Management Accounting and Reporting Techniques for Iceland Manufacturing Ltd.

This report discusses the meaning of management accounting and its essentials, various methods of management accounting report, and the benefits and drawbacks of different provision instruments utilized in fund control for Iceland Manufacturing Ltd. It also includes the calculation of costs using appropriate techniques and analysis of the income statement using marginal or absorption method.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 Explicate management accounting and give the necessary requirements of various kind of
administration accountancy systems.: ........................................................................................2
P2 Elaborate the various methods of management accounting report - ...................................3
M1. Evaluate the benefits of management accounting systems and its applications..................4
D1. Critically evaluate that how accounting systems and reporting linked with organizational
process.........................................................................................................................................5
P3 Calculate cost by using appropriate techniques of costs and analyse the income statement
by using marginal or absorption method.....................................................................................5
M2. Apply the range of management accounting techniques and produce financial reporting
documents...................................................................................................................................6
P4. Explain benefit or disfavour of various provision instrument which utilized in fund control
.....................................................................................................................................................6
M3. Examine the utilization of various designing tools and its utilize at the time of budget
prediction.....................................................................................................................................7
P5. Comparison the organise that how they trade with fiscal trouble by using appropriate
position accounting abstraction...................................................................................................8
M4. Analyse that how management accounting helps in resolving financial issues in order to
provide sustainable success.........................................................................................................9
D3. Evaluate that how planning tool help the organization to resolve their financial issues and
get sustainable success................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
APPENDICES...............................................................................................................................12
Absorption costing ........................................................................................................................12

Flexed Budget for the actual activity........................................................................................13
INTRODUCTION
Accounting is the process of recording the financial transactions in a books of accounting that
explains the yearly position of the business in market. It includes the analysing, summarizing
and reporting these transactions to supervision, authority, regulations and tax collection
bodies. It is a process of systematically and correct recording and controlling financial
accounting (Youssef, Moustafa, and Mahama, 2020). It consider the profit and loss accounting
is an activity that are being done in the process of managing the books of accounting. That is
done with the motive of analysing the profit of the enterprise. In this report considering the
firm Iceland manufacturing Ltd. The company is unique British food retailer having 900
outlets all over in UK. It is top named in supermarket for consumers satisfaction. The report
will cover meaning of management accounting and its essentials and in part 2 it will explain
various methods which is utilised for Mgt. Accounting moreover it will include the cash
baudget and other bugets that used in company.
MAIN BODY
Management accounting is the term which is used in organisation in order to record all the
transaction related to cash and bank in regards to examine the exact condition of the firm or to
increase the profitability and reducing overhead cost that is occurred with in the business. It is
the process of preparing reports about business operations that assist managers in building
short term and long term decisions. It aids institution to pursue its objectives by
determining, measuring, analysing, interpreting and communicating details to administration.
This can also be known as cost accounting. Main motive of this technique is to assist the
administration of a company in efficiently operating its features that are planning, organising,
controlling. It consist a various types such as product costing and valuation, cash flow analysis
and financial leverage metrics. These all are the several methods of operating various
accounting with in the organisation by accountants.
According to the Institute of Management Accountants (IMA) “Management accounting is
a profession that involves partnering in management decision making, devising planning and
performance management systems, and providing expertise in financial reporting and control to
assist management in the formulation and implementation of an organisation's strategy.”

P1 Explicate management accounting and give the necessary requirements of various kind of
administration accountancy systems.:
Management accounting system is the organized and synchronised approach of managing
to encourage administration in order to attain the institutional goals and objectives. This process
is commonly a system of analysing both financial and non financial details that is useful in
preparation and devising decisions for a company.
Different kinds of managerial Accounting system.
It is broad concept that has specific concepts that assist management take various
decisions for making the process smooth functioning. These types are listed below.
 Cost accounting system - This technique is used by the manufacturing industry in
regards to estimate the value of ware and other features that are related to inside the
organisation. Authorities of Iceland manufacturing LTD. Are utilising this structure
during producing the food products. It is necessary required by the company in relation
to measure value of their goods and services. With the assistance of correct price,
managers capable to make decisions relating to expenditures of the organisation.
 Inventory management system – It is a combination of procedure or automation
which requires to manage or monitor the stock or assets of the firm. It is important to
control food product and any other goods . It is also utilised to decrease the wastage
and increase the proper allotting of resource or usage. It consist various techniques to
handle stock which is listed below.
1. last in last out - In this kind of structure of stock management system, organisation
uses the last stock list for the producing procedures.
2. First in first out - This method explains the process which uses the material which
received first in the company in order to produce the goods.
3. Average cost - It is used on the basis of ordinary cost where concern measure goods
price on average basis.
From above elaborated techniques of stock management, Iceland Ltd. Adapts a FIFO method in
which they utilise the raw material which is available.
 Price Optimisation System - This system utilised by the company to understand about
customers attitude regarding various set of cost. Under this system, institution sets
various cost range for their services and required to know their behaviour related each

