Financial Management & Accounting Solutions

This assignment delves into the crucial role of management accounting in addressing financial challenges within companies. It specifically examines Zylla company, comparing its operations to a smaller electronics firm, 4com plc. The document emphasizes the use of tools such as Key Performance Indicators (KPIs), benchmarking, and financial governance to mitigate risks and improve profitability. Furthermore, it discusses various costing methods, like absorption and marginal costing, used for analyzing profit and reducing expenses.

Management of Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Management accounting and its types:.......................................................................................3
P2 Various management accounting reports:..............................................................................4
M1...............................................................................................................................................6
D1................................................................................................................................................6
TASK 2............................................................................................................................................6
P3. Net profits as per marginal and absorption costing:.............................................................6
M2: Implement of management accounting tools:......................................................................8
D2: Analysis of income statements:............................................................................................8
TASK 3............................................................................................................................................8
P4. Different planning tools used in the budgetary control:.......................................................8
M3.............................................................................................................................................10
TASK 4..........................................................................................................................................11
P5. Comparison with other company's in relation to solve financial issues.............................11
M4: Evaluation of financial issues..............................................................................................1
D3: Tools used for resolving financial issues.............................................................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
Management accounting plays a most important part for developing firm's growth.
However, this is the most prominent way to develop any firm. As, there are diverse tools by
which a firm could develop in an effective manner. This report is based on the Zylla company
which specially deals in small retail trading and its poor performance is analysed and tries to
overcome these by applying effective management tools. Under this report, diverse management
accounting tools such as- Job costing, cost accounting, inventory management system, price
optimisation system are used. The management accounting officer use them in an effective
manner so that the sustainable development can be done (Bodie, 2013).
On the basis of these management accounting tools, Zylla company's management
accountants makes diverse management accounting reports so that the company can make
effective strategies and have tight control over the costs. The net profits of the firm is maximised
by using the marginal costing and absorption costing method. Various budgetary tools such as
static, vatiable, operational, cash budgets and others are mentioned hereunder, their advantages
and disadvantages are also discussed. In addition to this, company issuing effective tools that can
be used for overcome of the financial risk. By applying, KPI, Benchmarking, financial
governance, Balance Score Card approach financial problems can be overcome (Fullerton, R.R.,
Kennedy and Widener, 2013).
TASK 1
Management accounting and its types:
Management accounting is the process of recording, assessing, evaluating the financial
and non-financial information of the firm so that they could make effective report that could be
useful for the managers of the firm so that they could incorporate effective decisions for their
routine activities. Management accounting does not have any regulatory requirements unlike
financial accounting. There are certain tools that can be followed by the firm for achieving
routine business activities. However, this is the most essential task for making business
sustainable. There are so many types of management accounting. Some of them are as mentioned
hereunder:
Cost accounting system: This is the cost accounting tool which is used by the firm for
effective calculating per unit cost for making the business objectives in an effective manner. The

cost accounting makes an effective tool. With the help of this, the company can effectively lower
the costs of the products by eliminating the wastage costs. Which will ultimately gain the
sustainable development. Zylla company needs to apply this system for improving the
performance of its operations (Baldvinsdottir, Mitchell and Nørreklit, 2010).
Job costing system: This is the management accounting tool under which all the costs
which are related to the costs of materials, labours and overheads for a particular job. However,
this approach is most effective tool for identifying specific costs to individual jobs and assessing
them to oversee if the costs could be limited in a later jobs. Job costing demands a considerable
amount of costing precision if costs are to be reimbursed by the customers. Under this case, the
cost accountant must highly review the costs assigned to each job before going to release it to the
billing staff, that creates a customer invoice. Such could cause long hours for cost accountants at
the end of the job, as the firm controller is willing to issues an invoice ASAP.
Batch Costing system: This is kind of form of particular order costing. Job costing
needs to costing of jobs which are performed against particular order in batch costing items are
produced for inventory. A final good might needs diverse factors for assembly and might be
produced in economical batch lots. When orders are achieved from diverse customers, there are
common products among orders. Then manufacturing orders might be issued for batches,
including of estimated quantity of each kind of good. Batch costing method is considered in such
a cases for measuring cost of each such batch ( DRURY, 2013).
Price optimising system: This is the tool which apply by the cited firm for mathematical
analysis by the firm to identify how customers is going to respond to diverse prices for tis
products or services via various channels. This also implement the prices which the firm identify
would be best to satiate the objectives like- optimising operating profits.
Inventory management system: This is one of the management accounting tool that are
used by the firm to optimise the inventory of the firm so that the firm can gain the competitive
advantages over their rivals. However, this can be said that the company needs to adopt various
tools which could be used by the firm for affecting the firm's operations. By managing the
inventory, firm can effectively use its available resources so that they could make effective
decisions making by which the firm can achieve its pre-set targets.

