Management Accounting Techniques for Business Efficiency

The provided assignment delves into the realm of management accounting, focusing on various techniques that businesses can utilize to improve their operational efficiency. The study emphasizes the importance of management accounting in industrial operations, highlighting the role of budgets and planning tools in making informed decisions and predicting costs. It also explores costing methods like marginal absorption costing, which provides a fruitful measurement of profitability. Furthermore, the assignment touches upon performance appraisals that help determine a firm's efficiency, productivity, and performance.

MANAGEMENT ACCOUNTING

TABLE OF CONTENTS
TABLE OF CONTENTS.............................................................................................................................2
INTRODUCTION.......................................................................................................................................3
P1 Management accounting system types and tools................................................................................3
P2 Management accounting reports.........................................................................................................5
P3 Marginal and absorption costing.........................................................................................................7
P4 planning tools and budgetary control systems advantages and disadvantages..................................10
P5 performance appraisals to overcome financial problems..................................................................15
CONCLUSION.........................................................................................................................................16
REFERENCES..........................................................................................................................................17

INTRODUCTION
To have the favorable decision relevant with operational objectives of a business where,
management accounting plays the most efficient role. It enables the professionals in terms of
decision making as well as planning to enhance the efficiency of firm. The present report there
will be determination of various planning tools and budgetary control systems as well as the
several reports which in turn helpful for a business to make the most effective planning. There
will be measurements of revenue and expenditure of Williams Performance Tenders which will
be on the basis of marginal and absorption costing techniques. There will be analysis of various
performance appraisals that will improve the operational activities in an entity. Therefore, all the
various necessary factors, types and parts of management accounting will help the business in
having the financial stability.
P1 Management accounting system types and tools
From: MAO
To: GM
Subject: Useful management accounting techniques to enhance the business efficiency
Sir,
This is to inform you that many of organization are implicating the use of costing,
forecasting and reporting techniques to improve the organizational efficiency. If the Williams
Performance Tenders implicate the operation of such techniques than the industrial efficiency as
well as revenue generation will be improved and enhanced. Therefore, here are various methods
and techniques were evaluated in the report which will be beneficial for enhancing the operation
of entity. To understand the benefits of management accounting it can be analyzed as:
Management Accounting:
This the technique which implicate the role of both the terms such as management and
accounting. Therefore, there are various reporting and costing techniques which helps the entity
in identifying the requirement of funds for the operations as well as proper management of the

resources. There has been record of all the financial transactions such as purchase, sales and
costs such as material and labor will be analyzed and an efficient decision will be made by the
professionals in context with the same.
Objectives and benefits of management accounting:
 The basic and foremost function of the management accounting is to assess the
operational activities and the financial condition of the business to meet the cost
requirement.
 It records all the transaction data and present the relevant information to the professionals
so the effective solution can be made in terms of modifying the business operations.
 It brings the favorable communication in the premises which in turn helpful for the
application of the effective plan and strategies with efficient efforts.
Management accounting system:
To have the most innovative ideas and new methods to resolve the financial or
operational obstacles in the firm there are several tools and techniques that will help the firm
(Chan, 2015). Therefore, while analyzing such features the professionals at Williams
Performance Tenders will become able to have the strong decision making. It will be very
effective in terms of lowering down the costs of operating activities (Garcia and et.al., 2016).
There will be adequate operational activities which will help the business to make the favorable
growth as well as increment in the profitability. These tools will help the Williams Performance
Tenders in terms with acquiring the fruitful solutions as well as ability to enhance the business
performance.
Cost accounting system: These techniques help in analyzing the actual requirements of
funds and finance in a particular operation. Therefore, the managers and professionals of the
Williams Performance Tenders make the efficient decision which will be fruitful for them in
allocating capital to such duties and tasks (Dragomir, Avram and Domnişoru, 2016). It helps
professionals in analyzing the revenue and return they have form the duties in against the costs
they have invested in the same.

