Management Accounting for Tech UK Ltd

This assignment delves into the importance of management accounting for Tech UK Ltd, focusing on its role in managing monetary and non-monetary factors. It also examines different budget preparation methods and discusses their benefits and drawbacks in an organizational context. The study concludes that management accounting is a crucial approach for sustaining business success.

MANAGEMENT
ACCOUNTING REPORT
FOR
TECH (UK) LIMITED

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P.1. Explanation of management accounting and the essential requirements of management
accounting system.......................................................................................................................1
P.2. Different types of managerial accounting reports................................................................3
TASK 2............................................................................................................................................5
P.3. Income statements of Tech (UK) Ltd organisation using marginal and absorption costing
methods.......................................................................................................................................5
TASK 3............................................................................................................................................7
P.4. Explain the advantage and disadvantage of different types of planning tools used for
budgetary control........................................................................................................................7
TASK 4..........................................................................................................................................10
P.5. Evaluation of Balance scorecard and some other financial approaches in terms of proper
address of financial issues in the organisation..........................................................................10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In this documentation, it defines about several kinds of management accounting tools and
techniques by which organisational manager of Tech (UK) Ltd company can identify some
factors through which all monetary and non-monetary factor of the organisation is assessed
sufficiently. Moreover, this study also describes about cost accounting system and inventory
management system in the company. This assessment also refers to preparation of income
statements of Tech (UK) Ltd organisation by utilising marginal and absorption costing
approaches within the firm effectively. Apart from it, this investigation also refers to some
management accounting tools and mechanisms by which the firm could resolve their financial
issues in an effective form.
TASK 1
P.1. Explanation of management accounting and the essential requirements of management
accounting system
Management accounting: This is a managerial accounting system in which the manager
of the business needs to make a report which defines about internal management system
effectively. This is a methodology of formation of a report at internal basis which defines about
the internal financial and statistical data required for the manager in order to make appropriate
decision concerning to business goals and objectives (Bennett and James, eds., 2017).
Management accounting is used for making monetary and non-monetary information within the
organisation effectively. Management accounting used to for find out financial rations of the firm
by which performance leverages could be figure out and financial standard performance could be
set up by company's manager.
Financial accounting: This refers to the process by which the business accounting
officer makes recording, summarising and reporting of proper financial transaction within a
given period, in which they need to make development in some areas by which effective decision
can be made by accounting officer of Tech (UK) Ltd. within the industry effectively. This is used
for monetary information within the business effectively (Otley and Emmanuel, 2013). Financial
accounting depends on debit and credit system. In case of debit, it increases of assets and
expenses and the decrease the liabilities and incomes. In the business cash is asset and capital is
liability of the business.
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Importance of management accounting as decision-making tools for departmental
manager
Management accounting is the most vital part for each organisation which assists the
management departmental managers in terms of making proper report within the business for
making internal analysis of the business functions and effectively managing them as well. In case
of Tech (UK) Ltd organisational manager, they have also needed to make use of sufficient tools
of management accounting at the workplace for identification of financial issues in the
organisation and making essential decision regarding increment in profitability and productivity
of the business in the industry in more relevant form (McLellan and Moustafa, 2011). With the
assistance of tools of management accounting in the enterprise, the department manager could
make relevant analysis of costing within the business and effectively reduce them as well.
Cost accounting systems:
Cost accounting is a process which has a major goal to capture the organisation's costing
of each production level and assessing them at each level in internal production level which is
capital equipment and depreciation as well. Cost accounting has first step to recording the
costing at individual level and then comparisons of input result figure to output actual report
result in respect to measuring financial performance of the business entity in given period time
within the organisational environment effectively. Cost accounting system helps the manager to
giving prices for each job which is being done in manufacturing plants of the firm. Thus,. It
could be said that, it assists the business manager to making pricing decision for each job in the
manufacturing plant.