P2 Various management accounting reports:
Management accounting reports assist the business owners and managers to control the
firm's performance and are formed frequently via accounting periods which are required. On the
basis of this, manager of the cited firm can request to reports daily, weekly or monthy basis.
There are few of the reports mentioned hereunder:
Budget report: this assist the firm's managers to assess their firm's performance and
make strategies to control the costs in an effective manner. However, the estimated budget for
the period is normally based on the actual expenses from previous years. Managers of the firm
could apply these budgets reports for providing incentives to the employees. Under this case, few
of the funds budgeted might renders out up as a bonuses to staff for meeting particular financial
goals and objectives (Morales and Lambert, 2013).
Accounts receivables reports: this is the report which is made after having extensive
research upon the debtors. This report segregates the customer balances by how long they have
been owned. Many of the reports covers independents columns for invoices which are 30 days
late or more than this. A firm manager could implement this report for identifying the problems
with the firm's collection process. If an important number of customers are not able to apply
their balances, the firm might required to make control on its credit policies. Periodically
assessing the accounts receivable reports maintains the collection department from the
overseeing the old debts (Herzig and et. al., 2012).
Job cost reports: This demonstrates expenses for a particular project. They are normally
matched with an forecasting of income so that the firm could assess the job's profitability. Such
assist determining more earning region of the firm so that the company could concentrates its
efforts there rather than wasting time and money at the time of making projects on the jobs with
least profits margins. This reports likewise implements to assess expenses at the time when
project is in progress henceforth, managers could correct areas of waste before the costs goes
higher.
Inventory and Manufacturing: firms with stock could apply managerial accounting
reports in order to form their production processes in an effective manner. These reports
normally covers items like inventory waste, hourly labour costs overheads costs per unit of
production. The manager of the cited company compare diverse assembling lines nuder the firm
to oversee where one could enhance or to offer bonuses to the best performing departments.

These are the reports that are important to know by the firm so that the cited firm can
make effective decisions for the firm's success in an effective manner. Although, these tools able
to assist the firm to gain the sustainable development.
M1
There are many benefits of management accounting system which are defined below:
 Reduces cost: Management accounting system provides the various information
regarding various aspects of company. This enables the management to prepare the
budget and guide the employees to perform the functions according to that. This enables
them to reduce the operational cost of different transaction of company (Nixon and
Burns, 2012).
 Decision making: Management accounting system provides various financial and non
financial information to manager of company. Such information is used by them to make
their policies and plans to improve the existing performance of their employees and
achieve organisational targets. Such information also contributes in identification of the
problems associated with the tasks of employee and provide the solutions regarding them.
 Increase financial return: Management accounting systems provides the information
regarding preferences of customers. This enables them to adopt the policies which are
customer friendly and increase the profitability. Such information provides the
opportunity to satisfy the different demands of customer and increase the sales figure of
their products and services.
D1
Evaluation different management accounting system are defined below:
 Relevant cost analysis: This analysis provides the opportunity to manager to make the
effective decision regarding minimise the cost of operations of company. This provides
the number of solution to the management in which they have to choose the best
alternative which increase effectiveness of organisation (Nixon and Burns, 2012).
 Activity based costing method: This analysis helps to determine the cost and benefit
associated with each task of company. This enables the management of company to
identify the tasks which are more beneficial and provide more importance to them.

TASK 2
P3. Net profits as per marginal and absorption costing:
Costing is the most essential part in any business. As this is the best tool by which a firm
can assess their pre unit cost of production. However, this can be said that the company could
use management accounting techniques so that its could make certain tools in order to make their
profits in an optimum manner (Dillard and Roslender, 2011). However, this is the most effective
tool that can be used by the firm for maximising the profits. Marginal costing and absorption
costing method is used by the firm for maximising the cost of the firm. This is the most effective
tool which are used by the cited company for maximising the costs. These are elaborated
hereunder:
Absorption costing: This is the costing tool which is used by the firm for maximising the net
profits of the firm. Under this, all the costs which are related to the manufacturing costs
irrespective of variable or fixed costs, considered. This is the most essential tool of the firm.
These are adopted as that costs that are levied over entire production of goods and services. This
covers variable or fixed costs during the same time. Henceforth, why these are addressed the
fixed production costs as optimum costs are connected with production (Quinn, 2014).
Marginal costing: This is connected with that costs that includes while production of extra
costs. Under this costing framework, all the variable costs considered while calculating marginal
costing. Hence, all the fixed costs are considered separately. There is a strong need to adopt
diverse features which could use the firm for making business operations in an effective manner.
Computation through Absorption costing
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 by using marginal costing
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 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
M2: Implement of management accounting tools:
This is utilized that there are so many factors which affects profitability of Zylla
company. This is observed with internal and external environment of the firm. For limiting
financial mistakes diverse accounting system could be implemented. Microeconomic techniques
that are linked with the cost volume analysis. Via implementing these tools, managers of the firm
could sort out their problems. There are so many tools such as ABC costing system and other
systems that are connected with production of goods and services.
D2: Analysis of income statements:
From the above mentioned information this is observed that the marginal costing is used
by the firm so that the manager could effectively optimise their profits in an effective manner.
Net profits as per the marginal costing is calculated as 7500 which is less than the net profits
calculated as per the absorption costing method. The net profits under absorption costing is
calculated as 7800 which is more than the profits calculated as per the marginal costing. Hence
absorption costing method is an effective tool for making profits (Ward, 2012).

