Management Accounting Systems for Company Growth

This project focuses on providing crucial information about using management accounting systems to increase a company's future growth. It has been concluded that every piece of data is essential for the company, and reliable accounting and reporting methods can lead to better outcomes in the near future. Various costing methods are used to achieve appropriate profits, and planning tools help control budgets prepared by the company.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Definition of management accounting and their essential requirements..............................1
P2: Different accounting reporting methods...............................................................................3
TASK 2............................................................................................................................................5
P3: Various costing method used for calculating net profit........................................................5
TASK 3............................................................................................................................................7
P4: Various merits and demerit of using planning tools in controlling budgets.........................7
TASK 4............................................................................................................................................8
P5: Comparison of ways management accounting overcome financial issues...........................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management accounting is considered as one of the primary aspects for an organisation
like Zylla Company. Account is utmost crucial matter which will provide sufficient amount of
information about every financial transaction which will assist them to increase profitability
position for an organisation. Whereas management is held responsible for providing appropriate
rules and regulations in order to make reports more effective in better decision making. The main
aim of every accountant is to make use of appropriate financial information in better
sustainability of growth for an organisation in coming period of time (Gond and et. al., 2012).
According to this particular reports which draw the attention of various investors to how
company is using accounting and reporting systems in recording the transactions within an
accounting period. Apart from this, some costing methods are also discussed under this report
that help in evaluating net profit for the company. While merits and demerits of using planning
tools in respects to control budgets are discussed effectively. Although, comparison of
management accounting use in respect to other companies are done to detect financial issues
arises in the departments are explain under this report.
TASK 1
P1: Definition of management accounting and their essential requirements
According to the mentioned case study which is provided about management accountant of
Zylla company for plenty of years. It seems to be one of largest multinational organisation which
has going through wide number of changes over the period of time. The outcomes for expansion
into new market for the purpose of restructuring and acquisition are being planning by the
management. After making all analysis, the finance directors used to considers that present
accounting system required to be restructure to make valuable modification so that better
outcomes can be attain in coming period of time (Abdel-Kade, 2011). Nowadays, it has been
determine that management is more concern about using appropriate systems for recording of
transaction so that better outcomes can be attain in coming period of time. All the information
regarding everyday transactions is taken into account in their respective set format so that
accurate outcomes can be determine. Management accounting is known as one of the key
professional aspects which will lead to an organisation to record, summarise, communicate and
evaluate overall performance during the time. There are various types of accounting systems
which are helpful for an organisation in this particular process. They need to implement all them
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in more reliable manner. There are more significant aspects for using accounting systems which
will be effective enough to make future decision in more effective manner.
Definition: As per the IMA, “Management accounting is one of the effective professional
that consist of partnering effective decision making, future planning as well as performance
management and control to assess management in the formulation of reliable plan in coming
period of time.
Some of them are discussed underneath:
Cost accounting system: It refers as effective framework that is being used by Zylla
company to estimate the cost for their product in order to enhance profitability analysis, stock
valuation and cost control purposes. Predication of accurate cost of products is reliable for
profitable operations in coming time. It consists of various costing methods such as standard
costing, normal and actual cost that are incurred during production process (Bennett, Schaltegger
and Zvezdov, 2011).
Inventory management system: This seems to be primary aims of an organisation to
make use of every information over the continuing process of operating business by using stock
those are going from the business within an accounting period of time. Zylla Company can make
valuable consideration to regulate and manage their stock on consistence basis so the better
outcomes can be generated in near future. Some useful techniques are:
EOQ: This particular resources quantity of product at one time in order to reduce the
annual total costs of ordering and carrying product in stock. It referred to as the optimum lot in
term of size.
ABC costing: It is appropriate costing method that is being identify and allot cost to
overhead activities that are related with the production process. All the product are categories
into three categories as per the durability.
Job cost accounting system: These are assign to an individual or group of products that
are produced during an accounting period of time. Basically, the job order costing is useful only
in case the produced are sufficiently separate from one another.
Price optimisation system: It is known as one of the effective techniques by which Zylla
Company would be easily able to analyse the thinking ability of customers about various prices
set by the company for their products. It can be more reliable sources of collecting valuable
information about their demand or purchasing ability.
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All the above mentioned accounting systems can be more reliable for making future aims
and objective of Zylla Company in accordance to enhance their future growth coming period of
time.
