Management Accounting and Cost Analysis

This assignment delves into the realm of management accounting by presenting a case study that demands critical analysis. Students are tasked with evaluating cost structures, profit margins, and applying relevant management accounting techniques to aid informed decision-making within the context of the presented scenario.

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and different types....................................................................1
P2 Different method for management accounting .................................................................2
TASK 2............................................................................................................................................4
P3 Marginal and absorption costing.......................................................................................4
TASK 3............................................................................................................................................8
P4 Advantage and disadvantage of planning tool..................................................................8
TASK 4..........................................................................................................................................11
P5 Management accounting system to respond to financial problems.................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
.......................................................................................................................................................14

INTRODUCTION
Management accounting is a system that managing many information and provision of
accounting activity. This is control and manage all performance for the employees and financial
decision. This is also preparing management account and report or provide financial and
statistical information about company short term decision in this organisation. This accounting
provide many help relating to the company activity and performances and also evaluating
coordinate between employees and business enterprise. This accounting find out many types that
can be increasing effectiveness of its business operation ans developing new ideas ans initiative
plan. The manager of unicorn grocery company may be use the different types of planning tool
that create best report and reducing cost of the operation and help to utilise the many resources.
Unicorn grocery company is local company that sell the fresh food and drink items in this
organisation. This company producing house hold product like body care and general grocery
items. There are no external as well as outsider stakeholder or owner. Management accounting
help the manager to forecasting company budget with the help of market details. This report find
out advantages and disadvantage of planning tools that the manager many be evaluating best tool
(Baldvinsdottir and et. Al, 2010).
TASK 1
P1 Management accounting and different types
Management accounting: It is a accounting tool that used by the unicorn grocery
company manager in an organisation and coordinating all business activities. A number of the
method are applied this order and evaluate result of business activities and performances. This
accounting collecting many information from the company and use this information to take the
best decision for the enterprise. Unicorn grocery company manager may be applied this concept
and getting impressive result related to the business activity. Management accounting consists
many function for management like planning, organising, directing and controlling.
Types of management accounting
There are two types of the management accounting that define the financial statement and
company performances are as follows:1. Traditional accounting system: This system is very effective that use in past time
period and this is use many entrepreneur in this organisation(Bennett and et .al, 2013).
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This type focus on the company results and product productivity and increasing company
demand and supply. This system is a long established that fail to result quickly and arise
the operation of the business problems and difficulties. This system is very difficult to
calculating the business product cost and company financial condition as well as position
in this organisation (Busco and Scapens , 2011). There are many issue that define the
company condition are as follows:
Dynamic business environment: In this situations business environment changing the business
places in quickly including buyers problems, high quality of the product and other that full fill
the company requirement related to traditional accounting system. Business environment provide
the many solution to reducing business functional problems and difficulties.
Changing accounting practices: Business environment change that the accounting practice
session also Chang from time to time and also changing the company structure.
2. Modern management accounting system: This is the best system to calculating the
company data and many financial statement. This system use every businessmen and enterprise
and take the best decision related to the company performances in this organisation. This
accounting system quickly solve many issue and problems regarding to the enterprise and
contributing effectiveness techniques of business operation. The productivity is not the main
objectives for this accounting system. Many resources use effectively method to increasing the
maximum benefits. This accounting has many advantage that the company growing their profit
are as follows:
 Process management is best advantage to developing the product process and define the
company objectives.
 Balance scorecards processing many techniques and methods for calculating company
financial statements (Christ and Burritt , 2013).
Cost accounting: It is a best process of transcription, grouping, summarizing, evaluating different
alternatives courses of action and control costs. Under this accounting provide appropriated need
and detailed related to cost information. It is primary function that use by company managers to
making best decision.
Job costing: This type is very important that support number of assigned to individual part of
revenues and expenses. A job can be determine specific and smart project that done by one
customer.
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Batch costing: Under this types define number of quantity and quality for products. This costing
is used in various situations where a individual order define the work to be completed.