TASK 3
P4. Different planning tools used in the budgetary control:
Budgets are the estimation of the figure which are related to the expenses or revenues for
the particular period of time. However, the company needs to adopt various planning tools that
could be used by the firm for making the business operations effective and efficient. This can be
observed that Zylla company uses diverse planning tools for making the business operations
effective and efficient. Some of them are mentioned hereunder:
Operating budgets : This is the budget which is related to the all the expenses and the revenues
which are related to the operating of the firm. However, there is a need to adopt various
strategies by which the company could effectively make budgets for the firm and the firm, on the
basis of the information which are provided in the budgets, can meet its pre-set targets in an
effective manner.
Advantages:
Under this budget, the company's whole operational activities are considered. whether they are
related to the expenses and revenues. By applying this, the company uses this tool in an effective
manner. The firm uses this tools for gaining firm's operational objectives (Ahadiat, 2013.).
Disadvantage:
The main drawback of this is that the company uses this tool for achieving the business
objectives. But in reality, this is not achieved. As , this is the tool by which the variance can
occur and operational constraints can occur.
Static budget: This is the firm's budget which does ont change as the sales figure of the firm
changes. This budget is already fixed and are based on an information about profits and expenses
gathered before the budget starts. This is the budgetary tool that are used by the firm for gaining
the sustainable development by having the effective controls of diverse departments under this,
all the factors which are fixed considered under this.
Advantages:
This budget is easy to use as this because a static budget does not required to be adjusted as sales
volume and turnover vary. At the time of using this, the company measures costs and forecasts
total sales over the specified period of time. This is the most effective tool that are used by the
firm for determining the actual costs and revenues and implement this information to form the

next budget. This budget also helps for simplification of the tax. Which is used by the firm for
making effective decisions for the firm (Renz, 2016).
Disadvantages
This budget is the rigid in nature and have the lack of flexibility. This is the most
common disadvantage under using this. This budget once made cannot be changed. Company
can not control the affect of change. The cost of the services which are shared that the company
needs to adopt changes for the firm effectiveness.
Flexible budget: this is also called as the variable budget. This is the budget under which all the
factors which are related to the all the variable expenses and the revenues for a specified period
of time. However, this can be said that the company needs to adopt these for making the business
decisions in an effective manner. This planning tool can be changed at any time once it is made.
Advantages:
The company by using flexible budgets can gain the sustainable development. As this is
the last tool for the firm for making the business objectives in an effective manner. The company
can change at any time when the manager feels that there is a requirement to change the planned
revenues or expenses.
Disadvantages:
The firm by using this tool, can make effective strategy during a specified period of time.
The one of the most common drawback of lack of budget mobility. This is the great weakness of
the firm for applying this.
Cash flow budgets: This is the budgetary tool under which all the cash inflows or cash
outflows are covered for a specified period of time. This is the tool that can be used by the firm
for knowing the cash flow inflows and outflows for the firm.
Advantages:
By using this, the company can effectively know about their cash inflows and outflows so
that they can make an effective decisions which will ultimately make certain tools for the firm
effectiveness.
Disadvantages:
This is not always renders accuracy in terms of cash inflows and outflows. This is the most
common tool that can be used by the firm for assessing the cash inflows or outflows but this will
not assure the accuracy for the data that are occurred (ter Bogt and van Helden, 2012).

