of effective management accountant and how these are used to solve
problems................................................................................................................................................33
4.4 Discuss the significance of developing strategies which requires effective and timely reporting....34
4.5 Analyze how in respond to financial problem management accounting can solve lead to sustainable
success (M4)..........................................................................................................................................35
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4.6 Evaluate how planning tools for accounting respond to solve financial problem to attain the
sustainable success. (D3).......................................................................................................................36
Conclusion.................................................................................................................................................37
References.................................................................................................................................................38
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Introduction
The report deals with the explanation of management accounting with that how it is different
from financial accounting is also highlighted. With this the use of management accounting in
Zak Limited is explained which helps them in management accounting reporting. The analysis of
variance is also done so that the performance can be evaluated. Budgets are also highlighted and
the merits and demerits of those are also explained. The ways in with the management
accounting can solve the financial problem to attain the sustainable success is also highlighted.
The planning tools used for planning and controlling budget are also depicted.
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TASK 1
1.1 Define and explain management accounting.
Definition of management accounting: It is a managerial process which involves planning,
identifying, controlling, measuring and communicating of information of the organisation.
Management accounting helps in decision making, formulation of plans and other things.
Further it helps to achieve its goals as the focus is on making of cash flows, budget planning,
financial statements (Johansson, et. al., 2012). On the other hand it truly differs from the
financial planning as it focuses on only organisation financial strategies.
It helps the firm to restructure its plans and actions with the management accounting techniques
which helps a company to gain the competitive edge. In all it is the internal focus on organisation
development through accounting techniques and tools like ABC model, ERM management
(Johansson, et. al., 2012).
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1.2 What is management accounting system and why it is important to integrate it within
the organisation.
Management accounting system involved the formulation of plans preparation of reports,
financial statements, cash flow statement, balance sheets and other agendas which help managers
to achieve organisation goals by quick and accurate decision making.
It also includes managerial accounting reports like financial reports, cash flow pro forma and
everything making of financial items (Johansson, et. al., 2012).
It is important to integrate within the organisation to improve decision making of managers,
helping in the issues like mergers, takeovers and acquisition. The management accounting is
helping to analyze about the future outcomes of risk, measuring of our results which
management tools (Johansson, et. al., 2012). In overall it helps us to pursue the goals of
organisation with the financial information and the statistical information provided by the
financial accounts.
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1.3 Distinguishing Management Accounting from Financial Accounting.
Particulars’ Management Accounting Financial Accounting
Meaning It is process of planning,
analysing, execution of
everything in organisation
context (Richardson, 2017).
It is calculated formula to
maintain financial records of
company
Focus Internal focus External focus
Consumption of time It is more time consuming
(Dälken, 2014)
Less time consuming
Benefits Helps to improve decision
making
Helps to maintain the
financial data (Richardson,
2017).
Time bound More futuristic Depends on historic data
Goal Made to achieve
organizational goal
(Richardson, 2017).
Financial goal of company
only
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1.4 Define and explain different types of management accounting systems and their benefits
within the organisation
1.4.1 Cost accounting systems.
It is also called as costing system used by firms to know the cost of the product for the stock
valuation and profitability analysis. Estimated cost is monitored by the actual cost.
Normal costing: used to measure manufactured products (Johansson, et. al., 2012).
Actual costing: it involves recording of product cost.
Standard costing: it involves substitution of estimated and actual cost.
1.4.2 Inventory management systems
This system helps in managing the inventory from factory place till the goods are delivered to the
distribution place to the customers. In short it’s the whole management of inventory at it each
stage of product. It includes keeping a month to month record of inventory. This can be done by
using a ERP system (Johansson, et. al., 2012).
Valuation of inventory can be done by methods:
FIFO: “first in first out” means goods added first to the inventory are assumed to be the first
goods.
LIFO: “last in, First out” means goods added last in the category are assumed to be the first
goods.
Average: It’s a rarely used method with less accuracy.
1.4.3 Job costing systems
Job costing or the job order costing is the method of assigning a manufacturing cost to each
product manufactured in a company, this method is used by a company when the companies
product is slightly different from each other (Modell, 2012).
Job costing method uses some information for its use like:
1. Direct materials 2. Direct Labour: 3. Overheads
1.4.4 Price optimizing systems
This system is used by the company to know which price should be used to gain maximum
profits or using a pricing strategy to determine how customers will respond.
It is used of historical cost past data and other figures (Johansson, et. al., 2012).
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1.5 Explain the different types of management accounting reports and methods used for
reporting.
Managerial accounting reports like:
1. Financial Reports: it consists of making of profit and loss statement, balance sheet (GÜREL
and TAT, 2017).
2. Pro Forma Cash Flow: It gives a month to month summary of inflow and outflow of cash
from the business operations.
3. Sales reports: Tool as it shows the profits on sale and let us know the revenue generation in
terms of the company expenses (GÜREL and TAT, 2017).
4. Item cost reports: it helps us to make you more accurate knowing of your expenditures in
terms of direct labor, material and overheads expenses.
Methods used in reporting:
Cost reports: reports made for identifying cost of business.
Budgets: a futuristic plan made for an organisation.
Execution reports: a report which is made directly to be executed and has everything within it
(Gomes and Romão, 2017).
Image: Types of reports
Source: By Author, 2018
1.6 Discuss why the information needs to be accurate and understandable to the user.
Financial information are the final records of the business organisation, it is presented accurately
because they reveal the true value of company (GÜREL and TAT, 2017). Goodwill of company
depends on net worth, so it should be shown correctly to the public. As well as the public are the
investors so they need accuracy in financial terms.
10
CostreportsBudgets

