Management Accounting and Environmental Reporting

This assignment provides an overview of management accounting research related to environmental reporting and sustainability. It includes a list of relevant articles and books from 2012 to 2016, covering topics such as shared services, strategic management accounting, and corporate eco-efficiency. The resources also touch on the research-practice gap in management accounting and the role of information technology in accounting change.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and various kinds of management accounting systems.................1
M1 Benefits of management accounting systems and their applications...................................4
D1 Evaluation of various reporting method and accounting system integration........................5
TASK 2............................................................................................................................................5
P3 Techniques of cost analysis to develop income statement using adsorption and marginal
costing.........................................................................................................................................5
M2 Various types of accounting tools and techniques................................................................7
D2 Analysis of data collected from income statement................................................................8
TASK 3............................................................................................................................................8
P4 Advantages and Disadvantages of using planning tools used in budgetary control..............8
M3 Use of different planning tools and their applications........................................................10
TASK 4..........................................................................................................................................10
P5 Comparison with other organisation to overcome financial issues.....................................10
M4 Analysis of planning tools to deal with financial issues.....................................................12
D3 Planning tools for responding to financial issues................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a process of preparing the management accounts as well as
reports that helps in provide the timely and accurate financial information needed through
managers. Under this managers use provisions of the accounting information in context to better
inform before they decide the matters with in company. It will be helpful for managers to control
all functions of company. It is procedure of examining cost of operations and business to prepare
an internal financial report, account and reports to help the process of decision making of
managers in attaining specific aims. This present report is based on Unicorn grocery and it is co-
operative grocery store and sells processed and dried food, body care, household and also
grocery products (Kaplan and Atkinson, 2015). Under this mention report will be discuss about
the management accounting and various kinds of management accounting system. There will be
discuss about the costs using effective cost analysis techniques to develop the effective income
statement by using the absorption and marginal costs.
TASK 1
P1 Management accounting and various kinds of management accounting systems
Management Accounting is also called managerial accounting. It is the process of
preparation of management reports and accounts which provide help to the managers for
statistical and financial information of company to take better decisions.
According to Institute of Management Accountants(IMA),
Management accounting is a profession which involves partners to make management
decision, performance management system and devising planning. It provide assistance in
financial reporting and control of management for the formulation and implementation of
company's strategy (Hilton and Platt, 2013).
Management accounting system is the way of evaluation and measure of its process for
the management within the organisation. It is also called internal system of the company.
Origin of management accounting- Management Accounting is an important activity
which is emerged during early industrial revolution. It arose after financial accounting. It is
considered as an recognised field.
Role and Principle
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The role and principles of management accounting as per the context of Unicorn Grocery
are as follow:
Influence- It helps in better communication which improves decision making. It ensures
effective thinking and decision.
Relevance- Management accounting considers all the relevant information that helps in
decision making and enhance quality.
Value Generation- It analysis all the necessary information along with value generation.
It includes analysing the information with value generation path (Otley and Emmanuel, 2013).
Trust-Trust is very important for the organisation. The process of accounting are ethical,
skilful and accountable which makes objective and process clear.
Here, Unicorn grocery should follow all the above roles and principle to make the
accounting accurate and liable.
Distinction between management and financial accounting
The differences between management and financial accounting are:
Basis for Comparison Management Accounting Financial Accounting
Meaning The accounting which helps in
providing information for
making policies, strategies,
plan for the business by
manager is called management
accounting.
The financial statement which
provide information related
with finance is called financial
accounting.
Time frame According to the need and
requirement such report is
prepared.
It is made at the end of each
accounting year. It is prepared
once in a year.
Information Both information (monetary
and non-monetary)
Only monetary information
Publishing and auditing These are not published and
audited by auditors.
These are published and
audited by auditors.
Different types of management accounting system
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Cost accounting system- It provide help in estimating the cost for the product in an
organisation with analysis of cost control, profitability and inventory. It includes process and job
order costing. Simple, flexible, cooperation and participation are essential character of good
accounting. Unicorn grocery should follow this system in order to calculate the cost of the
product.
Inventory management system- It helps in the management and supervision of stock.
The essentials of this system are: inventory management both physically and monetarily,
forecasting and replenishing strategies (Renz, 2016). Under the context of unicorn grocery, each
and every stock should be managed and supervised with the help of inventory system.
Job costing system- It is the system in which manufacturing cost is assigned to each
product along with track and monitor of expense. Before manufacturing product cost should be
known for profitability in unicorn grocery.