Inventory management: It is very important way that define different practices of controlling and
observing optimum number. A main objectives of inventory in company to provide production,
customer services and sales for the products.
Price optimisation: It is a mathematical analysis by a firm as well as company to specify how
client will respond to various prices. It is a best way that maximize operating profit. Primary and
secondary data used operating cost, historic prices, inventory and sales.
P2 Different method for management accounting
The method of management accounting developing the best budget report and many
report related to the company data and financial statement. There are many method of
management accounting are as follows:
 Budget report: This is define the best report to calculating the company available funds
and data to the different business operation in an organisation. This report to unicorn
grocery manager in evaluating the number of business employees performance to
operating business. It help to manager of small scale business to coordinating and
evaluating company activities and performances.
 Accountant receivable report: This report provide many help for the unicorn grocery
company manager to evaluate and manage all the credit transaction. This is also very
important to improving the credit transaction and policies.
 Inventor and manufacturing: This types of the report mainly use away the business
men as well as enterprises to reducing wastage inventory and decrease the keeping cost
for the stock. Help to maintaining best level of stock in many situation. Under this
problem both inventory and manufacture may be create situation for the businessmen and
enterprise (Cinquini and Tenucci , 2010).
 Job cost report: Under this report define that us by the unicorn grocery company
managers in order to specify attribute of each job. This report determine the number of
the job employees and their performance. It is very important to achieving better result.
So Unicorn grocery company use many reports to growing their performances and increasing
sales for the product or services in this market.
M1 Benefits of management accounting
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There are many benefits of management accounting that developing organisation vision
and mission and also calculating the goals and objectives. Numbers of benefits are as follows:
 Reduces cost: This is the best benefits which the management accounting provide to
reducing the cost of business operation this is very important to achieving the economic
resources and rate in order to effecting running company.
 Increase financial return: This accounting increasing financial statement for the
Unicorn grocery company. This accounting help to providing many information related to
the customer taste, life style and their habits. This information increasing product feature,
demand of the customers and company product sales.
 Business decision: This is also very important that use by the manager to take the better
and innovative decision related to the business performances. Management accounting
provide many information related to the business environment and help to achieve
business success and opportunities (Contrafatto and Burns , 2013).
D1 Evaluation management accounting system
The use of management accounting system in the organization to achieve better
understanding needs and wands for the customers. There are different tool that controlling
business operation with the help of management accounting are as follows:
Relevant cost analysis: This analysis determine the management accounting and reporting
activity that help to take effective cost in the relevant cost decision and maximising cost in
different business operation. The management report define the number of solution and reducing
problems related to the enterprise.
Activity based costing method : This costing help to knowing the Unicorn grocery company
performances and their product cost related to the business activity. This techniques provide
help to calculating the effective cost. This method is mainly use best techniques for the
alternative choice (Dillard and Roslender , 2011).
Make or buy analysis: This is define the best report and system that help to taking effective
decision with the buy the product. In an every organisation arise difficult situation with the help
of manager decision. It is also making the effective performances and cost decision in this
enterprise.
Utilising data: With the help of data provide many information regarding to the management
accounting. This is creating many activities of an organisation that can be completed by the
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employees. Management accounting provide the many information about the Unicorn grocery
company.
TASK 2
P3 Marginal and absorption costing
Marginal costing: This costing determine the many opportunities cost that reducing the
product cost by an organisations an change the best place of the production. This costing
exceeding the many level of the product and services. Many organisation use by the marginal
costing that change the total cost of the production. This is making additional product or services
and decreasing overall cost production. This is very important to developing the organisation
goals and objectives and also take the best decision regarding to the Unicorn grocery company
product (Fullerton and et .al, 2014).
Absorption costing: This is the best method that calculating the product indirect and direct cost.
