Management Accounting: Systems, Reports, Cost Calculation and Budgetary Control

This report focuses on the use of management accounting in enhancing the efficiency and effectiveness of ASDA, a retail-based management dealing in groceries. It covers topics such as management accounting systems, reports, cost calculation, and budgetary control. The report also discusses various techniques and tools that can be used for these purposes. Subject: Management Accounting, Course Code: N/A, Course Name: N/A, College/University: N/A

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems..........................................................................................1
P2: Management accounting reports............................................................................................3
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
TASK 3............................................................................................................................................7
P4: Planning tools for Budgetary Control....................................................................................7
TASK 4............................................................................................................................................8
P5: Comparison of organizations.................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management Accounting termed to the use of a broad variety of methods and tools by
which the appropriate financial analysis will be done and therefore the right determination can be
taken by the managers of a particular organization which can thus help them in managing the
funds quite appropriately and properly (Alabdullah and Ahmed, 2020). Therefore, it is necessary
that the use of Management Accounting should be made so that the enhancement in the overall
level of efficiency and effectiveness level can be done in a right way. For this report, ASDA has
been selected. It is a retail based management that deals in groceries, and other related items. In
this report, there will be a elaborated and specific focussing on the manner in which the usage of
Management Accounting might be made with the aim of enhancing the global field level of
efficiency and effectiveness level within the organization in an appropriate manner so that the
management of the financial needs and requirements can be done.
TASK 1
P1: Management accounting systems
Management accounting is an important concept which is quite helpful for the managers
so that they are able to consider the way in which they can take the decisions which can be quite
useful for the purpose of managing the funds in a right manner (Alhatabat, 2020). Therefore, the
managers of ASDA are required to follows their concentration on its use so that the improvement
in the suitable level can be done in an appropriate way.
There are various types of Management accounting systems which can be used within a
company. These are explained as follows-
Cost Accounting System- It is a system in which a thorough and detailed assessment of
the costs is made (Amirbeyki Langroudi, Kordestani and Reazei, 2020). Hence, in this manner it
can be declared that the utilisation of this section that might be created so that the global term of
efficiency and effectiveness level can be made quite appropriately in a proper manner. ASDA
can use it for properly assessing the costs and determining the future course of action to be taken.
Essential requirements-
 It is a system in which there must be identification of the methods and techniques to be
used for the determination of the level of costs in an appropriate manner.
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 In this system, the identification of the appropriate steps to be taken so that the needs and
requirements of the organization are managed should be done quite appropriately.
Inventory Management System- In this division, the use of manner and toolsshould be
made for the specific aim of assessing the level of stock effectively and efficiently (Diab, 2020).
Thus, in this way it can be stated that the management of ASDAshould be able to make the use
of this system for managing the stock items appropriately.
Essential requirements-
 In this system, a right tracking system must be used which can therefore help a lot in
managing the stock items systematically.
 This system should be helpful for maintaining a higher-level of efficiency and
effectiveness in the management of the stock items in the organization.
Job Costing System- In this system, the proper assessment of the various types of job
costs should be made (Dwirandra and ASTIKA, 2020). In The relation of ASDA it can be stated
that this sections is quite essential and useful for determining and controlling the job sections.
Essential requirements-
 This system must be able to identify the job costs and therefore ensure that the
appropriate actions can be taken by tracking them.
 This system should be able to ensure that the appropriate and right steps should be taken
for enhancing the profitability level.
Price Optimization System- In this section, the management of the costs should be done
so that the suitable cost that are selected for the particular aim of ensuring that the section of
profits can be enhanced (Golyagina and Valuckas, 2020). Hence, it is quite necessary that the
business like ASDA are capable to make its usage for ascertaining the prices in a proper way.
Essential requirements-
 This system should allow for forecasting of the different types of prices so that the prices
can be set according to the level of demand.
 This system must be helpful for setting such prices so that the profits in the organization
can increase which will help the people within the organization.
P2: Management accounting reports
Management accounting reports are such reports that are quite helpful and helpful for the
particular purpose of ensuring that the analysis and interpretation can be carried out in an
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appropriate way (Hutahayan, 2020). Therefore, it can be declared that the use of such manner
that is quite essential and supportable for the particular purpose of ensuring that the right reason
and recommendations that might be derived which will be helpful in taking decisions. The
Management Accounting Reports that can be used by ASDA are mentioned below -
Job Costing Reports- These reports are highly helpful and useful for the determination
of the job costs in an appropriate way (Isoh, 2020). It is therefore crucial to make sure that the
determination of the job costs should be done through making an use of these reports. ASDA
managers should be able to make their use for the analysis of job costs and therefore determining
the approach to be taken for decreasing the job costs so that the profitability level can be
enhanced.