Different types of cost accounting systems:
Absorption costing system approach defines that all fixed and variable costs are allotted
to cost unit and overhead in case of computing absorption costing system. Under the marginal
costing system, costa are separated into fixed and variable costs. Variable costs are charged to
unit cost of the company.
Job costing system: This is a costing system in the organisation which defines about the
costing of each manufacturing job which is being done in the business entity effectively. It is one
of major appropriate approach which can assist the manager of the company in order to make
engagement in terms of production of specific products and services within the organisation in an
effective form. In case of Tech (UK) Ltd organisation, the organisational manager requires
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utilisation of job costing system approach at the workplace in order to identify each job costing
of the production level which is being done in the organisational environment in an efficient
form.
Inventory management systems: This is an important system which must be used by
each organisation at the workplace with respect to manage their all works and inventory in
manufacturing plant in an effective form (Nørreklit, 2014). This is an effective process in which
company's parts and inventory is being transported by the company's other locations and manage
inventory at daily basis in the organisation as per the customer re requirements in the business
effectively. The company need to make use of some of effective tools and software of inventory
management at the workplace in context of appropriate management of operational level, raw
material and surplus within the plant in an efficient form. Inventory management approach assist
the business to which products they should buy or not for the company in order to gain sufficient
profit. It also helps Tech (UK) Ltd company's manager in context of making new product
decision for the company which they want to launch in market.
P.2. Different types of managerial accounting reports
Varied of managerial accounting reports presented here by which the managerial
department of the company can formulate effective reports at the workplace effective manner
and identify the key elements of the organisation within the industry in more relevant form
(Hyvönen, 2010). Management accounting reports assist the business manager in order to proper
management of organisation's execution and equipped regularly throughout the accounting
period of the company in relevant form. Moreover, the department manager could utilise of these
accounting system in the organisation in relevant manner as per the needs of reports in business
and this could be prepared by the organisational manager at quarterly, monthly, even daily basis
as well.
Budget reporting: This is also effective approach for preparation of reporting in Tech
(UK) Ltd organisation in effective manner. The manager of the company needs to make use of
some areas by which effective development can be gained in relevant form in sufficient manner.
Budget reporting is also an essential part for the organisation in terms of effectively measuring
the performances of the business in more relevant form and in case of Tech (UK) Ltd
corporation, the business manager requires preparing these kinds of reporting at the workpeople
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in order to recognise the performance of the business and effectively control them in the business
environment efficiently (Maheshwari, 2014). Moreover, the estimation of budget reporting is
totally based on the total expenses occurred in the company in previous year in an efficient form.
In case of big organisation, the specific department has been established in the company in order
to prepare budget reporting in the company for cost reduction in the business in relevant form.
This is also used by corporation's manager in respect to provision of appropriate incentives to
employees and workers of the organisation in the industry effectively.
Account receivable: This is also the most appropriate method of reporting at the
workplace for Tech (UK) Ltd organisation effectively by which business manager can effectively
manage cash flows of the organisation and enhance the creditability for their consumers in
relevant form. This report also assist the enterprise manager in terms of breaking down the
customers balances by how long they have been owned in the organisation effectively. This type
of reporting has specific columns in the reporting system in which they need entering invoices
for 30 days, 90 days etc. this report also could assist the business manager in respect to identify
the issues in the organisation's collections methods efficiently. In this way, if some customers are
not paying their required balance in company, then the organisational manager require making
relevant policies in the company in order to paying sufficient credit payments to the company
effectively. This is also helps the business manager on overlooking on overdraft of the company
in the industry in relevant form.
Job cost reports: This type of reporting is specially used for the organisation for separate
projection, which review the expenses for the business in relevant form (Gullkvist, 2013). The
organisational manager generally matched with the approximation of revenue system for the
company so that company can effectively evaluate the work's profitability within the industry in
more relevant form. This is also made major focus on the top earning sections of the business in
the industry so that the manager of the company can make major focus on profit margin on each
job in the company instead of wasting their quality of time on low profit margin functions in the
company efficiently. This is also helpful for the organisation in respect to assessment of
expenses in the specific projection in the company so that each one of them can reduce the
costing of projection by utilising job costing reports tools and mechanisms efficiently.