Benefits of using management accounting system
In accordance to get more reliable outcomes for the company manager required to make
use of appropriate accounting systems which will be more gainful in coming accounting period
of time. Every discussed accounting system in the above is having their own benefits which
would be crucial to attain more productive advantage to the company. Just like cost accounting
that is crucial enough to get more beneficial cost and expenditure of the company. While
inventory management is more reliable system for an organisation that will detect all inventory
position those are suitable in future growth for the company, Job cost is used to analyse all cost
which is being paid for an individual or group of products during an accounting time.
P2: Different accounting reporting methods
In respect to get more appropriate opportunity to attain their future targets company need
to prepared valuable accounting reports. Reports are more effective aspects for every business,
whether operating at small or large level. It uses to show sufficient amount of available cash
flows company is investing during the time to get more reliable outcomes in near future period of
time. Report is considered as one of the systematic detail information about company’s financial
position by comparing the outcomes from taken data of past year. It always show positive sign
for the company to make use of available resources in better ways at right time so that maximum
earning can be incurred in future time (Hiebl and et. al., 2015). These revenues are more
importantly useful in making expansion plan for the purpose of increase overall growth and
stability in coming period of time. These report are consider more effective for investors and
other stakeholder to make analysis of financial position and to taken decision about capital
investment in their coming project plans. There are various types of accounting reporting method
which will be effectively responsible for getting more valuable outcomes in near future. Some of
them are mentioned underneath:
Performance report: This seems to be taken as one of valuable account for making
reliable activity in project evaluation. It includes certain ways of collecting effective progress of
running projects and better allocation of resources that are used by the company. This happens to
be analyse actual and standard performance those are going for last few years.
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Account receivable report: It is known as one of the primary report which is being
prepared by the accountant in respect to determine total list of unpaid customer invoices and all
credit memo as per the mentioned date. It is more crucial for external parties and investors to
determine positive position of the company for future investments. By using this company would
be able to determine total time duration to get their overdue payment from debtors (Al and
McLellan, 2011).
Inventory management report: According to this particular report, Zylla company
accountant would easily be able to determine overall record of stock position that are kept by an
organisation with them. All information related with opening and closing position of stocks that
are stored into the warehouses. It will also assist an organisation to get completed information
about total stock level which is vital for future production of product and services. This seems to
be easily effective to track their stock, bill of invoices and other important data.
Job cost report: It is one of the main accounting report uses by Zylla Company to analyse
their individual cost of single product or group of products from a specific job and make reliable
planning for appropriate reporting on regular basis. It will assist an organisation to get more
accurate and reliable information for the purpose of making effective results in coming period.
There are certain important aspects which will assist and organisation to make use of
reporting systems more effectively to get better results in coming time. In respect to get more
valuable outcomes in coming time they need to make reliable advantage for Zylla Company. It
can only be possible for effective reporting approach that is accurately beneficial for an
organisation (Laine, Paranko and Suomala, 2012). It has been determine that maximum gains can
only be attain in case company is able to use reliable reporting system that are related with facts
that effectively assist investors to make better decision in coming future.
Critical evaluation of various reporting methods
In respect to attain more reliable outcomes for Zylla Company, every department which is
operating as internal level is held responsible for getting more effective result in coming time.
All every reporting system which will be discussed under the above report is beneficial for the
company. Performance report is used to analyse actual and standard cost that are based on
current and past financial performance of the company. Account receivable reports are more vital
report that assists an organisation to determine total recovery time of overdue payment which are
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to be taken from debtors. Inventory reports are more crucial for control all impacts those are
related with stock position of the company are taken into consideration.
TASK 2
P3: Various costing method used for calculating net profit
Cost is said to be utmost important aspects for an organisation which will be effective
responsible for attaining maximum profit for the company. In every department those are
operating for the growth of the company is held responsible for using particular costs that are
effective responsible for increase overall profitability for an organisation. As per the mentioned
case of Zylla company which is not happy with the financial performance within an accounting
period are needed to be consider more reliable costing method which will be reliable enough to
provide more effective outcomes in coming period of time (Amoako, 2013). The company is
operating at a large scale which means that they are responsible for producing large amount of
product and services for the company in an accounting period by using all resources in better
manner. In this process, they also used to incur various cost which will be directly associated
with the overall productivity and growth of the company. These costs are direct or indirectly
associated with overall performance of an organisation. There are various types of costs which
are applicable in this process. Some of them are discussed positively in this report. Such as:
Absorption costing: It refers as one of the best costing method which is applicable to all
manufacturing cost of production. It is help responsible for evaluating total costs which are
associated with examine total net profit for the company. It consists of both variable and fixed
cost during production. It is also known as full costing methods which because of flexible nature.
