Management Accounting Report

This report delves into management accounting principles and their application within Unicorn Grocery, a cooperative store. It explores various costing methods, including absorption and marginal costing, demonstrating their impact on profit calculations and financial reporting. The report also examines budgetary control, outlining planning methods like capital expenditure budgeting, cost-plus pricing, and cash budgeting. It analyzes the advantages and disadvantages of these methods, highlighting their role in achieving organizational goals. Furthermore, the report discusses the importance of management accounting systems in enhancing business performance, emphasizing the use of key performance indicators (KPIs) and benchmarking for continuous improvement. The analysis includes a comparison of Unicorn Grocery's financial performance with that of Vectair Holding, illustrating the effective use of management accounting tools for sustainable success.

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management and managerial accounting use by managers the provision of accounting
information in order to inform and collection of themselves before all managers decide a
matters with in a company which aids their management function are related to performance
and costs are control. It is a process of planning, analysis, interpretation, controlling and
presentation of accounting information collected with the help of financial information a
costing element, in order to assists the all process of decision making (Baldvinsdottir,
Mitchell and Nørreklit, 2010), day to day operations and creations of policy for organisation.
This accounting system measuring of performances of employees and efficiency.
Management accounting include effective planning process which is helpful for the long term
growth and development of the organization. Members have to play effective role in order to
attain their target and fulfil their objectives as well. Various types of choices provided
members in order to fulfil their target and goals as well. This company controlled by
democratically members or owners to run the business with a management structure and with
an equal rate of pay. This company work on a model co-operative structure or employee
participation and revolve around direct often bulk purchasing direct from the manufacturer,
on side chain processing to add value, matching super markets prices and competitive
margins.
TASK 1
P1
It is a process of planing, identify, measuring, interpreting, analysing and
communicating information fro the achieving the organization objectives. Management
accounting is the effective process which is helpful for the long term success of every
business organization. Through this various types of options received by companies in order
to meet their objectives. Companies needs to reach target of satisfy needs to their targeted
customers. Through which they perform function in better way. Managerial accounting
handles the analysis the margins, amount of profits, cash flow generated by sales of products
in market. Aim of this function is to assess the risk in order to maximize risk and the
allocation of resources. This function helps to modifying the available accounting data by
rearranging and restoring a process of classification or combinations similarities retention of

the data without eliminating or dissimilarities. It’s also analysis and interpreting the data with
effective planning and decision related the cost functions. Analytical tools such as company
financial statement, ratio analysis, trade percentage and common size statement of a project.
Managers use the qualitative information of financial data, records of company (Bennett,
Schaltegger and Zvezdov, 2013). This accountant is responsible for maintain the performance
business team or having a report relationship at the same time and responsibilities (Busco and
Scapens, 2011). To prepare a management accounts to offer accurate as well as timely
information about financial data and statical information or data required by mangers to make
day to day and short term decision within an organization. The traditional accounting system
focus on generating and filtering internal information and strategical function pay attention to
information that is external factors of business and then integrate same in manner that will
not lead suboptimal decision within the company. Several types of management accounting
systems are mentioned such as cost-accounting, inventory management, job-costing and
price-optimizing systems. This process has been defined in various ways which are as aligned
below-
Budgets in accounting- This function of a financial condition of firm is an operation
way, provide information and data in effective manner that help to managers planning,
controlling as well as analysis the all procedures. This element includes and summarised the
projected activity of cash flow income statement and balance sheet (Luft and Shields, 2010).
Revenues representing the sales of goods, expenses and administrative cost. Cash flow
element analysis the inflows as well as outflows of cash in an organization on a daily basis
function related with internally or externally transactions. A financial budget outlines the how
company receive as well as invest the money on a corporate level included the revenue from
core business including income and costs from business capital expenditures. A statics
function related with elements where expenditure remain unchanged with variations to level
of sales of the company. The company use the all accounting budgets in their all activities of
cash outflow and inflow.
Cost accounting system- The cost have a direct impact of profit margins and viability
of company. Manufacturing cost included directs material, labour and cost of manufacturing
which determine the overall business profitability (Christ and Burritt, 2013). Company use
this element for calculation of all expenses related to production, distribution of its products