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TASK 2
P.3. Income statements of Tech (UK) Ltd organisation using marginal and absorption costing
methods
1. Absorption costing method:
Income generated from sales= 35 Pound x 1500 Unit= 52500
Cost of sales= fixed cost= opening inventory – Closing inventory=10000 + 30000 –
10000 = 30000
Sales & administration cost = 15% of income generated from sales = 52500 x 15%=
17875
Unit absorption= Actual amount of overhead- overhead actually absorbed = 15000 –
10000 = 5000
Thus, according to above information, income statement of Tech(UK) Limited according
` to absorption costing-
Particular Amount
Income generated from sales £52500
Less- Cost of sales -£30000
£22500
Less- Unit absorption -£5000
Gross profit margin £17500
Less – Selling & distribution overhead -£17875
Net profit (£375)
II. Marginal costing methodology in Tech(UK) limited:
Income generated from sales =35 pound x 1500 unit = 52500
Cost of sales = Opening inventory – closing inventory = 30000 – 7500 = 22500
Sales & Admin cost = 15% of income generated from sales =25200 x 15% = 17875
Thus, according to above information, income statements of Tech(UK) Limited
according to marginal costing-
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PARTICULAR AMOUNT
Income generated from sales £52500
Less – cost of sales -£22500
£30000
Less – variable sales & admin costs -£7875
Margin of contribution £22125
Less: fixed cost
Selling & distribution overheads
product overheads
£10000
£15000
Net profit (£2875)
Reconciliation statements-
Particular Amount (In £)
Profit figure( Marginal costing) 2875
Add – fixed expenses 2500
Profit figure (Absorption costing) -375
From the above assessment of Tech(UK) Ltd organisation, in can be stated that, marginal
and absorption costing, both techniques are appropriate for the firm in order to preparations of
organisational income statements effectively and examine the profitability of the business in the
industry in more relevant form. Marginal costing is ascertained in the business by examining the
fixed and variable costing in the business in relevant form. In these case only variable costing is
computed in the costing approach in the operational level of the organisation effectively.
Moreover, fixed costing is charged in order to identification of profit and losses in accounting
period of the time in the business effectively (Dosch and Wilson, 2010). In case of marginal
costing., variable costing in the business in considered is a production cost in the organisation
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and the fixed costing is considered is a period costing in the company in more relevant form.
This can be used by the organisational manager in terms of generation of more profitability in the
industry effectively and in case of absorption costing approach, cost identification of fixed and
variable costing is considered as the product cost of Tech(UK) Ltd. Apart from it, there are some
classification of overhead costing in the business in relevant form in which, in case of marginal
costing the fixed and marginal costing is classified as overhead costing in the company and in
case of absorption costing approach, there some of classification of costing is inclusion which is
production cost, administration costing and selling and distribution costs in the company in more
relevant form.
In case of marginal costing approach, the profitability of the company is measured by the
profit volume ratio in the company in relevant form and in absorption costing, due to the
involvement of fixed costing in the company, organisational profitability gets affected
efficiently. In Tech (UK) Ltd enterprise, there is some of direct material and direct labour fixed
production overhead costing is associated in the company in appropriate form for preparation of
costing in the business (Kokubu and Kitada, 2015). In case of marginal costing approach of the
company, its profitable figure showing value which is, 2875 and moreover, in case of absorption
costing techniques, its net profit is showing the value which is -375 which is more than marginal
costing in the company, because of addition of selling and administration fixed overhead
expenses within the organisation in effective manner. Hence, it could be said that the
organisational manager requires utilisation of absorption costing techniques at the workplace in
more sufficient manner in order to ascertain many things in the business environment in proper
sort. Moreover, it is also concluded that organisation manager can use both techniques in respect
to preparation of income statements and identification of profitability of the business in reliable
ways. So it could be said that marginal costing is one of the approach by which the organisation
can meet to their desired profitability.