Inventory Management Reports- These reports are necessary for ensuring that the
management of the stock level can be done appropriately (Johnstone, 2020). Hence, it might be
stated that it is quite necessary and important to make their use so that the global level of ratio
and affectivity that are raising. In the relation of ASDA it should be ensured that the use of these
reports is done for the particular purpose of appropriate management of the different types of
stock point so that the accomplishment of the score and objectives can be through with it.
Departmental Reports- In these reports, the assessment of the performance level of the
departments is required to be made which will therefore help in identifying the appropriate
decisions to be taken for the future. Thus, it can be stated that through these reports the track of
the work done by the departments can be made. For ASDA it is necessary that the use of these
reports should be made so that the overall level of efficiency and effectiveness can be enhanced.
Performance Reports- In these reports, it is highly necessary that the performance
assessment is carried out which will be helpful for the purpose of taking the right steps in the
future. Therefore, it can be stated that through using these reports the performance level can be
increased. ASDA managers should be able to use them for ensuring that the deviations and
variations in the performance are assessed and thus the corrective actions are taken effectively
and efficiently.
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TASK 2
P3: Calculation of costs
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It is necessary that the appropriate assessment of the different type of costs is made
within an organization. For this purpose, the important techniques are required to be used. These
techniques are explained as follows-
Marginal Costing-
It is a section in which the variable cost is charged from the divisions and the fixed cost is
written off as against to the contribution (Kumarasinghe and Haleem, 2020). Hence, it might be
stated that this special method is helpful in ensuring that the right purpose of the profits can be
made in the company which will thus support it a lot in the future. Hence, it is required that the
managers of ASDA are able to ensure that they can make the right utilisation of this method for
determining the profitability level.
Advantages-
 It is quite simple to use and therefore in this way the people in the organization are able
to easily learn about its application. Thus, it can be easily applied within the organization
and its processes.
 It is helpful for the purpose of decision-making in the organization and therefore this can
lead towards better decisions. Thus, the managers can take the right decisions which will
thus help them a lot.
Disadvantages-
 When the use of this technique is made, the segregation of the various types of overheads
in the organization becomes difficult.
 As this technique excludes the fixed overheads from the costs it can therefore lead
towards wrong conclusions.
Absorption Costing-
It is a system by which the classification of the costs can be made and hence the right
course of activities are to be taken for further determination (Legaspi, 2020). Therefore, it can be
stated that the right use of this particular system has to be created so that the business of the
appropriate needs and wants can be made quite effectively and efficiently. It will thus lead
towards improvement of the level of net income. For the managers of ASDA it is important that
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the use of this particular method is made so that the attainment of the future goals and objectives
can be carried out.
Advantages-
 The analysis of the level of overheads within the organization can be made appropriately
when the use of this particular technique is made. Thus, the control on the level of
overheads can be kept in this way which will be quite useful in controlling the overheads
in an appropriate manner.
 Through the use of this technique the apportionment and allocation of the overheads can
be done in a much better way. Thus, the identification of the overheads of the various
departments in the organization can be carried out in a right manner.
Disadvantages-
 It is not useful for the purpose of decision-making and therefore in this way it can create
an impact on the organizations.
 The highlighting of certain costs is not done when this technique is used and therefore
this affects the organizations.
Therefore, it can be stated that the use of both of these techniques is quite
accommodating for the specific intention of taking of the right decisions which are related with
enhancing the general division of efficiency and effectiveness in a better manner. Therefore, the
managers of ASDA should be able to ensure that they must be able to appropriately use these
particular techniques which will help them in identifying the future course of decision which has
to be taken. This will help in targeting a particular increase in the general level of net income in
the future for the organization.
TASK 3
P4: Planning tools for Budgetary Control
Budgetary Control is a technique in which the preparation of the Budgets is done so that
the necessary course of action can be taken. Therefore, in this way it is helpful for the
management of the funds within the organization. The managers of ASDA should make its use
for ensuring that the use of forecasts can be made correctly and appropriately.
Different types of Budgets can be prepared within the organizations. An explanation of
some of these Budgets can be provided as follows-
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Cash Budget-
It is a Budget in which the insure of the cash receipts and expending is made. It is
therefore necessary that its preparation can be done so that the social control of the cash can be
done in a correct manner (Lueg, 2020). Therefore, it is important for the management of ASDA
that they make the use of this budget.
Advantages-
 Through its preparation, the cash can be managed so that the decisions can be taken in
quite an appropriate way.
 This budget is required to be prepared so that the necessary control on the cash receipts
and expenditures can be kept.
Disadvantages-
 Its preparation can affect the level of flexibility in the organizations which is related with
cash expenditures.
 Its preparation is quite time-consuming and costly and therefore in this way this affects
the organizations.