Financial statements, balance sheet, profit &loss do reveal company true position. Like showing
of contingent liabilities at the foot note of balance sheet needs to disclosed as it gives true
information of company policies to the public (GÜREL and TAT, 2017).
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1.7 Evaluate the benefits of management accounting systems and their application in the
organisation context. (M1)
It helps in better decision making as making of reports and accounts, better controlling which
improves the efficiency of the organisation (GÜREL and TAT, 2017). It helps in better
management so that it serves customer satisfaction. It provides motivation to employers and
better flow of communication among the employees (Modell, 2012).
Benefits of management accounting in the context of Zak Ltd it provides better flow of
communication between the employees, it’s a manufacturing company which needs coordination
and utilization of units which now is happening with it (GÜREL and TAT, 2017).
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1.8 Critically evaluate how management accounting systems and management accounting
reporting is integrated within the organizational processes. Provide justifications to your
proposed methods and benefits in the organizational context. (D1)
Both are correlated with each other as management systems include the overall process of
making of financial records and annual statement (GÜREL and TAT, 2017). Whereas the
management accounting reporting includes making of management reports as sales reports, cash
flow reports etc. Both are correlated in each term.
It is integrated through well developed tools and techniques and for that C.A and practitioners
are appointed.
Use of ABC model ERM management tools as well as other costing methods this methods can
help the Zak ltd to overcome its issues. This method is economical, more utilisation and yields
better results (GÜREL and TAT, 2017).
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TASK 2
2.1 What is the meant by cost? Explain different types of cost and cost analysis?
Cost:
Cost can be referred to the monetary expenditure by which firm can incur in order to purchase or hire all
those factors which are necessary to the production and management. It is determined as expense of
purchasing, investing and hiring factors and different services for production and managerial activities.
Cost analysis:
Types of cost:
1. Fixed cost: fixed cost can be defined as fixed inputs managed in production of products. These costs
cannot varies changes with the fluctuation occurred in volume of production.
2. Variable cost: it is the cost in which variable inputs can be used in the production level. These costs are
able to vary with the changes in the production level (Laudon
&Laudon, 2016)
3. Semi-variable cost: semi-variable cost is those cost which are the mixture of fixed and variable cost.
Such kinds of cost cannot be affected directly with the changes in the level of production. For instance;
administration cost, selling and distribution cost etc.
4. Total cost: total cost is related to the aggregate of production cost. It is defined by summing up all fixed
and variable cost of production.
5. Marginal cost: it refers to the cost which is related to the production of additional units of the product.
MC= TCN –TCN-1
On the basis of expense:
1. Material cost: such kinds of costs are directly related to the production and cost of procurement which
is utilised in the raw material for production.
2. Labour Cost: such kinds of costs are related to the payment made to the permanents and temporary
purposes. It is meant to be and directly related to payment provided to labour as wages and remunerations
etc.
3. Overhead cost: such cost is those costs which are likely to be semi-variable cost and vary with the level
of production units for instance; administration expense, selling expense and distribution expense etc.
Other cost:
1. Sunk cost: sunk costs are referred to the costs which are not be altered by the fluctuation in current
state of business and in activity.
2. Opportunity cost: these kinds of costs are taken as foregone opportunity or nest best alternative actions
which can be sacrificed in subject to pursue the alternative actions.