value of goods. After recognising the cost structure in relation to satisfy the customer
requirements and cost issues. Managers of Iceland manufactures set appropriate cost of
goods their services which satisfies the consumers judgement as well as assist in
attaining the concern objectives and goals. It is important for the company where they
understand correct cost of the goods. With the assistance of this structure, firm capable
of producing long run advantages such as maximise the profit through impressing
users.
 Job Order costing - This accounting system utilised for accumulating manufacturing
value of single unit of produced good. It is important for medium sized company like
Iceland manufacturing Ltd. In extent to figuring their unit price. It will further assist
the managing director to improve effective strategy to increase the gainfulness through
reducing the disbursement.
P2 Elaborate the various methods of management accounting report -
Management accounting report is the method which assist the mangers to collect details
and shows in a documents form and it will show in front of investments. There are various
reporting methods which any business produced for the analysis and it further assist the
managers to create to make their upcoming decisions in regards to increase their fruitfulness
and revenue. Various techniques of discussed below.
 Budget Report – This report prepare for the management of their funding which
create by the department of the company. In this report, individuals estimate the each
revenue as well as expenditure which going to happen at this time of manufacturing
goods. In extent of Iceland manufacturing Ltd. Concern utilise this budget for the
measurement of costing with the assistance of this. Manger are capable to design the
plan and make sure that every area finishes the task as per requirements. With the
assistance of it, management gets the thought that which variable required to reduce
or modifies in the plan accordingly (Urakova, 2021).
 Performance report - it is like statement which gives the information related with
concern as well as single workers ability. With the assistance of action card, manger
analyse for the operations of individuals and examine that if they needs of operating
for further training for the betterment. In order of Iceland manufacturing LTD.
Institute utilise this detail to examine the individual actions which assist in providing

rewards to best employee. Also assist in analysing the area where employee needs
betterment to grow their operations as well as profitability (Thorsten, Nicole, and
Wagener, 2020).
 Inventory management report - This report majorly utilised by the manufacturer
company because they have to control the raw material unit. With the assistance of
this statement get the correct results of assets and its production goup and its
situation. In context of Iceland manufacturing group, administration ensures about
the stage of assets to improvement food industry and its whole basis on the demand
of users. Major aim of this report is to be aware about the stage of inventory in the
institution to finish its business operations.
 Accounts receivable Report - this report develops by the large organization which
deals in credit terms or where they have certain amount of users. Due to big
institution, it is not possible to remember their receivable so management prepare this
statement and timely review for the overcome. With the assistance of account
receivable report managers of Iceland observe the correct amount which they going
to receive in the upcoming or bad debt as well. It is fruitful for the organisation to
analyse it investment its capital to have in future (Tan, 2019).
M1. Evaluate the benefits of management accounting systems and its applications
Management
accounting systems
Benefits or application of accounting systems
Costing accounting
system
In discourse of Iceland manufacturing institution follow this explanation
system where they estimation the cost of concern act and cost of
production. It is beneficial for the institution because it foster helps in
development scheme and try to cut down cost as well as power for the
whole industry time period.
Price optimisation
system
This system used by the director of Iceland manufacturing in order to
place the response of customers regarding assorted price range of the
merchandise. With the help of it, director correct the cost which meet the
customer's outlook as well carry through the organisational objective to

