A Case Study of R.L. Maynard Limited

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management accounting is a process where different kinds of reports as well as accounts
are prepared with help of various financial transactions. Further, by this the entrepreneur able to
decide that whether the company is performing well in the industry or not and take corrective
actions if it generates negative return. In the present case study, there is R.L. Maynard Limited
organisation is selected which is UK based small enterprise as well as operating in the
construction segment. It has 24 number of employees along with 10.00 GBP sales at the end of
financial year. The report shows numerous kinds of systems and approaches of management
accounting which are required for the R.L. Maynard Limited in order to give response to the
financial obstacles. Further, it describes that what are differences among the absorption as well
as marginal costing method. Beside this, current study focuses on different tools of financial
planning used by the company to make it more profitable in the UK's construction sector.
TASK 1
P1 Explanation of different management accounting systems along with requirements in R.L.
Maynard Limited
Business Report
To,
Board of Directors,
R. L. Maynard Limited
Date: 20th April 2017
Subject: Management accounting systems
Throughput accounting system: It is a term of management accounting which are used
for the performance measurement. Throughput accounting is way to measure all financial aspect
in R. L. Maynard Limited. It mainly discusses on cash factor. Throughput accounting is differed
from the cost account in cost accounting we measure overall cost investing in company but in
throughput account mainly focus on cash, which means mainly focus on what revenue ratio is
generated and how much we loose (B Douglas Clinton CMA and CFM, 2012).
Lean accounting system: Lean accounting is a term of management accounting where
1

managed all over the manufacturing environment. And in this accounting system management
will focus on the cost factor. Like indirect cost or direct cost. In this accounting system measure
all the occurring cost in R. L. Maynard company. This accounting system is less complex
accounting system. Lean accounting is managed by the managers and make sure about the
reduce all in direct expenses in an organization. Lean accounting is focus on reducing indirect
cost and increase productivity. Control over the lean production company increase their
performance and increase revenue.
Transfer pricing: In this type of accounting system company transfer its product to
subsidiary company, whereas company transact with the other subsidiary company. Transfer
price is also known as transfer cost (Otley, 2016). Most of the time transfer cost increase
addition cost and time consuming which is negative for R. L. Maynard. Extra manpower will be
required to execute this system. Moreover, transfer prices some times creates dysfunctional
behaviour between among employees and organisations. Transferring cost accounting system is
expensive system rather than others.
Budgetary control: It is a process of determine actual budget of the organisation and
control over the all costing. Budgetary control is established for future planning forecasting and
requirements expected performance of the R. L. Maynard in construction industry. Budgetary
control is helpful to elimination of wastes and increase in profitability. Budgetary control is a
way to difference between actual costing to estimated costing. Budgetary control is a process to
control over the all expenses such as indirect expense or direct expenses. Reducing all those
expenses are help to increasing productivity and generating revenue. One of the main
disadvantage of budgetary control for R. L. Maynard is uncertain future, whereas sudden
changes are greatly high impact on estimated budgets.
Inventory accounting: Inventory accounting system is based on properly control over
the manufacturing system as well as production system. Inventory control system is an internal
system of control, where check internal all stock inventory, along with reducing over
manufacturing. In this accounting system company has to be information about the inventory
control system (Boyns and Edwards, 2013). Inventory control system is beneficial for the R. L.
Maynard whereas less stock wasted. Inventory control system is relay on LIFO and FIFO
system, where product manufacture in last but sale at their first. On other side product would be
2