It is not consider more reliable and accurate for future decision making in respect to future
growth.
Marginal costing: It is said to be one of the best sources of reliable cost accounting
method which are associated with evaluating cost which will be charged for additional
production of products. In order to evaluate contribution per units, fixed cost during the period
are written off. It is determine as more reliable an effective method which is consider effective
for better decision making in coming period of time (Klemstine and Maher, 2014).
Evaluation of accounting techniques
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In accordance to get more reliable profit for the company, it is necessary for an
organisation to make use of tools and techniques in best and suitable manner. There are various
types of accounting tools which are associated with this process. Such as historical cost which is
consider as base for actual cost evaluation. While standard costing is taken as more effective or
accurate costs that are reliable in future decision making. Marginal costing accounting
techniques are used to determine extra cost which are paid by the company for their products are
analyse effectively in near future.
Computation of Net profit by using absorption costing Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Calculation through using Marginal costing Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 600*1 - 600
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3600
Total Profit / Loss 7400
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Critical evaluation of wide range of accounting system
According to the above information, it has been determine that all accounting data are
taken into consideration while calculating net profitability for the company. For this purpose,
Zylla Company is having two effective methods such as absorption and marginal costing. In case
company is using absorption costing they are able to get a net profit of 7800. While in case by
using marginal cost they are able to get sufficient amount of profit with 7400. The major
difference of 400 is arising because of fixed treatment during computation of net profit for the
company.
TASK 3
P4: Various merits and demerit of using planning tools in controlling budgets
In case of large organisation which is operating at huge level to increase their reputation
and efficiency. For this purpose, budget is needed to be prepared so that overall information
about total cost and expense a company needed to increase their production of product and
services. Budget is one of the effective aspects which will be essential for finance department to
organize their future cost of production Zylla company is going to bear can be calculated
properly. It is known as one of the effective financial planning which is done for the definite
period of time, usually for an accounting period of time. This seems to be well organise sales
capacity and earning generated within an organisation. There are various types of planning tools
which are needed to be used in the department which will be helpful to control the budgets.
Some of them are mentioned underneath:
Forecasting tools: It is one of the effective planning of making estimation of future based
on previous and current data and mainly for evaluating the trends. A similar place is said to be
estimation of few variable that are associated with the company taken into account to deal with
all kind of aspects which are affecting the growth of Zylla company.
 Advantage: It has been examining that organisation is having plenty of forecasting method
to assess best possible results within an accounting period of time (Wickramasinghe and
Alawattage, 2012).
 Disadvantage: The major limitation of these forecasting tools is that company is not able to
estimate future in more effectively. It is so because of qualitative nature of forecasting.
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Scenario planning tools: It is consider as one of the primary tools which is used by
business in making effective strategies in respect to deal with all kind of implications those are
associated with an organisation (Scenario Planning, 2018). Manager of Zylla need to be ready
always to face all kind of situation which is comes in front of them.
 Advantage: The main idea behind using this particular tool is to establish better thinking
regarding best possible future which can control all kind of impacts that are affecting the
profitability of an organisation.
 Disadvantage: It cannot be able to work in those situations which are handled by an
organisation without using appropriate tools and techniques.
Contingency tool: These kind of planning tools are required to be formulated by using an
effective group of team which would be representing all functional location of an organisation.
In case of Zylla Company which is more enough as a formal project which required to be
determine proper approval of top authorities those are operating for increase the productivity of
the company (Christ and Burritt, 2013).
 Advantage: It is consider as backup plan which activate in activity of contingency that
would make huge impacts on the company’s overall production.
 Disadvantage: In some kind of situation, it does not having maximum report that can
assist in critical situations.
Evaluation of planning tools
In respect to every better outcome a company need to make use of their planning tools
which will be helpful to control the budget. All tools are considered more reliable and accurate
for increasing productivity of an organisation. Forecasting tools are more effective in estimating
their future cost and expenses. Some other tools are also reliable to control their future
implications those are responsible for increasing goodwill of the company.