earn profit. After all the investigation institution select the befitting price
rage for the merchandise.
Inventory
management
system
With the activity of this group, director capable to cognize about the
plane of stock list in the organisation for the industry process. Director of
Iceland manufacturing adopt this scheme which supply payment at the
time of edifice scheme and assist in evaluating the unwavering of stock
list in the organisation.
Job order costing
system
In Iceland manufacturing institution use this scheme to roll up the each
unit expenditure which assistance them to explicate assorted plan of
action for the concern in order to accomplish concern content & clinical.
D1. Critically evaluate that how accounting systems and reporting linked with organizational
process
It is crucially examined that accounting system and reports both are integrated due to it
aids in organization able to organizations capable to perform their business procedure. With
the assistance of accounting system, management able to collect details and it is utilised
during the time of coverage. However the management to manage organizational actions by
using accounting system or reporting methods. Such as administration of Iceland utilised
cost accounting system to estimate the goods and it will be stated in cost accounting
report. It further assist to institute where manager spend on business activity as per the
evaluated then they have to be progressive certain important planning to reduce it
( Kasasbeh, I., 2018).
P3 Calculate cost by using appropriate techniques of costs and analyse the income statement by
using marginal or absorption method
Cost - It is the price which organisation have to be feature at the case of producing
something. It is not only about producing cost. It is all about the expenses which
individual complete the assignment. In the extent of Iceland the cost of producing or supply
the product and services to the last consumer and what value they suffer. In command to
examine the real profit institute can exercise the following costing method like absorption
and marginal.

Marginal costing - In this mode variable value will be measured as fixed cost will be
assumed as good value as the price of duration. In the marginal costing method fixed cost
will be consider as the cost for the clip. Here profit will be calculated by utilising profit
margin ratio and examine the value for the next unit. Opening and closing inventory didn't
effect the value per unit and it motive is to enhance the contribution in production cost.
Absorption Costing - it is a valuation method where fixed or variable cost observed to
be product cost. Here wastage are various in this characteristics in this costing variant such
as production, distribution and mechanising and administration. This method examine the
value of each unit and further aids the mangers to make planning as per situation
(Joannides de Lautour, 2018.).
M2. Apply the range of management accounting techniques and produce financial reporting
documents
With the assistance if different accounting methods, managers produce financial
reports with the aid of available accounting details, it provides the financial position of
the company through evaluation net profits or loss for the accounting period. These details
help managers capable to formulate future decisions regarding investments and the strategies
which requires to operate business actions. It is beneficial to achieve an objectives and be
successful.
P4. Explain benefit or disfavour of various provision instrument which utilized in fund control
Budget is a quantitative statement which is prepared for a fixed periods in order to
calculate upcoming activity. All industry must be prepared a budget that assist to understand
the upcoming risk and profit. Companies are preparing several budgets to know the real
operations of institute of planing instruments that are as described in below (Johnstone,
2018).
Capital budget - This budget aids the concern to analyse their long term investment and
upcoming decisions as per. The report helps in managing capable to evaluate the long
term revenues with organisational activities. Iceland usage this calculation and measures the
long term profits with institutional. In order to Iceland manufacturing allows this budget and
calculates all the investments and capital required in the company. After examine the
revenue and expenditure of the company authorities make decisions as per the investments
and its ability upon the returns.

Advantage Disadvantages
The assistance of the fund, enterprise
capable to realize the hazard and its forth
coming effect. It aid the director to build
their finance determination with the help of
income of the institution.
It is very costly mode which is not afford
by the every organizations. It needs skilled
persons for its analysis, so institute have to
hire talented workforce which creates high
values.
Zero based budget: it is effective style of making budget where all the expenses examined
of each course. In this method members have to examined value of business activities.
There are no demand for the former year fund info because director have to measure each
expenditure fir the new play. Administrator of Iceland manufacturing use this acting to
estimation their merchandise outgo of the food industry. It is very time taken procedure and
analysable so they supply to hire professed execute to physique this program.
Advantages Disadvantages
This budget helps manger to allocate
resources and it will be on the basis of needs
of operations. It effects managers to utilised
value effectively to change activities.
Zero base budgeting is time consuming as
well as costly method which not all
company capable to expend.
In command to produce this budget, person
needs particular skills otherwise the
calculate of budget does not give real
reasults.
Cash Budget: managers designs cash budgets by considering by considering all revenues
and expenses that assist to increase. Withour money budget any company cannot get idea
about inflows and outflows which are essential for making decisions (Jakobsen, M., and et.,
al., 2019.).
Advantage Disadvantage
The debt of cash budget business avoids
the credits because they do not consume
more than the handiness of cash.
In the organisation it will make over the
condition of getting stolen person can
manipulate the illustration. It limits the
disbursement capacity of people in the