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2.2 define following terms with their explanation:
1. Cost volume profit: Cost-Volume-Profit analysis (CVP) analysis can be taken as managerial
accounting technique which is concerned with the influences of sales volume and production costs in the
basis of operating profit in the business. It deals with the management and how all operating profit can be
affected by changes in variable costs, fixed and semi variable costs while setting prices and management
criteria.
It follows following assumptions:
1. All costs are categorised as variable and fixed expense.
2. Sales price per unit, variable cost p.u. and total fixed cost are defined are constant.
3. All units are determined as to be sold.
CVP analysis formula:
PX = vx + FC+ Profit
2. Flexible budgeting: flexible budgeting are the method which are made to flex and adjust all changes in
the volume of production activity, it is more sophisticated in nature while measuring volume of
production.
3. Cost variances: it is amount or a value of money which is actually spent on such project related to
production. It is the budgeted cost of work performed subtracted form the actual cost of work performed.
4. Absorption and marginal accounting: marginal costing technique differentiates between fixed and
variable cost. Only variable costs in ascertained while making or valuating cost. Absorption costing are
those costing techniques, in which all production costs are equally determined including both variable
plus fixed cost while make valuation of closing stock for absorption method.
5. Normal and standard costing:
Normal costing: it is adopted as usual accounting costing technique of production in which while
evaluating manufactured costs with actual production costs.
Standards costing: in the standards costing, all costs of production are determined on the basis of setting
standard and expected costs based on predetermined manufacturing overheads.
6. Activity based costing: ABC costing is the costing which are used to determine production and actual
level of inventory. It is management tools which are used to determine and set cost of production based
on level or activity (Mussati, et .al.,2018).
7. Overhead cost: Overhead cost is referred to other operating and factory costs and expense which are
related to such expense associated with running activity in the business. Such kinds of activities cannot be
related to running production or service.
8. Cost allocation method:cost allocation can be defined as cost researching assignment. It is a concept of
finding cost of different objects such as projects, department, units and branches etc. cost allocation is
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allocating activity which defined different methods of rendering services and helps to categorise business
cost and profit.
9. Role of costing in setting prices:
Costing is the process of determining expense and accuracy process of profit and revenue; it is based on
cost based analysis which is allowed the company to setting prices through sales and production
department. It reduces all costs and additional wastage to increase profit after setting profitable prices.
10. Inventory cost and their different types:
Inventory cost can be classified into three parts, first is raw material, semi-finished costs and finished
costs depending on business activities and process, companies use to adopt different inventory cost
techniques in their management (Dale and Plunkett, 2017)
Inventory cost is those cost which are regulatory performed to measure inventory expense
Types:
1. Inventory holding cost: it is the cost which is incurred while storing various inventory and stock of
products in company’s warehouses. Invoice, bills, warehouses duties are known as inventory holding
costs (Lomas, et. al., 2018).
2. Processing costs: Processing costs are those costs which are used or performed while working on
inventory at the time of production or when it is ready to sale. It is the costs which are regulatory related
to various procedure or steps at workplace.
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2.3 income statement with the helps of marginal and absorption costing:
Absorption costing:
17