Price optimising system - This system helps in controlling the prices of resources. It also
helps in deciding prices for more than one product at a single time and determining demands
according to change in price.
Benefits of management accounting systems
Enhance efficiency of firm- Unicorn Grocery firm use management accounting as it
enhanced effectiveness as well as efficiency of business in order to perform the operations. It is
helpful in contributing for effective performance through comparing as well as evaluating. It
assess in attain the different outcomes in better manner.
Maximise profitability bar- The management accounting consist capital budgeting and
budgetary control. This method is easy for firm to reduce additional expenses for perform the
necessary operations. Management accounting enhanced the profit level of firm as it minimize
cost of its goods and services.
Cost transparency- In business world, cost majority comes from Information
Technology. Management accounting work with IT department. It assures within budget a as
well as helpful in give cost transparency to firm.
P2 Various methods used for management accounting reporting
Management accounting refers to procedure of measuring the operations and business
costs to prepare the internal financial reports, records and also account that help the managers to
take the effective decisions. Under this, information and data should be relevant to user because
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it is helpful in take the effective decisions related to company. If the information will be reliable,
accurate and up- to- date then it will helpful for Unicorn Grocery company to complete its
operations in a significant manner (Wickramasinghe and Alawattage, 2012). Different types of
management accounting reporting mention below:
Budgeting reports- It sets out plan to measure performance of company at the time of
making an evaluation about control costs and performance of departments. In context to
preparation of budget, Unicorn grocery company use the expenditure of the past periods.
Job cost reports- These type of reports are related with determining expenses,
profitability and cost of every specific job. There can be evaluation made regarding earning
aspect of projects so that firm can introduce its efforts. These reports are helpful in examine cost
while project is in the progress so that waste areas can be take care and project can be workable
as well as profitable.
Performance reports- Under this report, difference is calculate on comparison of the
actual costs with budgeted performance that analysed the present performance of company.
Generally, these reports are prepared on the yearly basis but they can be made quarterly or
monthly basis also.
Order information report- It is helpful for management of Unicorn Grocery to see trends
in its business in an efficient and effective manner. Under this, different kind of reports are
developed that ads in integrating the management operations to attain the minimum cost of
placing orders and its management.
Accounts Receivable aging report- This report is related with managing the account
variables for those firms which are involve in extending credits to consumers. Under this, an
analysis can be developed about credit policy of firm and require to be tighten it. This kind of
report is helpful in minimizing old bad debts as well as maintain liquidity of firm (Bodnar and
Hopwood, 2012).
M1 Benefits of management accounting systems and their applications
Management accounting systems Benefits
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Price Optimizing System  It provides immediate financial
benefits.
 It helps automate the entire
optimization process.
 Guaranteed consistency in the prices of
products.
 It speeds up quick decision power.
Job Costing System  It allows managers to calculate the
profit earned.
 Job costing system helps managers to
ascertain whether specific jobs are
desirable to pursue in future.
 It helps to keep track of individuals and
team performance in terms of cost-
control and productivity.
 It allows managers to determine
average cost of each unit produced.
Cost Accounting System  It is adaptable i.e. it can be
implemented according to the changing
needs of business.
 It helps in finding profitable and
unprofitable entities.
 It provides lower cost to customers to
maximize the profit.
D1 Evaluation of various reporting method and accounting system integration
It has been identified that accounting reporting is used to give the valuable information
about existing position of Unicorn Grocery company. It is necessary for finance department to
make the better information about the reporting, accounting system and its integration. In context
to this, there are different kinds of reporting methods for an instance performance report that is
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concerned with the present and the last year performance of Unicorn grocery firm. On the other
hand account receivable report is helpful to identify the recovery time and outstanding amount.
TASK 2
P3 Techniques of cost analysis to develop income statement using adsorption and marginal
costing
Cost means value of that money that has been used to develop anything as well as
represent in monitory analysis of resources, risks incurred, materials, utilities, time consumers
and also opportunity foregone in the manufacturing and also delivering of services of products.
Different types of cost mention below as above:
Marginal cost- It is an accounting system under which the variable cost is charged to the
fixed and cost unites of period that is written off in against aggregate contribution. It is change in
total cost when quantity is to be produced is enhanced through one (Banerjee, 2012).
Absorption cost- This cost is related to expensing all costs which are related with the
production of specific goods. It is method of developing full cost of products that add the direct
cost and also proportion of the overhead costs through means of number of the overhead
absorption costs.