It resource the administrator to recognize the
experience of concern because they can
analyse the accessibility of currency and
activity in determine the accomplish able
deficit.
company and unit them to finish assignment
in constricted sources.
M3. Examine the utilization of various designing tools and its utilize at the time of budget
prediction
With the assistance of different strategy tools business capable to complete planning and
making decisions in respect of the enterprise. In iceland managers applied assorted
statements such as cash budgets , zero based budget and many more. It further assist the
mangers to evaluate and forecast the information. Capital budgeting utilises to examine
that which investment option is more beneficial due to it assist the directors to estimate
the value which gives correct results. It helps in minimising overheads which increase
border of the institution (Hiebl, M.R. and Richter, 2018).
P5. Comparison the organise that how they trade with fiscal trouble by using appropriate position
accounting abstraction.
Financial issues - it is an financial pressures which generates the situation where people get
stressed and facing difficult issue due to lack of capital. In regards to perform in the
marketplace or attain enterprise objectives they have to complete analyses of institute to
determine the financial issues which impact the operations as well as earnings. Some of the
issues are :
Unforeseen expenses : In the company there various expenditure which initially grows and
basically financial issues. So managers of the institute have to control their funding sources
and try to reduce it.
Late payment of the supplies - Every company have to deal with suppliers or balance a
long run relation. So they have to deal with providers on credit basis in regards to
increase the sales. Many of the clip is occurred that lenders not capable to pay and
institute faces the conditions of lacking of capital resources (. Gomez-Conde, and Lopez-
Valeiras, 2018).
Some techniques to resolve financial problems:

Key performance indicator - it is a measurement instrument which help the company to
examine their object on the basis of various measurements. Commonly there are two kinds
of actions indicators just as financial. With the assistance of financial KPI administration
of Iceland determines the unforeseen expenses and non financials utilised to identifies the
mistakes in the company operations. By utilising these methods, managers of company
resolves the financial issues of unforeseen expenditure.
Benchmarking :
it is the business practices which utilised by the company to compare its performance
with the company best. With the help of this methods mangers able to identifies the
chances for the development. In Iceland structures determine the issues regarding late
supply of providers through comparing with its debt policy. It helps the managers to build
effectual strategy in order to resolve this issues (.G'iyosov, , 2019) .
Compare that how organizations respond to the financial problems with the help of
accounting systems:
Iceland manufacturing company Tyson Foods
In order top resolve unforeseen expenses
managers of Iceland implemented cost
accounting system. With the help of it they
capable to determine the value of each
actions.
This company adapts the occupations order
costing to resolve the financial problems
regarding shortage of capitalist. Earlier
executing any planning they have to evaluate
it cost.
Institution uses price optimisation system to
determine the user attitudes in order to
product cost. With the aid of this, bodies
can solve the problems of post payments
from providers. So they have to create their
price structure more attractive so they didn't
say for debt.
Inventory management system practical by
institution to rigging the state of lack of stock
list for concern act. Through this scheme get
item message about industry process.
With the resource of KPI method, director
firmness the unanticipated outgo.
In the company directors adapts the
benchmark methods to solve late payments
from providers hazards.

M4. Analyse that how management accounting helps in resolving financial issues in order to
provide sustainable success
In the organise, there are assorted kind of fiscal problems which faced by the Iceland
manufacturing such as post payment of businessperson and unanticipated disbursement. By
using respective method such as key performance indicator (KPI) and standard help the business
to resolution their fiscal difficulty(Fuzi, and et., al., 2019)
D3. Evaluate that how planning tool help the organization to resolve their financial issues and get
sustainable success
It is critically examined that contrary sort of monetary fund help the director to firmness their
fiscal difficulty. With the assist of Zero base budgeting, director unable to measure each
merchandise which resoluteness the unanticipated disbursal difficulty. Through analyse each
creation cost administrator able to determine that which inactivity is essential for the classical.
CONCLUSION
From the above report it is concluded that management accounting is the procedure
which every concern have to adapts in regards to organize their business operations and
other inner activities. There are different accounting system and reports business operations
and internal activities. It helps the managers to design efficiency however effectiveness.
Company have to face different fiscal difficulty and try to minimize by exploitation individual
method such as KPI, criterion than sort out through business organization.