Critical evaluation of planning tools
According to the all impacts which will be affecting the profitability position of the
company at large scale. It is necessary to make use of all financial records those are major
responsible for damage. Some of them are related with product and quality issues and other one
are associated with productivity position of the company.
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TASK 4
P5: Comparison of ways management accounting overcome financial issues
In Companies like Zylla which is working at large level need to deal with various kind of
issues. Some of them are related with operating or few are associated finance. The major one is
based on financial stability of an organisation. Company always tried to reduce the implication
as soon as possible so the chances of mistakes can be controlled in quicker time. By doing so
they are able to increase their goodwill and efficiency at the same point of time. Some common
issues are mentioned underneath:
Issues related with cash flows: Cash is consider as one of the main sources of planning. In case
company is facing cash shortage they are not being able to plan their future growth and stability
in effective manner.
Product and service quality: Another one is associated with those entire products that
are produce by company in their regular course of business. In case those services are not in
effective manner they are not able to control their flow of capital (Soin and Collier, 2013).
In order to deal with all the above mentioned issue Zylla Company need to make use of
below discussed tools which are responsible enough to get better outcomes in coming period of
time.
Key performance indicators: It is utmost important accounting techniques which will
be use to analyse the performance of the company on the basis of taking past records with the
present one. These tools can lead to provide more accurate position of the company.
Financial governance: Some of them legal rules and regulation are needed to be
followed by every business those are being made by government. These laws and policies are
made for the purpose of getting more reliable method of operating their business in effective
ways.
Audit committee: It is known as one of the primary parties that are responsible for
evaluating overall performance of the companies financial position.
 Internal audit: These are planned in effective manner about internal risk factors those
are affecting the profitability position of the company.
 External audit: For analysing overall financial position of the company they need to
make use for appropriate valuation of performance audit.
Zylla company Tech (UK)
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It is one of the largest companies which are
having plenty of financial issues that can lead
to make huge impacts on the overall
productivity. In order to deal with them they
need to make use of key performance
indicators and benchmarking tools.
In accordance to this company which is
related with electronic gadgets that can assist
an organisation to enhance their future aims.
They can control their impacts by using
SMART objectives of financial governance
(Klemstine and Maher, 2014).
Evaluation of financial problems
All the above discusses financial issues which are responsible for reducing the growth and
sustainability of the company. It is essential to make use of all data which will be helpful to
enhance their profit by control cost of production. Some of them are related with flow of capital,
productivity and services that are delivery by the company.
CONCLUSION
This project is all about providing crucial information about use of management
accounting systems in order to increase their future growth of the company. It has been
concluded that every information is crucial for the company. The accounting and reporting
methods are more reliable to get better outcomes in near future time. Various costing method are
used to get appropriate profit in coming time. Planning tools are also reliable to control the
budget those are prepared by the company.
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REFERENCES
Books and Journals:
Gond, J.P., and et. al., 2012. Configuring management control systems: Theorizing the
integration of strategy and sustainability. Management Accounting Research. 23(3).
pp.205-223.
Abdel-Kader, M. G. ed., 2011. Review of management accounting research. Springer.
Bennett, M., Schaltegger, S. and Zvezdov, D., 2011. Environmental management accounting.
In Review of management accounting research (pp. 53-84). Palgrave Macmillan,
London.
Hiebl, M.R., and et. al., 2015. Family Influence and Management Accounting
Usage. Schmalenbach Business Review. 67(3). pp.368-404.
Al, S.F.A. and McLellan, J. D., 2011. Management Accounting Practices in Egypt--A
Transitional Economy Country. Journal of Accounting, Business & Management. 18(2).
Laine, T., Paranko, J. and Suomala, P., 2012. Management accounting roles in supporting
servitisation: implications for decision making at multiple levels. Managing Service
Quality: An International Journal. 22(3). pp.212-232.
Amoako, G.K., 2013. Accounting practices of SMEs: A case study of Kumasi Metropolis in
Ghana. International Journal of Business and Management. 8(24). p.73.
Klemstine, C.F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A
Review and Annotated Bibliography. Routledge. Parker, L.D., 2012. Qualitative
management accounting research: Assessing deliverables and relevance. Critical
perspectives on accounting. 23(1). pp.54-70.
Soin, K. and Collier, P., 2013. Risk and risk management in management accounting and
control.
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.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Online
Scenario Planning. 2018.[Online] Avaliable through: <
https://sloanreview.mit.edu/article/scenario-planning-a-tool-for-strategic-thinking/>.
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