Marginal costing:
18

2.4 What is the minimum number of unit that Zak needs to sell per year for X products?
Use formula product?
Solution:
2.5 Prepare a flexible budget:
19

2.6 Prepare a financial reporting document:
Management accounting techniques can be used for better accounting and financial decision in the
company. Company can utilize such method as costing methodologies and for the long term analysis of
business projects so that accuracy and flexibility of decision can be measured through management
accounting systems, costing techniques such as variable costing, marginal costing, variance analysis and
cost analysis are such types of management techniques which allows the company to support and regulate
financial threats and prepare financial report more accurate and exact to achieve long term objectives.
2.7 produce financial report that apply and interpret the range of business activities:
Financial report:
Management accounting techniques and accounting systems are these systems which are used in
observing, designing, implementing and executing financial plans to get long term achievements in the
business. It helps in managing financial plans effectively and regulates budget and sale forecasting
decision by controlling budget and make financial decision. Variance analysis is the analysis which helps
in controlling and management of financial decision. It helps the management to achieve business
financial and non-financial objectives in order to reduce cost and increase productivity and efficiency in
the business (Cooper, 2017)
20

Task 3
Introduction
This part of the report deals with explanation of different types of budget and their advantages as
well as disadvantages. With that it also explains the use of various planning tools which are used for
planning and controlling the budget.
21

3.1 What are budgets and how are they prepared. (P4)
Budget is the statement which shows estimation of the revenues and expenses for the future
period of time. It includes the plans which are related to the cost, sales volume, revenue,
quantities of resources and assets (GÜREL and TAT, 2017).
Advantages:
The advantage of the budget is that it will help in focusing for the long term objectives of the
business by controlling the cost and increasing revenues (GÜREL and TAT, 2017).
Disadvantage:
The main disadvantage is that the future is uncertain and the budgets are prepared by forecasting
the future (Gupta, 2013).
The budget preparation involves specified steps which are:
Image: Steps for budget preparation
Source: By Author, 2018
Obtaining Estimates: At this stage the estimation of expected cost, sales and production level
are done. With this estimation of the future cost and the revenues which may impact the business
are also considered (Gupta, 2013).
Coordinating Estimates: The plans which are submitted by the organizational units are
evaluated. This evaluation is done so as to utilize the resources accordingly.
22
ObtainingEstimatesCoordinatingEstimatesCommunicatingBudgetImplementationReportingProgressTowardsBudgetObjectives

Communicating Budget: Once the estimates are coordinated then the budget is communicated
to various departments. At this stage the managers of the organization can modify the plan
according to the availability of resources (Gupta, 2013).
Implementation: The final budget is presented to all the managers and the plan is adopted for
the current accounting period.
Reporting Progress: The performance reports are prepared so that the performance of the report
can be evaluated according to the determined plan. If there are any variances then it requires the
need for the revision of plan.
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3.2 Discuss different types of Budget.
Operating Budget: The operating budget helps in analysis of projected income and expenses
over the period of time (Shpak, 2018). These budgets are created on weekly, quarterly and the
monthly basis. The managers of the organization can compare on the monthly basis about the
suppliers of company.
Advantages: The advantage of the operating budget is that it helps in managing the current
expenses as it helps in evaluating the areas where the considerable savings can benefit the total
budget of the organization.
Disadvantages: The projections which are done for the long term can lead to the shortage of
funds so as to meet the financial obligations (Shpak, 2018).
Capital Budgeting: These are the planning process which is used to determine whether the
organizations for the long term investment are worth for the funding or not of the capitalization
structure.
Advantages:
 It helps the organization for taking the long term strategic decisions.
 It also offers the control over expenditure for the projects (Shpak, 2018).
Disadvantages:
 These budgeting are for the long term decisions which are irreversible in nature.
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3.3 Discuss different pricing strategies and how do competitors determine their price.
Pricing for market Penetration: The market penetration is the strategy in the market for
offering the goods and services at lower price. This strategy is adopted in the initial stage so that
the market share can be captured and the customers can be attracted.
Advantages: This strategy will help in increasing the growth of the business at the initial stage
as the better prices will be offered than the competitors.
Disadvantages: As the company has the various product lines so the penetration strategy might
be harmful for the degrading the company image (Wise GEEK, 2018).
Price skimming: It is the strategy for setting the price at high rate during the initial stage. The
main motive of this strategy is just to capture the market share and increase profits.
Advantages: The main advantage is that through this strategy the business can attain the profits
at the introductory stage before dropping the price to attract more of the customers (Shpak,
2018).
Disadvantages: It cannot be applied to those countries where there are strict rights regarding
legal and government regulations.
The competitors set their prices according to the pricing strategy of the organization who is the
competitor. If the price of organization’s products and services are high so the competitor will
keep low price and vice versa (Wise GEEK, 2018). But in some cases the price of goods and
services can also be kept equal to the competitor’s price.
25

