Management Accounting Report for Tech (UK) Limited

Management Accounting report for Tech (UK) Limited

Contents
Introduction:....................................................................................................................................4
Task 1...............................................................................................................................................5
a) Explanation of management accounting and the essential requirements of management
accounting system........................................................................................................................5
b) Presenting financial information.............................................................................................9
M1 Evaluate the benefits of management accounting systems and their application within an
organizational context................................................................................................................10
D1 critically evaluates how management accounting systems and management accounting
reporting is integrated within organizational processes.............................................................11
Task 2.............................................................................................................................................12
a) Calculate costs using appropriate techniques of cost analysis to prepare an income statement
using marginal and absorption costs..........................................................................................12
M2 accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents:..................................................................................................14
D2 Produce financial reports that accurately apply and interpret data for a range of business
activities:....................................................................................................................................15
Task 3.............................................................................................................................................16
a) Different kinds of budgets and their advantages and disadvantages.....................................16
b) The budget preparation process including determination of pricing and different costing
systems that can be used............................................................................................................19
c) The importance of budget as a tool for planning and control purposes.................................20

M3 Analyse the use of different planning tools and their application for preparing and
forecasting budgets....................................................................................................................21
D3 Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organizations to sustainable success..............................................................22
Task 4.............................................................................................................................................23
a) Balance scorecard approach..................................................................................................23
M4 Analyse how, in responding to financial problems, management accounting can lead
organizations to sustainable success..........................................................................................24
Conclusion:....................................................................................................................................26
References......................................................................................................................................27

Introduction:
Management accounting is the subject of managing all managerial things sophisticatedly in order
to achieve some goals and make arrangements for further targets. This report study will revolve
around management studies and their evaluation related to Tech UK Ltd. to analyse each and
every phase of management accounting and their significance in the decision-making process.
This report will include a brief description of costing techniques in order to understand each
situation and management & financial changes within the management. It will reveal about cost
analysis process budgetary control process via analysing various planking tools as budget. This
report will include an explanation of marginal and absorption costing to monitor business
activities and managerial tasks within the organisation.

Task 1
a) Explanation of management accounting and the essential requirements of management
accounting system.
I). Difference between management accounting and financial accounting:
Management accounting: it is a study of analysing, observing, evaluating and interpreting data
and facts related to business activities in order to achieve long-term profit. It can be taken as
long-term decision-making process in which management needs to focus on cost, production and
sales activities to maximise more profit. This management accounting tool is based on principle
and analogy and causality to provide effective and relevant information as per managerial
requirements and connectivity.
basis Financial Accounting Management accounting
1. Nature Financial accounting is
basically used in observing
and analysing financial terms
of the business. It provides
transparent and relevant
information to the
management to observe
financial problems.
These are flexible in nature.
This managerial accounting is
used as a profession to making
the decision process easier.
2. objective Its’ major objective is to Through this company
Management accounting
Financial accounting

maintain records,
documentation and financial
information to produce
financial statements.
becomes capable to observe
and changeable situation and
make accurate decisions to
meet long-term requirements.
3. relevancy Financial accounting is used in
the company based on past
and previous movements and
action of business.
It provides relevant results
based on historical plus
futuristic environment.
mandatory It is mandatory for all business
operations
But it is not compulsory for all
apply it in the business.
ii) Use of management accounting as decision-making tools:
1. Inventory management decisions: using management accounting as decision-making tools
helps in the business to measure inventory level and storage process as per requirement in the
business. It allows the manager to observe and avoid stock risks to reduce situation of under and
overvaluation in an inventory while making production decisions. It helps to reduce inventory
shortage problem and to allow manger to make a quick assessment of inventory process.
2. Forecasting decisions: management accounting is the tool which helps the management of an
organisation to make profitable decisions as sales forecasting, demand forecasting and gives
inventory decisions
forecasting decisions
pricing decisions
Investment decisions