Management Accounting: Techniques and Applications for Nasty Gal Vintage

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Task 1...............................................................................................................................................1
P1. Management accounting and requirement of different types of management accounting
system.....................................................................................................................................1
P2. Methods used for management accounting reporting......................................................3
M1: Benefits and application of management accounting system.........................................4
D1: Evaluation of integration of management accounting reports and system with
organisational processes.........................................................................................................4
Task 2...............................................................................................................................................5
P3. Calculation of cost using cost analysis techniques and preparation of Income statement
using marginal and absorption cost........................................................................................5
Income statement under Absorption costing..........................................................................6
Flexed Budget for the actual activity......................................................................................6
P4. Advantages and disadvantages of different types of planning tools that are used for
budgetary tools.......................................................................................................................7
M3. Analyse the use of different planning tools and their applications for preparing and
forecasting budget..................................................................................................................8
P5. How organisations are adapting management accounting systems to respond to financial
problems.................................................................................................................................9
M4 Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success.....................................................................................10
D3 Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organisations to sustainable success.........................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting refers to the technique used by the organisations for preparing the
reports about the different business operations. This process is conducted to inform the manager
about all the business information so that they can make informed decisions in the conduct of the
business (Burritt and et. al., 2019). This process consists of various stages such as identification,
measurement, analysing, interpretation and communication. This process is generally focused
towards the operations of the company in which the cost of products and services produced by
the organisation are considered. Nasty Gal Vintage is a United States based clothing retail
company, this reports discusses the several aspects of the management accounting by taking in
account of the organisation. This report revolves around the concept of management accounting,
principles and the implications that the business faces in the operations. Further the necessities of
analysing the cost is helpful in preparing the income statement of the company.
MAIN BODY
Task 1
P1. Management accounting and requirement of different types of management accounting
system.
Management accounting is the process of creation of the organisational goals by treating the
financial information of the company in a right manner. This information is further
communicated to the manager and other users of the company. The above practice is performed
by the company to ensure that the internal users of the respective company are making an
informed decision (Rikhardsson and Yigitbasioglu, 2018). They can analyse and use the
information so that they can make the best decision in the company. Different types of reports
are used such as the budgets and the actual performance of the company to so that the managers
can compare the planned performance with the actual performance. Further the organisation uses
other reports such as Return on Investment, payback period and net present value in selecting
between different project alternatives that are available for the organisation. Nasty Gal Vintage
uses several types of tools to plan and make decisions in the organisations which directly impacts
the operations of the business. Few of these management accounting system used in Nasty Gal
Vintage are discussed below:
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 Cost accounting system - This managerial system is use by the organisation to track the
costs such as variable and fixed that have incurred in the production of the company. This
is most basic technique that is used by the organisation in managing the cost of products
and services that the company is currently using in the model. In this technique the input
cost of the variables in the organisation is calculated and further added with the fixed
cost. This addition helps in generation of the total cost of the products that the company is
producing in the current financial year. This total cost of the product is compared with the
returns that the particular project is able to generate for the business. Through this a series
of different types of costs are managed in the system such as the fixed costs, operating
costs, variable costs, direct and the indirect costs (Zakirova and et. al., 2020). This system
is used by Nasty Gal Vintage to manage the different costs that are incurred in business
during the production of the products.
 Price optimising system- This is one of the mathematical model that is used in the
business to aid in the evaluation and analysis process of the ways in which demand of the
products varies with the level of change in the price of the product or services that Nasty
Gal Vintage is offering in the market. The information and data that is collected by the
system is further combined with the inventory and cost so that the recommendation of the
prices can be made to improve the profitability of the business. Nasty Gal Vintage, they
use this system to understand the market trend and further collection information about
the preference of the customers. The demand of the customers is understood so that they
can well apply the techniques and tactics in the business. This system helps in essentially
generating more sales in the organisation which directly contributes to the profitability of
the business.
 Job-costing system- This is the technique which helps in assembling the differential
information that is the tracking and analysis of the cost with specific jobs. This system is
based on the various data that is the direct material, cost and the overheads. Nasty Gal
Vintage uses this type of system in the organisation for deciding the accuracy and the
estimated model which aids in the process of quoting the prices of the product. This also
assists the organisation in generation of the reasonable profit in the business. The
essential need of the system is continuous monitoring of the production process so that
the issues can be identified.
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