Sales Budget-
It is a forecast of the sales of a particular organization over a specific period of time. Therefore, it
is quite important that the management of the sales revenues of the organization can be done
through making an appropriate use of this particular budget (Massicotte and Henri, 2020). In the
context of ASDAit is necessary that its preparation should be made for ensuring a right
management of the sales effectively and efficiently.
Advantages-
 It is a Budget through which the comparison of the actual sales data with the previous
sales data can be carried out. This can therefore help the management to be able to draw
conclusions and recommendations which are useful.
 It is a Budget through which the determination of the actions to be taken for the future
can be done which will be useful for the purpose of taking the right decisions effectively
and efficiently.
Disadvantages-
 A Sales Budget which is prepared by the higher authorities may not be acceptable to all
the people in the organization. Thus, in this way it can impact the level of operations.
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 Its preparation is quite time-consuming and costly. Therefore, in this way it affects the
organizations.
Master Budget-
It is a Budget which is prepared for the purpose of managing the overall level of needs
and requirements of the organizations which are related with the Budgeting process (Mayndarto
and Agustine, 2021). Its preparation helps the firms in keeping a tight control on their expenses
and ensuring that the decisions can be taken smoothly.
Advantages-
 It is a budget which details the estimations in a proper manner within the organizations.
Therefore this is helpful for the firms.
 This budget is quite useful for ensuring that the management of the level of expenditures
can be made in the organizations. In this way it can help the organization in a proper way.
Disadvantages-
 This budget does not offers specialization and therefore it is difficult to analyse and
interpret a particular area through its use.
 This budget is quite difficult to read and update. Therefore, in this way it affects the
different types of organizations.
TASK 4
P5: Comparison of organizations
Financial problem- This refers to a condition in which the business faces the financial
trouble and therefore it creates an impact on its position of funds. Such as other management
such as, ASDA also faces financial issues. Some of the problems that are being faced by it are as
follows-
 Increase in overheads- The overheads of the organization have been increasing
constantly and therefore this is increasing the costs and lowering the level of profits.
Thus, this is affecting the financial problem of the organizations.
 Improper inventory management- The inventory products in the business are not being
maintained as appropriately and thus this is developing its effects on the firm. Therefore,
this is impacting the financial situation of the organization.
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The use of techniques can be made for the purpose of solving financial problems. Some of them
are explained as follows-
 KPIs- These are the Key Performance Indicators. It is quite necessary and essential that
their use should be made for the particular purpose of enhancing the own performance
appropriately. Therefore, it is quite necessary that their use should be made by the
managers of ASDA so that the problem of overheads can be solved because their use will
be quite helpful in the determination of the way in which the reduction in the overheads
can be done.
 Benchmarking- It refers to a technique through which the appropriate benchmarks and
standards can be set (Napitupulu, 2020). For the managers of ASDA it is necessary that
its use should be made so that the problem of inventory management can be solved which
will thus result in appropriate management of the level of stock within the organization.
Comparison of organizations
Basis Tesco Sainsbury's
Financial problem In Tesco the management of
job orders is not being done
properly which is thereby
creating an effects on the
business.
In Sainsbury's the prices are
not being set properly which is
thereby developing an impact
on the business.
Management accounting
system used
Tesco is creating the utilisation
of Job costing section is to
solve this issue.
Sainsbury's is making the use
of Price managerial division to
solve this issue.
Application of the sections The application of this system
can be done by Tesco by
ensuring that the management
of the job orders is done
appropriately and properly so
that the overall efficiency and
effectiveness level increases.
The application of this system
can be done by Sainsbury's by
ensuring that the prices are set
quite appropriately according
to the set level of demand
which will thereby help in
managing the needs and
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requirements.
From the above discussion, it can be stated that the managers of ASDA should find out
from the managers of Tesco and Sainsbury's and thus ensure that the suitable activities that are
taken for solving financial issues. Hence, the business of the organization can develop the use of
Cost accounting system to resolve the issues of overheads and Inventory management sections
to solve the issues of inventory. Therefore, in this way the company will be able to bring
smoothness in its level of operations and it will also be able to make sure that it can maintain its
financial health in the right way so that the goals and objectives in the future are attained.
CONCLUSION
From the above report, it can be concluded that Management Accounting termed to the
utilisation of the manner and tools by which the management quite suitably. Thus, for the
managers of an organization it becomes necessary that they use it for the purpose of taking of
various types of necessary decisions. Therefore, it is necessary that it should be used by the
managers of the organization so that the financial facts and information can be used to facilitate
decision-making. Thus, in this manner the business will be capable to ensure that they are
capable to increase the global section of efficiency and effectiveness in quite an suitable manner.
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REFERENCES
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