in market. Non-manufacturing or marketing function related to salaries and administrations
expenses of business. These expenses related to the profitability of a company and its ability
in the market place. Opportunity elements views the value of all alternate investment or
allocation decision and funding the money in a project. It is an important look for risk were
comparing costs as well as the return on investment (Cinquini and Tenucci, 2010).
Job costing system- This system is helpful for organization to maintain their
performance in international market. Through members can analyse budget.
Price-optimizing systems- Unicorn grocery use this system for the the mathematical
analysis by managers and researchers to determine how consumers will respond to various
prices for its goods or services with the help of several channels and its competitors (Lukka
and Modell, 2010).
P2
Management accounting is able to collect information or data related to operational
functions of company which is beneficial for their performance. This system taking exiting
operational data and information report related to sales analysis which is products or its
production time-specific, analysis of the cost of storing of material before its production, and
comparing of budgeted and actual expenses of company. Managerial accounting techniques
use to formulate financial strategies, explain the financial consequences in decision making,
evaluate all expenses and maintain profit margins (Contrafatto and Burns, 2013). The role of
management accounting and management accountants in a company to influences all aspects
of a business operations and transactions. Types of managerial accounting reports.
Budget report- Through this term companies are easily attaining their target maintain
their operational functions as well. It is able to control cost of firm. It is based on all actual
expenses of prior years of budgets. Managers use this report to provide incentives and
compensation to employees. Company use this report for detailing plan its expenditure and
allowing comparisons to what they are actually were (Macintosh and Quattrone, 2010).
Business create this formate in two columns one for budget outlay and other one is outlay
(Dillard and Roslender, 2011). This formate help in business to identify how closely its end
of budget mirror and its costs (Fullerton, Kennedy and Widener, 2014).
Accounts Receivable report- It is an important tool for business to maintaining cash
flow for operations of company that extend credit to their targeted audiences in marketplaces.

Unicorn grocery managers opted this report in order to find problem through the company's
collections process, information, method and techniques. Many consumers are not able to pay
their balances, the firm create its credit policies (Lee, 2011).
Job Cost Reports- Business use for this system show the all expenses for a particular
project. Companies are usually try to matched estimate revenue and inventories so the firm
can identify job's profitability for peoples in the marketplaces. Company create this report to
identify greater earning areas of the firm so the unicorn grocery focus on its efforts there
rather than of wasting time as well as money on jobs with low profit margins.
Inventory or Manufacturing- Company through physical inventory needs to opted
managerial accounting reports in order to make their manufacturing processes more effective
comparing its competitors. Unicorn grocery create this report include all the items like
inventory cost, hourly labour. Company identify its manufacturing cost and expenses for
making the products and services to create an expenses report weekly (Håkansson, Kraus and
Lind, 2010), monthly and yearly. The manager uses this function to compare several
assembly lines within firms to see how can enhance its profitability.
Task 2
P3
There are different types of techniques to create income statement including margin
an absorption costs to calculating net profit.
Absorption costing- Unicorn grocery method which are helpful
for costing in which all fixed as well as veritable costs are appropriated
to cost centre by accounted using observation rates (Herbert and Seal, 2012).
The key cost elements are including those material that are include a finished products and
also include the factory labour costs required to production a goods an and services.
Company make this statement use those costs to operate a manufacturing facility for its
employers, its production volume and rent and insurances of employers.
Income statement for absorption costing method:
Selling Price £35
Unit costs
Direct Labour £5

Direct material £6
Variable sales overhead £1
Variable Production overhead £2
Production budgeted for the period is 600
units
Fixed cost of a month-
Administration Cost: In which budgeted cost considered as £800 or Actual cost is £700
Production overhead: In which budgeted cost is £1,800 or Actual cost is £2,000
Selling cost: In this budgeted cost is £400 and Actual cost is £600
Absorption costing
Calculation of full production cost
Direct labour £5
Direct material £6
Fixed cost £5
Variable cost £3
Total £19
calculation of value of inventory and production
Opening inventory Production Closing inventory
0 700*19 = £13300 100*19 = £1900
Calculation 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
Marginal costing: Company use this this method use for the ascertainment, using by
difference among fixed or variable cost, marginal cost and having effect on profit of changes
in volume and several type of output of all transactions. Under this techniques include
variable cost are considers products costs or are allocated tom products for manufactured. , its
include direct material ,labour, expenses and veritable overheads (Hiebl, 2014). Fixed costs
are mostly concerned with the period of production price and company are written-off in the
costing profit and loss account of the period in which they incurred all expenses.
Income statement for marginal costing
Calculation of variable production cost £
Direct material 6
Direct labour 5
Variable production O/h 3
Variable production cost 14
Calculation of 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 cost
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
M1
There is various type of management accounting system which are beneficial for
companies. There benefits are as aligned below-
 It can be used by Unicorn grocery through which they can meet the effective
competitive advantage.
 It helps in enhancing process of cost allocation and techniques by opted
managers. These function helpful in decrease cost of production as well as
merchandise of products and services (Jansen, 2011).
 It helps in enhance cash inflow and outflow through which employers as well as
employees helps in taking correct or relevant firm decisions with the help of