Cost analysis- It refers to act of breaking cost summary in to constituents and reporting
on the each other. There are different kinds of cost analysis methods mention below:
Cost- volume profit- This analysis is use to identify changes in volume and costs that
impact on operating and net income of firm. In context to this analysis, there are many different
assumptions made through company such as Sales price per unit is constant (Nixon and Burns,
2012).
Cost variance analysis- It is control system that is to be designed to correct and detect
variances from expected levels. It is a difference among actual amount and budgeted amount.
Calculation of Net income from marginal costing
Sales (35*600) 21000
less:
Cost of Production (6+5+2) -9100
closing stock (100*13) -1300
variable cost -7800
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Contribution 13200
less:
variable sales overheads (600*1) -600
fixed overheads -2000
Admin & selling cost (700+600) -1300
-3900
NET INCOME AS PER MARGINAL
COST 9300
Net income as per Absorption costing
Sales (35*600) 21000
less:
Cost of Production 9600
Gross Profit 11400
LESS:
Fixed and variable cost:
variable sales overheads (600*1) 600
Admin & selling cost (700+600) 1300
less;over absorbed fixed production overheads -100 -1800
NET INCOME AS PER ABSORPTION
COSTING: 9600
Product costing- It refers to cost that used to develop product. It consist direct materials, factory
overhead, direct labour and consumable production supplies. It can be regarded cost of labour
that need to provide service to consumers.
Fixed and variable cost- Fixed costs are those expenses which are remain same related to
the production output. If the company makes sales or not but it should be pay its fixed price as
this cost is independent of the output. On the other hand, variable costs are those costs which are
vary or flexible with output (Otley, 2016). It enhances at constant rate related to capital and
labour. The variable costs consist utilities, materials used in manufacturing, wages etc.
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Cost allocation- It is process of giving relief to shared services of cost centres of
company that help in give service or product. It is procedure of determining, aggregating and
also assigning the cost to the objects.
Inventory costs- It refers to costs which are related with storage managing and procurement of
inventory. An inventory costs refers to the cost that holding products in stock. Under this, all
those costs are included which are related with storing or holding an inventory for the sale. It
consists costs for an instance carrying cost, ordering costs and the shortage costs. There are
different kinds of inventory costs mention below:
Ordering cost- This cost is related with placing order consisting expenses concerned to
personnel in the communications, purchasing departments and handling paper work. It is varies
and dependent on the two factors for an instance excess ordering cost and less ordering cost.
Carrying cost- These type of expenses consists handling, theft, storage financing of
products etc. If the inventory level will be rise then the carrying cost will also be rise. In order to
reduce carrying costs, management of Unicorn Grocery, make the orders of minimum quantity.
It is necessary for Unicorn grocery to reduce the inventory cost. Minimizing level of
inventory has many different benefits to business for an instance minimum wastage, cost control,
enhanced profit level etc.
M2 Various types of accounting tools and techniques
Management accounting techniques is a concept that surround budgeting and planning,
taking decisions related to long term and short term decisions and the operational performance
measurement. Different kinds of accounting tools are mention below:
Historical cost- It refers to analyse value that is used in the accounting (Contrafatto and
Burns, 2013). Under this, cost of assets on balance sheet is depend on its original or nominal cost
when adopted through firm.
Marginal costing tools- Company use this tool to identify optimum production quantity
for firm, where it costs minimum amount to produce the extra units. It is helpful in enhance
profit level of firm.
D2 Analysis of data collected from income statement
In context to deal with the different problems which are arise in company in future, they
require to use the different methods of costing. It will help in make the reliable aspects to
Unicorn grocery to take the better decisions. In regard to use the marginal costing, firm used to
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make the effective net income with 9300 and on the other hand in absorption costing net income
is 9600. All variations is examining through using fixed cost.
TASK 3
P4 Advantages and Disadvantages of using planning tools used in budgetary control
Budget
It is a plan of the policy to be pursued during a defined time period. It is a document that
management makes to calculate the revenue and expenses for an upcoming period based on their
goals for the business.
Types of Budget
There are two types of budget, Capital and operating.
Capital budget- It is a budget that allocating money for the acquisition or maintenance of
fixed assets such as land, building and equipment (Taipaleenmäki and Ikäheimo, 2013). In this
budget an organisation do long time investment such as new machinery, replacement of
machinery, new plants, new products and research projects.
Operating Budget- It is a detailed statement showing all the operational expenses to be
incurred and incomes to be generated during a particular period of time. Operating expenses
such as expenses raw material purchases, interest of the loan, the salary of the staff and the
maintenance of the office.