Direct cost including raw material, labour cost and many machinery cost. Indirect cost including
the factory rent, maintenances and other cost. This costing calculating the fixed and variable cost
of the product. Variable cost is not fixed in the many time period and fixed cost is fix for the
many situation.
Income statements related to the absorption costing method:
Selling Price £35
Unit costs
Direct materials £6
Direct Labour £5
Variable Production overhead £2
Variable sales overhead £1
Budgeted production for the period is 600 units
Fixed cost for a month:
Production overhead: This budgeted cost is £1,800 and Actual cost is £2,000
Administration Cost: This budgeted cost is £800 and Actual cost is £700
Selling cost: This budgeted cost is £400 and Actual cost is £600
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Absorption costing
Working 1: Calculate full production cost
Direct material £6
Direct labour £5
Variable cost £3
Fixed cost £5
Total £19
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*19 = £13300 100*19 = £1900
Working 3: under/ over absorbed fixed production overhead
Actual fixed production: £3300
Fixed overhead: £3500
Total £200(over absorbed)
Net profit using absorption costing £ £
Sales
(-) Cost of Sales:
Opening stock
Manufacturing
Closing stock
(Under)/ Over absorbed fixed prod. O/h
Gross Profit
Less Expenses
Variable sales expenditure
Fixed administration expenses
Fixed selling expenditure
Net Profit
0
13300
(1900)
1800
700
600
21000
(11400)
200
9800
(3100)
6700
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Income statement on the basis of Marginal costing method:
Working 1: Calculate variable production cost £
Direct material 6
Direct labour 5
Variable production O/h 3
Variable production cost 14
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*14 = 9800 100*14 = 1400
Net profit using marginal costing £ £
Sales
Less Variable costs
Opening stock
Manufacturing
Closing stock
Variable sales
Contribution
Less Fixed costs
Fixed Production expenses
Administration cost expenditure
Selling cost
Net Profit
0
9800
(1400)
2000
700
600
21000
(8400)
(1800)
10800
3300
7500
This income statements show the company data and their position in this market. This is
also define the company financial statement and show their profit. The absorption costing
method define the many sales and net profit. According to this method is net profit 6700 and
company sales 2100 so the company earn maximum profit (Håkansson and et .al, 2010).
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Marginal costing method define the many income and expenses related to the company
statement. According to this method net profit 7500 and company product sales are 21000. So
the marginal costing method is best to evaluating the maximum profit.
M2: Management accounting techniques
There are many tools an techniques of management accounting that define the company
internal and external method of the data collection. The range of the management accounting are
as follows:
Financial planning: This id define the advance need and activity f financial statements of an
organisation. This planning including long and short term financial activity related to the
enterprise.
Analysis of financial statements: This is the best techniques of management accounting system
that use by the businessman and many stakeholder. This techniques provide help by the company
manager to evaluating the financial activity of an organisation, investor and creditors.
Historical cost accounting: This accounting system define the company data and create the
many best cost of the product. This is also find out past operation of the company (Herbert and et
.al, 2012).
Stranded costing: As per the costing use by the company manager in operation of an
organisation. This cost compare the actual and standard cost with the help of company manager
and take the best decision regarding to cost.
Budgetary control: This is the best techniques that achieving the organisation goals and
objective in this organisation. This techniques use by the businesses men and control all losses
and expenses related to the business innovation.
Marginal costing: This is the best techniques of management accounting that the manager
applied and take the best performances in this organisation. The manager of the company use
many method to calculating the marginal costing like break even analysis (Hiebl , 2014 ).
Fund flow statements: This statements also creating company inflow and outflow. This is
define the company position in this market. This fund provide the help to manage and controlling
outsider fund.
Cash flow statements: This statements show the cash inflow that the manager control many
inflows and outflows. It help to maintaining all level of the cash in order to define the
organisation as well as enterprise.
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D2 Financial report that accurately apply and interpret data:
There are many report that help to achieving financial report with the help of company
manager in this enterprise. This report taking the best decision to operating the business
activities.