3.4 What is meant by supply and demand consideration and how does demand and supply
affect pricing.
The supply and demand are the major factor in determining the market place. The supply of
goods helps in determining the price of the goods and services (Market Business, 2018). Another
factor is the demand which means the willingness and the ability of the customer to purchase
goods and services. If the demand for the product will be low so its supply will also decrease and
if the demand for product is high then the supply will also increase. So, the demand and supply
are inversely related to each other (Market Business, 2018).
Image: Supply and Demand
Source: Market Business, 2018
The demand and supply affects pricing as when the demand rises the supply falls and the prices
of the products and services rises whereas the price falls when the demand falls and the supply
rises (Wise GEEK, 2018).
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3.5 How does cost system differ depending upon the cost activity.
Job Costing: it is system which tracks the cost and revenues of the particular job. The advantage
is that the cost can be estimated of the job according to the past records of the job costing (Albu
Consulting, 2017). With this it also has disadvantages as the comparison is difficult during
inflation.
Process Costing: It ascertains the cost of product at each stage of the production process
(Dulčić, et. al., 2012). The main advantage of process costing is that it is easier to use when the
homogeneous costing products are compared. There are production cost errors which is the
major disadvantage (Wise GEEK, 2018).
Batch Costing: It assigns the cost to the particular batch. Through this the cost can be reduced of
production arised out of batch quantity. These systems are costly to use.
Contract Costing: These costs are assigned for the contract basis. The advantage of this costing
is that the delay for the work is reduced and the disadvantage is the contractors have to pay for
all the inefficiencies.
27

3.6 How SWOT analysis improve financial position of organization.
The SWOT analysis improves the financial performance in the following ways:
Strategies: The organization can prepare the strategies accordingly once the weakness of the
organization will be determined (Albu Consulting, 2017).
Clear View: The SWOT analysis gives the clear view to the organization about the strength,
weaknesses, and opportunities and threats so that the organization can predict its overall
performance in the competitive market (Albu Consulting, 2017).
Improves operations: The operations of the organization can be improved by looking forward
for the opportunities and the weaknesses of business.
28

3.7 Analyze the use of different planning tools for preparing and forecasting budget (M3).
PEST Analysis: The PEST analysis is done to determine the position of the company in the
external market. Here the PEST stands for political, economical, social and technological factors
(Gupta, 2013).
SWOT Analysis: This is the analysis which is done to determine the internal ability of the
organization to compete with the external environment. It identifies the area of improvement so
that the profits can be increased (Albu Consulting, 2017).
Balance Score Card: It defines the objectives that can be considered by the organization so as to
increase the position of the organization. It also provides the measures for improvements.
Porter’s Five Forces: It is the tool which helps in identifying those forces which may impact the
profitability of the organization (Gupta, 2013).
29

Conclusion
It can be concluded that budgets help the organization in determining the future. The planning
tools of the organization help in analyzing the financial position of the organization. Supply and
demand both are useful for evaluating the price of product.
30

TASK 4
4.1 Identify financial problems using indicators such as:
4.1.1 Benchmark: The benchmark means that the particular standards are set by the
organization from which the comparison is done and the financial performance of the
organization is evaluated. It also shows the reasons for the variance in the revenues and the cost
(Richardson, 2017).
4.1.2 Key Performance Indicator: It is the indicator to recognize that the organization is going
according to the accounting standards or not. These are the indicators through which weaknesses
can be evaluated. The KPI’s are both financial as well as non financial (Albu Consulting, 2017).
4.1.3 Budgetary targets to identify variances: These are the targets which are set by the
organization to evaluate the performances on the timely basis (Richardson, 2017). The managers
of the organizations evaluate the performances and calculate variances so that the accountability
can be maintained within the organization.
31