Alternative Method of budgeting
There are basically four methods of budgeting, although most organisations are likely to
prepare budgets using a combination of these methods. There are two alternative method of
budgeting:
Traditional historic budgeting- It refers to the process of planning and budgeting in
which previous year's budget is taken as a base to prepare a budget.
Zero based budgeting- It is a method in which all expenses must be justified for each
new period (Figge and Hahn, 2013).
Behavioural implications of Budget
Participative Budgeting- This process is a bottom up approach that involves the people
affected by the budget, including lower level employee, in the budget preparation process.
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Excessive Pressure Created by Budgets- In this task, budget should not generate
excessive pressure and stress on the subordinate managers, supervisors and the people working
in the organisation. The budget goals and standards should be set which are neither too high not
too low.
Pricing strategies can be used by company to pursue the various kinds of objectives for
an instance enhance market share, increase profit level, identify competitors etc. at market place.
In context to this, it is necessary for Unicorn grocery to change its pricing strategy over a time as
market alterations. Company can identify the process of its competitors by conducting a
research.
There are different planning tools are mention with their benefits and disadvantages:
Forecasting tool- This tool is helpful in estimate the future and current events for analysing
trends. It is an effective tool that use the historical data to make the informed estimates which are
predictive in identifying direction of future trends (Schaltegger, Gibassier and Zvezdov, 2013).
Advantages
 It helps in give the valuable or reliable information to business related to future.
 It aids in estimating the financial requirements of business.
Disadvantage This tool is based on qualitative estimation that relied on the subjective inputs.
Scenario tool – It refers to system for examining and deriving set of the distinctly various
futures. It is helpful for managers to examine the different views of happening arise in future.
Advantage
◦ This planning tool is helpful in deal with the different future issues.
Disadvantage
 There is complexity arise in taking the decisions related to future development.
Common accounting system
Actual costing -It is the cost accounting system that determines actual cost of the product
i.e. coast of material, cost of labour etc. It is the actual cost of the product it does not include any
budgeted amount or standards (Herbert and Seal, 2012).
Normal costing- It is used to value manufactured products. It implies after actual costing
of the products. In other words, it is a way to find the price of an item that is being produced
using actual material cost, actual direct costs and manufacturing overhead.
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Standard costing- It is the costing system which determines the cost of production
process. Standard rates are applied to calculate the cost.
The cost systems varied depending on cost activity mention below:
Process costing- It is an effective method of assigning costs to production units in
organisations producing maximum quantity of the homogeneous goods, it is used to ascertain
cost of goods at each stage of production.
Batch costing- It is form of particular order costing and somewhere same as job costing.
Under this, every batch is separable cost and provided batch number in similar manner that every
job is provided job number (P. Tucker and D. Lowe, 2014).
M3 Use of different planning tools and their applications
In regards with different controlling method of budgets for company, there is a need to
manager to use different tools of planning, there is forecasting tool is used to examine the
expenses and costs which are incurred through firm. On the other hand, contingency tools are
taken for controlling or managing the business risks which can be arise in department. In
addition to this, revenue generation and the planning are necessary principle for examining the
problems in an effective or significant manner.
TASK 4
P5 Comparison with other organisation to overcome financial issues
Finance is an area that is related with allocation of liabilities and assets over a time.
Financial problems refers to situation where money is a main issue. In order to determine the
financial problems, benchmarking and key performance indicator are used by Unicorn grocery
which are mention below:
Benchmarking- It is used in business for setting the financial and budgetary performance
objectives. It is practice of comparing the actual performance outcomes with standardise
performance goals. It is helpful in determining issues and also make improvement in them.
Key performance indicator- It is measurable value that helps in determine how
effectively Unicorn grocery is attaining its business objectives. At many level, it is helpful in
reach at target of business (Atkinson and et. al., 2012).
There are two type of indicators which includes financial and non-financial for the
calculation of success and long term goal.
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Financial indicators
Basis KPI Use in determining financial
problem
Liquidity ratio  Current ratio
 Quick ratio
Denotes short term debts and
assets.
Denotes liquid assets with
short term debt.
Revenue ratio  Sales growth It measures sales and growth.
Non-financial indicators
Management of human resources Employees are the assets of any organisation
which helps in success of the company. It
includes job offers accepted, staff turnover and
competence survey.
Product and service quality Product and service quality directly affects
sustainability and customer dissatisfaction.
Company should compare with the
competitors.
