Management Accounting and Reporting: A Case Study of Warwick Fabrics UK Ltd

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Management accounting and essential requirement of different kind of management
accounting systems-.....................................................................................................................3
P2. Various method that used in management accounting reporting:.........................................5
TASK 2............................................................................................................................................6
P3. Preparation of income statements under the absorption and marginal costing-....................6
Absorption costing ..........................................................................................................................7
Flexed Budget for the actual activity...........................................................................................8
TASK 3............................................................................................................................................9
P4. Advantages and disadvantages of planning tools used for budgetary control:......................9
TASK 4..........................................................................................................................................10
P5. Comparison of organisations to solve the financial issues .................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting (MA) is called managerial accounting and cost accounting. It is
a process that is discussed as controlling, directing, administration of the operational and
functional activities of the business processing unit to prepare the financial reports and statement
from business transaction or records that assist in decision-making process to management
(Yahyavisaeen, Amirhosseini, and Poorzamani, 2015). It control the business operation and
apply the systematic approaches of management accounting process to management can take the
decision regards the achieving the business goal. For this report a financial consultancy company
that is Arrow financial services is selected that is UK origin company and provides the financial
consulting services to its valued customers. In further to another Client company of the this
particular company Warwick fabrics UK Ltd is choose for better understanding this report. This
is manufacturer of the cloth and supplier of fabrics that is located in Gloucester, united kingdom.
This reports covers the management accounting system and reporting, budgeting control system
and different planning tools and techniques that are implementing in the business to resolve the
financial problem of the business. It also covers practical problem on the basis of the stores and
production level of the company.
TASK 1
P1. Management accounting and essential requirement of different kind of management
accounting systems-
Management accounting: It consist of the detailed planning, monitoring and handling
the business activity or action to betterment in the business productivity and performance. This
process of management accounting includes the decision making system in the business from its
current business affairs and deals. Management accounting is combines the application of the
financial and non monitory information and data to handle the business concern and its
components. The company Warwick fabrics UK Ltd is manufacturer of the textiles fabrics is
used the management accounting system to conduct the business activities and deals (Sahu and
Kumari, 2015).
Management accounting system: management accounting system are appropriate and
systematic process of analyse the business final account and other statement and used the data
from the daily operation and records in the enterprises. These analysed data and information are

really helpful in order to make the business decision and redefine the organisational rule and
policies in structured manner. Warwick fabrics UK Ltd applies the management accounting
tools in the business function to better manage the short term operation. There are a lot of
management accounting system available to be utilize in the business. Some of them are
discussed below:
Cost accounting system: This is the main accounting system of management that is
described as structure of outlay which is recognize the accurate cost of production for a
processing unit. This is the system that used to evaluating the cost of the material, direct labour,
and other overhead and monitor the total works cost at the processing unit of manufacture. This
system is based on the cost and production value techniques to handle the overall cost. In the
relevance with Warwick fabrics UK Ltd company used this process to maintain the overall cost
of manufacturing, fabrication and designing section cost. So it help in the ascertaining the total
cost of production as well as profit from the processing unit of enterprises. This tools is also
helpful in devising the cost accompanying scheme, cost structure and annual budget (O’Grady
and Akroyd, 2016).
Inventory management system: It is a basic system of management accounting process
that defines as ascertain the level of the stock in the manufacturing unit, stores, and warehouses.
It further ensure the accessibility of the stock material at right time of consumption in making the
goods and services. The stock comprises the stage of the stock such as raw material
consumption, work in progress (WIP) and last stage of goods finished stock. This system play a
significant role in deciding the price tag for the particular product. The selected company
Warwick fabrics UK Ltd is using this particular tools in the system to ascertain the quality and
quantity of the stock available at the warehouse. This process monitor the stored quantity of the
goods to improved flow of the goods and services. There are antithetic concepts to confirm the
value of goods such as LIFO, FIFO and weighted average method (Nanshun and Ya, 2013).
Job costing system: This is the another method of the management accounting system
that refers to simply allocation of the cost on the particular task or projects. It is relevant with
grouping of the cost component that is related with particular product. It aid in evaluating the
different job allocation cost to improve the final capacity of particular manufacturing unit. It is
cost accounting method that is based on the estimation of the cost of the completed projects and