Income statements: This statements help to define the company income and expenses and also
determine the net profit. This statements includes sales and other income and expenses. This
statements prepared in specific time period.
Balance sheet: This statements show company assets and their liabilities of an organisation. It is
very important because it help to calculating the company assets and liabilities.
Profit and loss accountant: This statements show company profit and loss account and also
define the company trading account in an organisation (Jansen , 2011).
TASK 3
P4 Advantage and disadvantage of planning tool
There are many planning tool and techniques that determine and controlling budget
process in an organisation. There are many budget that help to control budget in the enterprise.
Master budget : this budget define the average cost and expenses of an enterprise and
evaluating the company financial needs. This budget including sales, purchase and many
operating expenses. This budget in high cost that the high and large number of an organisation
use.
Operating budget: This budget forecasting the company expenses in the different way of
operation. This budget provide the help to reducing the cost of an organisation. This budget
including sales, material and manufacturing cost.
Cash flow budget : This is the best budget that define the company product cost. This budget
help to define availability of the cash and manage the inflow and outflow of the cash in an
organisation (Kaplan and Atkinson , 2015).
Types of budget Advantages Disadvantage
 Master budget The advantage of this budget
making the best cost of the
enterprise. This budget show
the high performances of the
This budget is very costly.
Small scale business not afford
this budget.
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 Operating budget
 Cash flow budget
company cost.
This budget maintaining the
income and expenses of the
business operation. This is
provide help to achieving past
expenses.
The advantage of this budget
help to managing the company
inflow and cash outflows in an
organisation.
This budget is use lot of time
that operate the business
performances.
The disadvantage of this
budget is it is very costly and it
make many time to prepared
budget.
Above this budget take the many advantages and disadvantage and company manager
help to maintaining the company activities and also calculating the employees performances
( Lee, 2011).
M3: Different planning tools
There are many different planning tool that define and preparing budget. The planning
tools and techniques are as follows:
 Financial statements it is best tool that defining company income statements, balance
sheet and profit and loss account.
 Financial planning is most important tool that create the company performances and
objectives. This planning also evaluating the company best budget.
 Cost accounting system is best techniques that the company manager get and take the
best decision related to the company product.
 Fund flow analysis define the company financial problems and help to achieving
enterprise of business operation(Luft and Shields , 2010.).
 Cash flow analysis is useful to analysis the company inflow and out flow.
 Decision making accounting system also very important to taking the best decision
regarding to the company product and their financial statement.
 Management reporting system create the best report relate to the company research and
define the company internal and external method of data research.
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 Ratio analysis also define the company current and profitability ratio. This ratio define
the company current assets and current liabilities.
 Historical cost accounting define the past cost of the company and define the best product
and best techniques in an organisation.
D3 Planning tools of accounting that solve financial problems
This tools is very important to forecasting the financial problems because this tool
provide the many techniques that reducing company effective cost. Planning tool play the very
important role in an enterprise. The business have many problems that they arise business
environment related to the company product. This tool solve financial problems with the help of
income statements, balance sheet and profit and loss account( Nandan, 2010).
Planning tool help to maintaining all resources of the tools and techniques. This tool
minimising the overall cost and reducing the risk and uncertainty of the resources. This is also
helpful to developing the best environment related to the company product and services. This
tool increasing the company product cost and rising many problems in the better way of
planning.
TASK 4
P5 Management accounting system to respond to financial problems
Management accounting system it is very important to calculating financial and non
financial problems in an organisation(Pipan and Czarniawska, 2010). Management accounting
provide the information for Unicorn grocery company because it solve the management and
financial problems. It is help to providing business objectives and goals and also define the
company values and opportunities. The comparison of two business that adapting this system are
as follows:
Unicorn Agmet
This company use this accounting because this
system decide the cost in the different
activities.
This company use this techniques to
controlling the future activity of an
organisation.
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Unicorn grocery company use this techniques
and increasing effectively business
performances in an enterprise.