Financial governance- It refers to way under which an organisation gathers, managers
monitor and also control the financial information. It is helpful for company to track the financial
transactions, control data manage performance, disclosure etc. In order to resolve the financial
problems, Unicorn Grocery uses the financial governance (Bouten and Hoozée, 2013). It is
helpful for company to prevent itself from the financial issues. Management of Unicorn Grocery
company use the financial governance for respond financial issues such as insufficient funds etc.
Characteristics of management accountant
Commercial awareness: Management accountant must have knowledge about the field
and the company. He should be aware about the business ethics. Ethics played a valued role in
the characteristics of a management accountant. A person must have a sense of accountability so
that he can maintained the books of accounts properly.
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Trustworthiness: Management accountant must be honest with all facts and figures of the
organizations records. The person must be trustworthy so that books of accounts is kept
disclosed and organizations secrets are not been revealed.
With the help of these skills, management account and company both can deal with the
financial issues in an effective manner.
M4 Analysis of planning tools to deal with financial issues
Under this, organisation accounting is regarded as a better formation of the marginal
accounting. It is used to record the particular information about the different techniques for
enhance future growth of firm. In addition to this, there are different accounting problems which
can affect on work on different departments. It is necessary that issues should be concerned with
the estimated budget of future with departments. With the help of effective planning tools,
Unicorn grocery can achieve its objectives with in given period of time.
D3 Planning tools for responding to financial issues
In this, Unicorn Grocery require to face the different internal issues at workplace. So, for
control the different problems, forecasting tool is used by Unicorn Grocery to estimate the future
issues which can impact on the performance level of firm. On the other hand, contingency tool is
used to control the business risks which can develop impact on operations as well as business
performance (Kaplan and Atkinson, 2015).
CONCLUSION
It has been concluded from above mention report that management accounting is an
effective tool that helps in improve financial condition. Under this report studied about the
different type of management accounting systems. Different roles and principles of management
accounting help company to retrieve as well as obtain information needed through managers for
conducting functions of business. There has been discussion about the various kinds of the
planning tools which are used for budgetary control. In given report discussed about the different
methods used for the management accounting reporting.
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REFERENCES
Books & Journals
Atkinson, A. A and et. 2012. Management accounting: Information for decision-making and
strategy execution. Essex: Pearson.
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt. Ltd..
Bodnar, G. H. and Hopwood, W. S., 2012. Accounting information systems. Upper Saddle River:
Pearson.
Bouten, L. and Hoozée, S., 2013. On the interplay between environmental reporting and
management accounting change. Management Accounting Research. 24(4). pp.333-348.
Contrafatto, M. and Burns, J., 2013. Social and environmental accounting, organisational change
and management accounting: A processual view. Management Accounting Research.
24(4). pp.349-365.
Figge, F. and Hahn, T., 2013. Value drivers of corporate eco-efficiency: Management
accounting information for the efficient use of environmental resources. Management
Accounting Research. 24(4). pp.387-400.
Herbert, I. P. and Seal, W. B., 2012. Shared services as a new organisational form: Some
implications for management accounting. The British Accounting Review. 44(2). pp.83-
97.
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Kaplan, R. S. and Atkinson, A. A., 2015. Advanced management accounting. PHI Learning.
Nixon, B. and Burns, J., 2012. The paradox of strategic management accounting. Management
Accounting Research. 23(4). pp.229-244.
Otley, D. and Emmanuel, K. M. C., 2013, Readings in accounting for management control.
Springer.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014.
Management accounting research. 31. pp.45-62.
P. Tucker, B. and D. Lowe, A., 2014. Practitioners are from Mars; academics are from Venus?
An investigation of the research-practice gap in management accounting. Accounting,
Auditing & Accountability Journal. 27(3).pp.394-425.
Renz, D. O., 2016, The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Schaltegger, S., Gibassier, D. and Zvezdov, D., 2013. Is environmental management accounting
a discipline? A bibliometric literature review. Meditari Accountancy Research.21(1).
pp.4-31.
Taipaleenmäki, J. and Ikäheimo, S., 2013. On the convergence of management accounting and
financial accounting–the role of information technology in accounting
change.International Journal of Accounting Information Systems. 14(4). pp.321-348.
Ward, K., 2012, Strategic management accounting. Routledge.
Wickramasinghe, D. and Alawattage, C., 2012,Management accounting change: approaches
and perspectives. Routledge.
Online
Managerial Accounting. 2018. [Online]. Available through:
<https://www.investopedia.com/terms/m/managerialaccounting.asp>.
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