REFERENCES
Books and Journals
Fuzi, N.M., and et., al., 2019. Environmental management accounting practices, management
system, and performance: SEM approach. International Journal of Quality & Reliability
Management.
G'iyosov, I.K., 2019. THE THEORICAL FEATURES OF THE ORGANIZATION OF THE
STRATEGIC MANAGEMENT ACCOUNTING IN BUSINESS. Theoretical &
Applied Science, (9), pp.260-266.
Gomez-Conde, J. and Lopez-Valeiras, E., 2018. The dual role of management accounting and
control systems in exports: Drivers and payoffs. Spanish Journal of Finance and
Accounting/Revista Española de Financiación y Contabilidad, 47(3), pp.307-328.
Hiebl, M.R. and Richter, J.F., 2018. Response rates in management accounting survey research.
Journal of Management Accounting Research, 30(2), pp.59-79.
Jakobsen, M., and et., al., 2019. Educating management accountants as business partners:
Pragmatic constructivism as an alternative pedagogical paradigm for teaching
management accounting at master’s level. Qualitative Research in Accounting &
Management.
Joannides de Lautour, V., 2018. Strategic Management Accounting, Volume II.
Johnstone, L., 2018. Theorising and modelling social control in environmental management
accounting research. Social and Environmental Accountability Journal, 38(1), pp.30-48.
Kasasbeh, I., 2018. Problems of Management Accounting Implementation: The Case of
Balanced Scorecard Implementation within Jordanian Commercial Banks. International
Journal of Academic Research in Accounting, Finance and Management Sciences, 8(2),
pp.200-207.
Tan, H.C., 2019. Using a structured collaborative learning approach in a case-based management
accounting course. Journal of Accounting education, 49, p.100638.
Thorsten, K., Nicole, N. and Wagener, S., 2020. Determinants of information system quality and
data quality in management accounting. Journal of Management Control, 31(1-2),
pp.97-121.
Urakova, M.H., 2021. Management accounting as an enterprise management tool. International
Engineering Journal For Research & Development, 6(ICDSIIL), pp.3-3.
Youssef, M.A.E.A., Moustafa, E.E. and Mahama, H., 2020. The mediating role of management
control system characteristics in the adoption of management accounting techniques.
Pacific Accounting Review.

APPENDICES
P3.
Cost Cards
November
Sales = 70* 10000 = £ 700000
Direct Materials = £100000
Direct Labour = £ 150000
Fixed Overheads = £ 250000
December
Sales = 70* 8000 = £ 560000
Direct Materials = £100000
Direct Labour = £ 150000
Fixed Overheads = £ 250000
Inventory = £ 2000 units
Absorption costing
Profit as Per
absorption costing
£s November
£s
£s December
£s
Turnover 700000 560000
Less Full cost of sales 500000 400000
Direct Material cost 100000 100000
Direct Labour cost 150000 150000
Fixed manufacturing
overhead
250000 250000
Less:Closing Stock 100000

Gross Profit 200000 160000
Less: Under
absorption
0 50000
Profit 110000
Marginal costing
Profit as Per
absorption costing
£s November
£s
£s December
£s
Turnover 700000 560000
Less Full cost of sales 500000 400000
Direct Material cost 100000 100000
Direct Labour cost 150000 150000
Fixed manufacturing
overhead
250000 250000
Less:Closing Stock 100000
Gross Profit 200000 160000
Flexed Budget for the actual activity
Particulars Budget Actual Variances Variances (%)
Sales 100000 122000 22000 22.00%
Less: Cost of
Goods sold
87500 114500 27000 30.86%
Direct Material 50000 60000 10000 20.00%
Direct Labour 25000 28500 3500 14.00%

Variable
Overhead
12500 15000 2500 20.00%
Gross Profit 12500 7500 -5000 -40.00%
Less: Fixed
Overhead
10000 11000 1000 10.00%
Net Profit 2500 -3500 -6000 -240.00%