Investment management: This technique will be beneficial for the managers to make the
strong analysis over the revenue and reserve firm has acquired. Thus, on which they will make
the adequate decision to resolve the problems as well as facilitate the information for the fruitful
investments in future (Hickman, 2016). Therefore, with these tool Williams Performance
Tenders will have a sufficient increment in the profitability as well as revenue generation (Bryer,
2013).
Job costing system: This is the reporting technique which implies with determining the
cost incurred in each job performed by organization. It includes the record of cost allocation,
labor and all the direct expense made in such process as well as the final outcome from such
operations. This, helps managers in identifying the fruitfulness and profitability of such unit in
terms of decision making (Wei and et.al., 2016). They analyze the result and make favorable
decision that will helpful in increasing the efficiency and profitability.
Price Optimization: To determine the suitable price for the products and services there
is need to have proper market analysis such as consumer demands for a product as well as
suitable price over such article which will meet the cost requirements.
Requirement of management accounting:
 It manages the internal business operations which will be effective in terms of having the
better profitability as well as revenue generation (Simionescu and Bica, 2016).
 It determines the performance of the organization and the employees as well as motivate
them to put their valuable efforts in attaining the goals.
P2 Management accounting reports
These techniques require records of all the transactions within the Williams Performance
Tenders that there will be presentation of such reports which in turn helps in making the proper
cost allocation. Therefore, the reports are being prepared on the basis of financial and non-
financial activities in the Williams Performance Tenders. Thus, that will be beneficial in making
the fruitful decisions for business operations. It also highlights the corporate social
responsibilities of an entity that will help firms in making the sustainable environments (Pemsel
and Wiewiora, 2013). The data and information are used in each data set are belongs to
authenticate sources that will help in presenting fruitful analysis of business transactions.

Figure 1 management accounting reports
(source: Lock, 2014)
Budget report: this reporting will help to make the fruitful decision which in turn
determines the costs and expenses to be incurred in the operational tasks of Williams
Performance Tenders. Thus, it can be said that with the help of these techniques the managers in
analyzing the various sources to retain profits as well as make a fruitful estimation of costs in
each business operations (Bryer, 2013). These will be beneficial for them in terms of allocating
costs as well as demonstrating the required changes in the piece of work.
Job cost report: This report will help in making examination over the costs were utilized
on each operation of business. This technique is helpful in analyzing or measuring the
appropriate costs in each activities of Williams Performance Tenders (Ozdil and Hoque, 2017).
These helps in determining the expenses incurred over men, machinery and material in a job or
in a particular department. Therefore, it can be said that, it will help the professionals planning
the fruitful innovative idea that will lowers the costs in each function.
Debtors aging report: This reporting technique is helpful in measuring the period of
receiving the money or funds from debtor over sale of goods and services. This estimation will
be beneficial in terms of analyzing the accurate amount of funds from the various individuals or
stakeholders of Williams Performance Tenders such as suppliers, consumers, distributors etc.
these are the revenue of gains which are yet to be received by firm over the selling of such
produced goods (Chan, 2015). Therefore, it can be said that it will help in managing the
operational activities of the business. This will be added to the accounts because it is also the

income which will be recovered and will reflect in the income of entity. There will be benefits of
making or showing such transactions in the books of accounts as there will be no tax payments
over accounts receivables. So in these regards the income which is yet to be received will not be
liable of taxation.
Inventory and manufacturing report: To analyze the requirement of material while
producing the goods and services in Williams Performance Tenders will be known as inventory
management reports. Therefore, in this reporting technique the professionals seek availability of
goods and services in the premises as well as the demands in market. It estimates the current
demand and plan for the increase or decrease of such demands and requirements in the upcoming
time (Simionescu and Bica, 2016). Thus, it will be fruitful for the managers in terms of making
the proper estimation of consumers needs so on that they will plan costs of production as well as
prices of such goods in terms of making profitable gains.
P3 Marginal and absorption costing
The motive behind presenting a disclosure of the books of accounts or the financial of a
business is to gain the profitable outcomes as well as used in decision making. There will be
analysis of the given data set which indicates purchase and sales made during a year. There has
been sufficient development techniques and strategies which will be helpful to the entity in
terms of identifying the costs incurred in particular tasks as well as profitability of it. Therefore,
there will be calculations of such financial on the basis of marginal and absorption costing
method such as:
Marginal costing: This method helps in analyzing the deficit and surplus in the volume
and costs of production as the increment in the one unit of output. Therefore, it is based on the
concept that if the price of such goods or units is more than its production costs then the
professionals may carry forward such operations (Wei and et.al., 2016). Thus, with the help of
this technique the contribution made by consumers will be analyzed as well as have the adequate
revenue gathering.
Income statement for Williams Performance Tenders as per marginal costing techniques
such as:

Particulars Details Details
Sales revenue 600*35 21000
Direct material 700*6 4200
Direct labour 700*5 3500
variable production overheads 700*2 1400 9100
Less: Closing stock
Direct material 100*6 600
Direct labour 100*5 500
variable production overheads 100*2 200 1300
Variable expenses 7800
Per unit contribution 13200
less: variable sales overheads 600*1 600
Less: Fixed expense
Production overheads 2000
Fixed administrative cost 700
Fixed selling cost 600 3300
Net profit 9300
Amount in(£)
Interpretation: in accordance with the income statements of Williams Performance
Tenders on the basis of marginal costing technique where all the revenue generated through
selling the 600 units over selling costs of 35 per unit which is amounted to 2100. The costs of
producing such units will be over all the producing units such as 700 over costs of prices of
direct material labor etc. are the rate of 13 per units which is amounted to 9100. The remaining
inventory is of 100 at the price of 13 per units which is 1300. There will be reduction of variable
costs for 7800 and thus it presents contribution as 13200. There will be deduction of variable
overheads on the sales at the rate of 1 pound, fixed costs such as production overhead for 2000,
fixed selling costs at 600 and fixed administrative cot as 700. Therefore, the net profit will be
obtained by firm at the end of the year is 9300 respectively.
Absorption Costing: this costing technique is based on involving or measuring the direct
or indirect costs into calculations (Dragomir, Avram and Domnişoru, 2016). Therefore, the
concept lies over here that there will be analysis over all the costs and expensive that a firm made
while producing a unit. It helps in analyzing the actual gains from such operations.
Income statement of Williams Performance Tenders as per absorption technique

Particulars Details Details
Sales revenue 600*35 21000
Direct material 700*6 4200
Direct labour 700*5 3500
variable production overheads 700*2 1400
Variable sales overheads 700*3 2100 11200
Less: Closing stock
Direct material 100*6 600
Direct labour 100*5 500
variable production overheads 100*2 200
Variable sales overheads 100*3 300 1600
lees: Absorption of fixed overheads 100
Cost of production 9500
Per unit contribution 11500
Less: Fixed expense
Fixed administrative cost 700
Fixed selling cost 600
less: variable sales overheads 600*1 600 1900
Net profit 9600
Amount in(£)
Interpretation: this income statement represents the measurement on the basis of
absorption costing techniques that have measure all the expenses or costs incurred while
producing the units for business. Thus, the revenue obtained by Williams Performance Tenders
on the 600 units of sales for the costs of 35 which is amounted to 2100. The costs of production
will be over all the units produces at the costs of all expenses incurred amounted to 16 per units
as 9500. The closing inventory will be analyzed as 100 units at 16 such as 1600 and there will be
measurement of production overheads for 100 deductible from the revenue earned. Therefore,
the costs of production will be measured at 9500 which represents the gross profit for 11500.
There will be deduction of variable and fixed costs as amounted to 1900 and thus 9600 will be
analyzed as the net profit for the year.
However, after measuring the financials on the income and expenses of Williams
Performance Tenders. There has been use of two costing techniques such as marginal and
absorption. Therefore, it indicates variation in the net profit. The marginal costing facilitated net
profit of 9300 while absorption costing facilitates the net profit of 9600. Thus, it can be said that,

absorption costing technique will be beneficial for the Williams Performance Tenders in terms of
having the most favorable outcomes and the great net profit for the year.
P4 planning tools and budgetary control systems advantages and disadvantages
To make the appropriate increment in the production and profitability of the firm there is
need to have proper business administration. Therefore, in terms of analyzing the past
performance of business the professionals will become able to make proper decisions and
planning for the further operational activities. There has been various planning and budgeting
tools and have their own pros and cons which will help the professionals at Williams
Performance Tenders to make accurate decisions.
Net present value: This is the planning tools which help in estimating the present value
of the invested money in the coming years. Thus, it will help the managers that how many costs
they will have in each year for the money they have invested on the basis of cash flows for each
period (Hickman, 2016). It will be beneficial for the firm in making adequate decisions as well as
analyzing the needs of such projects or operations of Williams Performance Tenders. However,
there will be some advantages and disadvantages of this planning tool such as:
Advantages:
 The main advantage of this planning tool is that there will be deduction in each year’s
cash flow than the invested cash flow because of use of discounting factors. Therefore, it
helps in discounting the cash flows each year and presents the present value.
 It is very easy and helpful tool in terms of analyzing the present value over the future
cash flows of the business.
 It is beneficial for the professionals in terms of efficient and accurate decision making as
well as planning for the reduction in costs.
Disadvantages:
 This concept and the measurement are based on the lots of guesswork and estimation
which will result in sub optimal investment decision making.