This company find out the many techniques
and create the financial statement related to the
business activity.
This techniques help to managing the various
activities that the show company result and
employees performances.
This company adopting this system to define
the relationship between the actual and
standard cost and performances.
The unicorn company may be used management accounting concept because this
company solved many problems and issues related to the business operation. This system help to
achieving the organisation goals and objectives and also developing best techniques and method
related to the financial statement (Quinn, 2011). This is help to improving employees
performances and coordinating many activities related to employees and company staff. Agmet
company should be apply this system and achieve manufacturing process and number of the
employees. Management accounting is very useful to identify company opportunities and their
values.
Key performance indicators: kPI is very important to help managers and workers that define
various function and activities for achieve organisational goals and objectives. A target as well as
sales team member track innovative revenue, customers and deal the progress of corporate
revenue.
Bench marking: This process evaluate and understand the actual position of company in related
to good practices. In this process analyse business operation and compare employees
performances.
Budgetary targets: it is a best programs that create best strategies and techniques to improve
company position and situation in market. Targets specify the control and company budget.
Financial governance: In this types define rules and regulation related to financial statements. It
ensuring different strategies and practices to reduce social problems. They includes income
expenditure statements, balances sheet and profit and loss accounts.
M4: How management accounting can lead organisations to sustainable success.
This accounting system achieving many success related to the human sources in an
enterprise. It many be difficult for this company to developing sustainable success without liberal
intensity on the needs and wants of company employees (Renz , 2016). Management provide
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proper attention related to company factor and to archive demand and supply of the product.
Company not provide customer needs and wands than company employees go way it is not good
for company position. It help to evaluating company internal and external sources and employees
performances though the credit policies and practices. Management accounting is very important
for every enterprise that create business operation and improving performances related to
achieving business target and goals. It help to minimize total cost of the production ,
manufacturing process and evaluating resources.
This report define the many success are as follows:
 This is identify the environment and social values that impacting the business activities in
the time.
 This is also including company data on sustainability impact related to the pricing and
budgeting decision and scheme planning this also include investment appraisal.
 Sustainability ensuring financial and non financial information (Sánchez-Rodríguez and
Spraakman , 2012).
CONCLUSION
As per the above mention report can be concluded that manager of Unicorn company
define management accounting. This report find out many types and method of management
accounting . There are many appropriate techniques which can be create financial statement of
the company. Planning tool evaluating many advantages and disadvantage to preparing budget
and apply best pricing strategies. There are many techniques that company manager increase
profit and product demand. This is also define management concept that help to developing
business budget and report. This report may be define many budget that company apply and
developing best performance of company. Accounting management leading organisation with
the help of company manager in an enterprise. That is best system which can be company
improving best policies and practices related to financial statement. Modern accounting is best
for achieving company growth and product sales. This report also calculating modern and
traditional method of accounting and define company internal and external data.
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REFERENCES
Books and journals:
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and practice in management accounting. Management Accounting Research. 21(2).
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& Management. 8(4). pp.320-357.
Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of
contingent variables for adoption. Journal of Cleaner Production. 41. pp.163-173.
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loose coupling?. Journal of Accounting & organizational change. 6(2). pp.228-259.
Contrafatto, M. and Burns, J., 2013. Social and environmental accounting, organisational change
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97.
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Macintosh, N. B. and Quattrone, P., 2010. Management accounting and control systems: An
organizational and sociological approach. John Wiley & Sons.
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Nandan, R., 2010. Management accounting needs of SMEs and the role of professional
accountants: A renewed research agenda. Journal of applied management accounting
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Pipan, T. and Czarniawska, B., 2010. How to construct an actor-network: Management
accounting from idea to practice. Critical Perspectives on Accounting. 21(3). pp.243-
251.
Quinn, M., 2011. Routines in management accounting research: further exploration. Journal of
Accounting & Organizational Change. 7(4). pp.337-357.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
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