M3
There are many planning tools which are used by the manger of company in preparation
of forecasting budgets. Different type of planning tools which are used by them are defined
below:
 Financial statements
 Financial planning
 cost accounting
 cash flow
 fund flow
All these tools are used by the management of company to prepare the budgets of
company. This helps in allocation of the finance resources to different departments as per their
needs. This provides the opportunity to complete their tasks within stipulated time.
TASK 4
P5. Comparison with other company's in relation to solve financial issues.
It becomes difficult for an organisation to achieve desired goals and objectives if they
faces financial issues such as lack of financial resources, cash inability and short term liabilities
etc. therefore the manager of an organisation are held responsible to identify such financial
problems at earlier phases and accordingly take crucial and effective plan to resolve all such
financial issues which help the business to achieve short as well as long term sustainability.
Therefore in order to survive in competitive environment the company should need to analyse
and evaluate their used techniques and tools and need to upgrade them for getting better possible
outcomes. Such financial issues or problems may occur due to conducting errors in maintain
financial records and misconduct in accounting details may done by members of an organisation
and in order to eliminate these problems following effective tools are required to be
implemented:
KPI: Key performance indicator refers to such effective tool whose main aim is to
analyse and evaluate the performance of team members as well as organisation during the year
therefore plays an important role in resolving financial problems. The company need to first set
their objectives and then direct their team members to better perform so as to achieve stability
and profitability situation in competitive environment. The company should need to use KPI's at

different levels in order to evaluate the success in achieving desired targets. At high-level KPIs
should focus on the overall performance of an organisation whereas at low KPIs should focus on
process in different of an organisation such as sales, marketing or call centre. Sometimes the
company fail to achieve their desired objectives so KPI come into force in order to evaluate and
measure the performance of team member as well as an organisation and find out the reasons that
hinder the company to achieve desired goals and objectives. It is the responsibility of manager to
implement corrective actions in order to remove or eliminate hindrances and motivate their team
members to improve their productivity level so as to contribute more to the desired goals and
objectives of an organisation in effective and efficient manner (P. Tucker and D. Lowe, 2014).
Financial governance: It refers to rules and regulations implemented by government for
the company to run smoothly without facing any financial difficulties. It helps the company to
improve efficiency and reliability of financial management which help them to sustain in
competitive market for short-term and long-term period of time. Therefore the manager of Zylla
company should need to have knowledge regarding implementing rules and standards which
helps company to overcome all financial problems. If the manager fail to implement certain
corrective actions to resolve difficulties then the existence of the company may come in danger
and there is less chance for company to survive in competitive environment (Macintosh and
Quattrone, 2010).
Benchmarking: It means the company set standards that to be achieved in future in order
to compete with their competitors. Therefore the manager of company should need implement
specific plans and actions which help them to achieve desired standards in more effective and
efficient manner that will help them in gaining competitive advantage as well. The company
should need to analyse and evaluate their competitors objectives and accordingly formulate
standard that will bring the company to reach stable and string financial position in front of their
key competitors.
Comparison with other company's
Zylla company 4com plc
It is a large corporation which is associated
with multiple products and need efficient
accounting system which helps in managing
It is small scale company which deals with
electronic gadgets. It operates ta middle level.

their daily expenses.
Tools such as financial governance and
benchmarking should need to used to resolve
financial issues.
4Plc company should need to use KPI tool to
evaluate their performance.
It has wider scope. It has comparatively less scope.

M4: Evaluation of financial issues
As it is clearly shown that most of the companies faces the problem of financial crisis
which make negative impact on the profitability situation of company. Therefore there are
various different tools and techniques through which company can control and monitors their
financial issues in order to achieve probability situation in competitive environment. The
company cannot achieve favourable outcome if they used outdated system therefore the company
should need to use advanced and updated technology which helps in achieving organisational
objectives in effective and efficient manner. The manager of Zylla company should need to
implement to some effective tools such as Key performance indicator(KPI) and financial
governance the company can manage and control all business risks which may occur on daily
basis.
D3: Tools used for resolving financial issues
The Zylla company should need to consider various financial aspect in order to determine
their performance level which help in getting new opportunities and the chance of getting
accurate result can be high. To resolve all financial issues the manager of Zylla company is liable
to implement certain specific steps such as balance score system should be used to identify the
financial problems and accordingly implement steps to attain strong position in market. The
other important tools which can be used by company to resolve financial issues such as Key
performance indicators, benchmarking and financial governance through which company can
improve their profitability situation in competitive market (Luft and Shields, 2010).
CONCLUSION
As per the given report it has been concluded that management accounting pleas an
important role in managing and controlling financial transactions which makes positive impact
on the profitability situation of company. The company should need to use various accounting
system and reporting which helps in making effective decision relating to resolving financial
issues. In order to determine net profit of Zylla company there are few costing methods such as
absorption costing and marginal costing which are used to reduce unnecessary expenses and
analyse profit of the company. Under this project there are different effective tools are
summarised which is used in budgetary control process and used in resolving financial problems.

REFERENCES
Books and Journals
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