 These s not a fruitful two while comparing the two projects whit different sizes because
the amount of output is will be denoted as per the size of input made in such operations.
Average rate of return: It is a proportionate return over the capital invested in the project
which is without considering the time value of money. This is based on analyzing the average or
accounting return over the capital or cash inflows made during the period (Garcia and et.al.,
2016). Therefore, there have been several advantages or disadvantages such as:
Advantages:
 It is to simplest and easiest way of measuring the profitability over the total revenue or
profit gathered by firm in such year as well as it is same as payback period in terms of
considering the profits or cash inflows of the period.
 The net earnings of the year will be considered by this concept which as vital or
important factor in investment appraisal proposals.
 This is the most help tool in terms of comparing the two or more projects and analyzing
the fruitful returns from them.
 With the help of this technique the accounting return will be measured as per the
accounting records and the transactions made during the years.
 Professionals will be beneficial in terms of analyzing the returns over their investment as
well as it are very useful method which helps in measuring the current performance and
state of entity.
Disadvantages:
 It will be difficult for the managerial professionals in the firm while analyzing the
profitability and returns over the invested capital amount as per the two concepts such as
ROI and ARR. Therefore, the results in both the concept have the huge variation so it
becomes quite complex for them to analyze which project will be beneficial.
 This concept only considers the funds inflows but totally ignore the time factor so it
cannot be said that when the firm will have such return over invested projects.

 The outcomes are not appropriate or adequate so the one could not easily analyze the fair
rate of returns.
 This concept does not involve and external factors such as expenses of losses which are
also affecting the profitability as well as revenue of the business. Therefore, the
estimation will not be correct and adequate.
Internal rate of return: This rate of investment or inflows made during the year over the
initial investment. This measurement helps the professionals in knowing about the increment in
the total cash inflows during the period.
Advantages:
 It is the most preferable term will analyze the rate as it considers the time value of money
which is totally ignored by ARR.
 This method is the simplest method as well as easily measurable on which they will make
the adequate increment in the performance and operations of the business.
 It ignores the hurdle rate as well as invite the rough estimation over any investment in
any projects.
Disadvantages:
 It ignores the economic scale of value while analyzing the rate over the invested capital
in any projects.
 There will be not a proper assumption were made over the invested projects because of
implicated impractical reinvestments rates.
 It considers the two different terms of project which are having the differences in the
completion of the projects e.g. Project A is for 4 years while Project B is of 10 years.
 It mix all the positive and negative cash flows of the years which will be not and
adequate measurement for the rate of changes between them.

Zero base budgeting: this concept is lies over the method that all the budgets and costs of
any projects or investments are starts from the zero bases. Therefore, it can be said that it does
not consider the past value of income and gains (Lock, 2014). It begins the project with zero
value as the new beginning for each project in each year. Thus, the funds will be made as per the
requirements incurred in such projects in any time. It is the most flexible budgeting technique
which helps in making the costs on projected products as per the increase and decrease in
demands or supplies.
Advantages:
 In consideration with the other budgets they usually has and arbitrator balance of the
previous period and then consider the new budgets over it. Thus, this concept dose not
use that method and the budgets were made as the requirement of the funds in a particular
time so it the most accurate costing technique.
 It helps in utmost and efficient utilization of all the resources as well as reduce the
amount of wastages over any business operation. The capital invested in the projects was
fully utilized by them.
 It helps the managers in making the adequate planning and decision making as well as
searching for the new opportunities for the business operations.
 It is the most helpful tool in terms of building the favorable relationship in the Williams
Performance Tenders as well as creates a bridge of communication between various
departments.
Disadvantages:
 It is the time consuming process as the managers of professionals in Williams
Performance Tenders has the spent much time in analyzing the requirements of funds for
the tasks or operations.
 There will be requirements of high manpower like involvement of large numbers of
employees or accounting professionals to prepare such budgets while in these regards