TASK 3
P.4. Explain the advantage and disadvantage of different types of planning tools used for
budgetary control
Management accounting approach is a system by which company can manage crucial
circumstances of the business in relevant form. By which development could be gained in
appropriate ways, so that budget can be prepared within the organisation (Hopper and Bui,
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2016). In case of Tech (UK) Ltd organisation, they need to make utilisation of various kind of
budgeting controlling tools at the workplace in more effective manner in order to have proper
management of finance in the company. Proper information regarding budgetary control assists
the business manager in terms of appropriate planning and controlling of budget in the
organisation in effective manner. Several budget formation of management accounting makes
impact on the influences in the forecasting of the departmental exercises and how the manager
can address the growth of the company in the industry in order to meet their desired goals and
objectives in appropriate trems.
Master budget: This is the most appropriate option for Tech (UK) Ltd organisation for
formation of budgeting at the workplace in more effective form. The budget assists' manager to
conduct of all activities of the firm according to master budget period effectively. This is made
for specific projection in the company, in order to formation of cash budget, budgeting income
and budgeted balance sheets effectively (Yalcin, 2012). In case of these budget, all of these are
interrelated to each other in the company in effective manner and several departments are also
associated with them. Manager of the company generally utilises this budgeting process for
completion of plan of projection and meeting objectives in the company effectively.
Advantages:
 The major advantage of master budget is that, it furnishes effective company's executives
overview on the specific type of company's budget in more relevant form. It has ability to proper identification of appropriate planning and issues ahead the
business within the business environment efficiently.
Disadvantage:
 The major disadvantage of master budgeting is that, it has lower specificity at the
workplace.
 This budget is difficult to read and update by the business manager in the company
effectively.
Fixed budget: This is an approach of budgeting at the workplace which never fluctuates
in the company when sales and some of essential exercises increase and decrease in the business
envelopment effectively. The budget has also other name which is statistical budget at the
workplace. Fixed budget is an assumption which is based on particular volume of some good
during some period within the organisation effectively (Ramljak and Rogošić, 2012).
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Advantages:
 The main advantage of fixed budgeting is that, manager of the organisation can easily
formulate this kind of budget and they do not require to regular modify this in the
organisation.
 It assists the business manager in terms of controlling on the costing of production and
services of the company and also assisting in making smart decision within the
organisation effectively.
Disadvantages:
 The main disadvantage of fixed budgeting is that it has lower flexibility to change in the
organisation in given time period and sometimes, it gives negative results in the
company.
 It is based on previous statistical data of the company so it is difficult to establish and
implement them in the future efficiently.
The budget preparation process:
Obtaining estimates: This is the first step of budget preparation, in which the
computation of sales, production level and expected cost of production etc. the departmental
manager needs to make forecasting about to the future estimation of production expenses and
profitability of the business effectively (Blocher, Stout and Cokins, 2010).
Coordinating estimation: In terms of budget preparation, the organisational manager
needs to make assessment of various plans of action in the company and according to them,
ascertain the potentiality of the company for accomplishment of organisational goals and
objectives.
` Communicating budget: This is also prime responsibility of the manager in terms of
preparation of their plans and actions in more relevant form. They need to communicate plan of
budgeting preparation according to predetermined responsibilities and functions of the company
in efficient form.
Implement the budget plan: this is the final stage of the budget plan, in which manager
of the company need to complete each function requirements in appropriate manner and provides
proper resources to materials, labours, services and human resources in order to implementation
of budgeting in proper format.
Different pricing and costing system:
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Cost based pricing: Cost based pricing approach would assist the business manager in order to
ascertaining cost of each product and services offering for organisation's customer's in the market
Direct costing and Full costing pricing are two different kinds of budget in the business.
Cost-plus budget:Cost plus pricing occurs in business where its manager compute the costing of
manufacturing process overheads,direct labour and direct materials which will be associated with
the price of products and services of the firm.