information and financial statements or they are in the favour of Unicorn
grocery.
D1
Unicorn grocery is a corporative store that they use appropriate
management accounting system and create reports to collects the financial
data from business day to day operations including sales, purchasing and changes in raw
material costs which convert into information or data to analysis the project (Kaplan and
Atkinson, 2015). Management accounting helps in improving the cash flow
of company. The role of management accounting and management accountants in a
company to influences all aspects of a business operations and transactions
TASK 3
P4
Planning methods used in budgetary control-
Capital expenditure budget: Under this type of budget the assets of organizations are
upgraded physical properties. It is related with new project which is framed by organizations.
Cost plus pricing: It has been considered as tools which are implemented by
companies in order to fix price of particular products and services.
Advantage- This tool is simple to understand and easy to implement in company.
Disadvantage- Cost Plus price is not able to take into consideration as the account of
competitors as well as it having entire effect on price.
Cash budget- It is the estimation of cash inflow and cash outflow for the specified period of
time. Thera are various types has been used for the purpose of business operation.
Sales budget- It is the main budget which is opted for the purpose of predict and analyse
sales figure. It is required to make sales budget with the help of effective planning and
strategies. Through this company is able to attain its target and maintain its further budget as
well.
Advantages Increase in profits: - Every company has an aim of increasing it and planning tools
can help in maximizing the profit for them. A proper arrangement or a planning is

done to control the uneven expenses and investing in the right strategies which yields
benefits for it. A proper economic study or survey is done to increase it.
 Coordination: - Departments in the Unicorn Grocery need to be coordinated as the
budget of one may be high or low and might not fulfil all demands of other, so proper
budgeting needs to be done.
 Certain Aims: - Specific aims and goals are defined for every section or sector and
those aims need to be completed in given time. Attempts are made to reach those
goals and if there will not be any targets than the efforts made will go in waste.
 Reducing of Prices: - There is a tough competition in the market for a single product
of different brands. In order to increase the sale or to beat other competitor company
needs to cuts the costs of it. It can be done to the products which are more profitable.
 Alertness: - Employees needs to be get aware about the budget, setting up the targets
will help them to concentrate only on the goals. This will set a guideline for them that
what company is expected from them.
 Economy: - Budgeting will help them in keeping an eye on expenditure and expenses.
Profits made by the company will add to the economy of the country.
 Social welfare: - Benefits made by the organization would be used for the payment of
land, labour, capital and other needs.
Disadvantage
Uncertain Feature: - Budget are made for the upcoming time but the future cannot be
predicted or controlled so this can disturb it. Only assumptions can be made and on behalf of
it certain budget can be allocated. Despite the expectation a full hundred percent outcome
cannot be taken out.
Discouraging of the talent: - Employees are given certain targets which needs to be
achieved in a certain budget but there might be a person who is efficient enough to complete
the work and wants to go out of limit and work better but due to the limited targets and
budget he has to rest down.
Coordination problem: - A budget becomes successful only when there is
coordination between the sectors. Every department have to depend on each other so a
particular department having loopholes will result into the decline of performance of other
(Renz, 2016). So a proper sink and chain has to be there.

Dependence on Budget control: - There should not be much expectations from the
budget control because it takes time to show its effect. It is not a type of remedies which
provide quick results.
Support of Management: - Unicorn Grocery have to depend upon its upper
management team for the success of its budget as they are the people who motivates and
inspire the staff and make them believe that yes that strategy will be implemented in quick
time (Sánchez-Rodríguez and Spraakman, 2012). They need to be enthusiastic for the
purpose, without the support of management the system will fall down.
Planning of budget has been use for various purposes which must be effectively opted
by companies in order to fulfil their target and through which they earn better profit. Planning
and budget control process which is helpful to control budget of the company. Firm can fulfil
its long term and short term goals and objectives. Use of budget are as aligned below-
 Preparing a budget- Planning has been opted by large number of companies
in order to attract people and fulfil their needs as well. It is useful while
preparing a budget.
 Different types of budgets- There are different types of budget such as capital
and operating which are useful for the betterment of profit margin of
company.
 Alternative methods of budgeting- It has been useful to record proper
information related to transaction which are occurred in company.
Also members are bound to frame various types of plans and strategies which is
helpful for companies to attain their target. Organizations needs to determine prizes according
to the requirement of people and which is easily affordable by their customers.
M3
A budget is not prepared in one day it takes time before setting up the things a lots of
factors are considered and certain surveys, studies are conducted. Members have to frame
several plans and strategies also try to implement them in effective manner. Some certain
planning tools are as aligned below-