many units do not have that much human resource as well as the time consumption will
affect operations of business.
 There will be lack of expertise in terms of preparing such budget because there will be
need of qualified and skilled full worker to prepare such budget and that requires proper
training and execution.
Activity based budgeting: these budgets are based on each activity in Williams
Performance Tenders. There will be allocation of costs over the requirements in units or piece of
work. Therefore, it is based on the activity framework as well as utilizing the cost driver data
while planning the budgets. However, there will be various benefits and loopholes to such
budgeting process.
Advantages:
 It is the most perfect and accurate budgeting or costing techniques which presents the
favorable data and answers to each business operations.
 It is the easiest way of understanding every one as well as considering the overheads.
 It supports, benchmarking, balance scorecard and other performance appraisal techniques
which in turn helps in improving the efficiency of entity.
Disadvantages:
 It is the most complex technique in terms of determining the adequate costs to each
business operation and thus it requires the substantial resources for measuring costs of
projects.
 These may be a modern technique in terms of analyzing the costs but the managers in the
firm considers the traditional costing over each project which is not accurate and
adequate while presenting the outcomes.
NPV: This is the technique which reflects the present value of the future cash flow. The
measurement are based on estimates projects for the future which are planned by the
professionals. The cash flows will be analyses by them as they assume growth in the coming

time. The analysis will be helpful to the business to analyses the profitability of such projects.
However, It will be beneficial for the entity in terms of making accurate decision regarding the
fruitfulness in business targets.
Advantages:
 It is the best planning tool which determines the profits in the future
 It considers the cost of capital while measuring it.
 It brings the accurate outcomes
Disadvantages:
 It is quite complex and time consuming for the professionals.
 The outcomes do not belongs to the time value of money.
P5 performance appraisals to overcome financial problems
In order to improve the operational efficiency of a business there is need to have the
performance appraisal tools and techniques which help in resolving the financial obstacles.
Therefore, Williams Performance Tenders must use such techniques in terms of enhancing the
operational performance in the firm. Therefore, these tools and techniques are as follows:
Key performance indicators: these are the methods on which the firm will become able
to determine the adequate increment in the performance. These helps in recording and measuring
the performances made by managers, employees and firm. This is the most helpful tool in
analyzing the loopholes in the performance of the Williams Performance Tenders as well as
helps the managers in making adequate decision to resolve such problems (Hickman, 2016).
Therefore, in consideration with the financial problem in entity it helps in analyzing the costs and
the planning were made to reduce such costs. For example, Tesco implicate the use of KPI
technique in the operational as well as employment management.
Variance analysis: these is the quantitative investigation of the all the variations in actual
outcomes of the planned budgets for the operations of Williams Performance Tenders. Therefore,
it can be said that it is the most fruitful ways of determining the adequate increment and analysis
of the business operations (Pemsel and Wiewiora, 2013). Therefore, with the help these tools the

managers in the firm will become able to analyses the adequate increment in the growth and
performance of business operations and analyze the utilization of funds in each piece of work.
Benchmarking: It is the most helpful tool in terms of marking the records of all the
activities held in premises on the basis of its fruitfulness and the operational requirement of
Williams Performance Tenders. Therefore, with help of this technique the stakeholders in the fir
will be beneficial in analyzing the loopholes and weaknesses in the operations of business as
well as make the adequate increment in the firm’s efficiency and level of production. For
example, Ford Motor corp. Has implicated the use of this technique as to enhance the work
performance of organization.
Balance scorecard: These techniques will help in making the adequate increment in the
performance of the business as well as helps in determining the proper activity performed by
business. There will be adequate judgements which are made by managers or professionals as to
enhance profitability and lowering the costs as well as innovative ideas to improve brand image.
CONCLUSION
Hereby, in relation with this study it will be suggested to the managers of Williams
Performance Tenders that, management accounting is the most essential part of the industrial
operations. The presents of various budgets and planning tools will help in making the adequate
decisions as well as forecasting of the costs. Further, it can be said that with the help of these
tools the managers in the form will be beneficial in analyzing the performance as well as
efficiency of the Williams Performance Tenders. The costing techniques such as marginal
absorption costing techniques which indicate the profitability of the sales made during the period
on which absorption costing the most appropriate and fruitful measurement. There has been
influence of various performance appraisals that helps in determine the efficiency, productivity
and performance of firm.

REFERENCES
Books and journals