Profit pricing: The pricing method is used by its manager to giving proper pricing to each
products by adding various types of manufacturing and other costing which occurred in the
business while manufacturing products. It defines about profitability of the business which has
been earned by the firm while selling its products and services.
TASK 4
P.5. Evaluation of Balance scorecard and some other financial approaches in terms of proper
address of financial issues in the organisation
There are numbers of management accounting tools and techniques are presented by
which Tech(UK) Ltd organisation can improve their financial performance and also identify the
relevant issues in the company in more effective form (Ward, 2012). With the assistance of these
approaches, Tech(UK) Ltd business entity can resolve their financial issues in effective manner.
Balance score card: This is a scorecard of balance performance in the company by which
strategic manager could easily recognise the improvement in several organisational functions in
the company in relevant form. This is mostly used by the organisation in terms of provision of
appropriate suggestion and feedback to proper changes in the strategy of the organisation in
order to make improvement in the business (Hilton and Platt, 2013). As per the approach, the
information is collected and effectively interpreted by the business manager in order to sustain in
the market so that better decision could be made in the organisation effectively. Balance
scorecard is also the most appropriate method for Tech (UK) Ltd organisation in context of
identification of several critical issues in the firm and also make efforts in order to resolve them
in sufficient form. This tool furnishes effective and comprehensive information to the manager of
the company in order to determine the financial measurement and additional metrics that shows
customer satisfaction and production innovation effectiveness within the organisation effectively.
Key performance indicator: This is also one of the vital tools of resolution of financial
issues in the company in effective ways and they need to furnish effective services in proper
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context in the organisation. With the assistance of key performance indicators, the organisational
manager can identify the value about how effectively business entity is accomplishing the
organisational goals and objectives in appropriate ways. The organisational manager could utilise
KPI tools and techniques effectively in order to recognise the relevant issues in the company and
find out the appropriate ways by which organisation can meet their desired targets in the
company in the most effective form (Baldvinsdottir, Mitchell and Nørreklit, 2010). Once the
business manager can identify the KPI matrix at the workplace, then they can go further for its
real-time reposting tools by which they can examine the performance of the business and make
the decision regarding resolution of their issues within the firm in an effective manner.
Just in time: Just in time is also one of the appropriate financial management approach
for Tech (UK) Ltd organisation in order to making proper inventory management of its various
raw and final goods at workplace. With the help of this approach, its professionals can manage
and employ to increase efficiency and decrease ware by receiving goods. This is only needed for
the business in order to making proper inventory management. This method can assist the
business manager to reducing the costing of inventory at the workplace, which assist them to
resolving their financial issues.
CONCLUSION
From this investigation, it is concluded that management accounting is the most
appropriate factor for Tech (UK) Ltd organisation in order to manage their all monetary and non-
monetary factors in the company in an effective form. Moreover, this assignment also defines
about some approaches of different kinds of budget preparation at the workplace in order to have
proper formation of their financial issue in the company in relevant form. This study also
concludes about different kinds of budgeting and their effective advantages as well as
disadvantages in the organisation in appropriate ways. Hence, management accounting is the
most relevant approach in order to sustain in the market effectively.
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REFERENCES
Books and Journals
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management: current practice and future trends. Routledge.
Blocher, E. J., Stout, D. E. and Cokins, G., 2010. Cost management: A strategic emphasis.
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Dosch, J. and Wilson, J., 2010. Process costing and management accounting in today's business
environment. Strategic Finance. 92. 2. pp. 37-44.
Gullkvist, B. M., 2013. Drivers of change in management accounting practices in an ERP
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Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
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Hopper, T. and Bui, B., 2016. Has management accounting research been critical?. Management
Accounting Research. 31. pp. 10-30.
Hyvönen, T., 2010. Exploring Management Accounting Change in ERP Context-Four
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Maheshwari, S., 2014. Management Accounting And Control. Vikas Publishing House Pvt Ltd..
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Cooperative Countries.
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Nørreklit, H., 2014. Quality in qualitative management accounting research. Qualitative
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