4.2 Define financial governance and how these are used to prevent the financial problems.
How do we use it to monitor strategy.
The financial governance can be described as the set or rules which are set within the
organization so that the financial processes can be ensured (Lunkes, et. al., 2013). These will
help in preventing from the financial problems as it will help the managers of the organization
for taking the decisions according to the rules. The internal and the external auditing are done to
ensure the control in the organization. The auditing committee is set so that the performance of
the organization can be evaluated (Richardson, 2017).
They helps in monitoring the strategy as the budgetary reports are prepared so as to measure the
actual performance with the budgeted one. The strategic planning reports are also prepared so
that the planning for the future can be done. It will help in bringing the effectiveness in the
organization (Lunkes, et. al., 2013).
32

4.3 Discuss characteristics of effective management accountant and how these are used to
solve problems.
The characteristics of the effective management accountants are:
Ability to work in team: The accountant must work with the team so that the quality of work
can be delivered and the task of the organization can be coordinated (Lunkes, et. al., 2013).
Knowledge of field: The manager should have the required skills of the field so that right skills
can be required for determining the proceeds of accounting.
Emphasizing Accuracy: The accuracy should be maintained so that risk in the organization can
be reduced and the accuracy can be maintained within the organization (Lunkes, et. al., 2013).
These skills will solve the problem as it will help in maintaing the accountability in the
organization and will also help the managers of the organization to increasing the productivity
within itself and the employees (Richardson, 2017).
33

4.4 Discuss the significance of developing strategies which requires effective and timely
reporting.
The significance of developing strategies are:
Customer Retention: The business strategies help in retaining the customers by designing those
strategies which are according to the needs of the customers (Root III, 2018). The customer
services programme should so be designed so that the customer can be retained.
Company Expansion: The business strategies also help in expanding the company by
promoting the new ideas and the frontiers which could help in expanding the business by
adopting the new technologies. The new business opportunity helps in inspiring the company’s
standards (Root III, 2018).
34

4.5 Analyze how in respond to financial problem management accounting can solve lead to
sustainable success (M4).
The management accounting can help in solving the financial problem as with the use of the
management accounting the performance of the organization can be evaluated and the
sustainable success can be achieved (Root III, 2018). The decisions of the organization should be
taken by including the risk factor so that the evaluation can be done. The companies should
indulge in themselves the risk management factors so that the financial performance of the
organization can be increased by solving the financial problem and the sustainability can be
attained (Root III, 2018).
35

4.6 Evaluate how planning tools for accounting respond to solve financial problem to attain
the sustainable success. (D3)
The planning tools can also solve the financial performance as the financial statements are
prepared through which the areas of improvements can be evaluated and the sustainable success
can be achieved (Market Business, 2018). With this variance analysis is also one of the tool
through which the difference between the actual and the budgeted is calculated and this helps in
solving the financial problem so that the sustainability can be attained (Root III, 2018). These
planning tools also help in increasing the productivity as well as the accountability in the
organization.
36

Conclusion
From the above discussion it can be concluded that the management accounting is the process
through which the analysis of the financial statements are done so as to increase the profits of the
business. Various reports are prepared by the Zak Limited so that the cost can be controlled and
the revenues can be increased which in turn helps in increasing the productivity within the
organization. Budgets are prepared so that the actual results can be compared with the budgeted
one and the variances can be calculated so that the areas of improvement can be determined.
Beside this the reports also explains that how the management accounting and the planning tools
helps in solving the financial problem so that the sustainability can be attained and the
profitability can be increased.
37

References
 Root III, G. N., 2018. The Importance of Business Strategies. [Online]. Chron. Available
at: http://smallbusiness.chron.com/importance-business-strategies-4630.html. [Accessed
On 17 May 2018]
 Lunkes, R.J., Feliu, V.M.R. and Rosa, F.S.D., 2013. Study of published articles on
management accounting in Brazil and Spain. Revista Contabilidade & Finanças, 24(61),
pp.11-26.
 Richardson, A.J., 2017. The Relationship between Management and Financial
Accounting as Professions and Technologies of Practice. The Role of the Management
Accountant: Local Variations and Global Influences.
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