Management Accounting Research Trends

This assignment delves into the evolving landscape of management accounting research. It examines a selection of scholarly articles covering topics such as budgetary control, institutionalization, contingency theory, quantitative research methods, safety management, sustainability accounting, lean enterprise accounting, and big data in accounting. The analysis aims to identify prominent research themes, methodological approaches, and potential future directions for the field.

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
P.1 Essential requirement of management accounting system....................................................1
P.2 Methods of management accounting reporting.....................................................................3
M.1 Benefits of management accounting....................................................................................4
D.1 Management accounting system and reporting elate with organization...............................5
P.3 Prepare income statement using marginal and absorption costing........................................5
P.4 Advantage and disadvantage of planning tool for budgetary control....................................6
P5 Adapting management accounting system to respond to financial problems.........................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is a process that helps in decision making. Books and financial
statements of organization prepare by managers for short terms and long term. So management
of organization evacuate all books of finance and take decision about investment and increase
profit in organization. It also focuses on compare actual budget and required budget for proper
and systematic work (Maas, Schaltegger and Crutzen, 2016).
Delloite is an accounting firm in United Kingdom and provide professional services. It
was founded in 1845 by William Welch excite entertainment ltd and it headquarters situated in
London. This firm provide service like audit, tax, management accounting, financial advisory,
risk advisory and legal at global level. 286200 employees engage in this firm.
This report will be cover requirement of management accounting system and methods of
management accounting reporting, marginal and absorption costing, advantage and disadvantage
of budgetary control and financial problems.
P.1 Essential requirement of management accounting system.
Management accounting system includes all financial records and books that helps in
evaluate and analyze all things. Management of excite entertainment ltd. firm collect, analyze
and reporting about all information related to finance and operation. This accounting direct and
regulate by management of organization. On the bases of this accounting it makes decision about
investment, performance and evaluate that work of organization run proper or not according to
plan. Management make plan, strategy, policies and rules for achieve goal and maintain
discipline as well. So all data that relate to business and work of organization that includes cost,
price, budget and profit and make decision after analyze by management. Following
requirements of management accounting system :-
Cost accounting system :- this system of accounting is very helpful and necessary for
excite entertainment ltd. because it provides all information about cost and price of products in
organization. It easily fixes and decide price and cost of products. This system use for make
estimate and make budget, standard cost and actual cost. Management of organization easily
evaluate and analyze all things and find gap between profit and cost. Many departments present
so it easily evaluates all performance cost and profit and make decision for improve work and
make strategies for increase profit through investment and expand business for future
improvement and make profit. This accounting system use by all types of organization.
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Requirement :-
 This system of accounting helpful in control over cost of products and services that
organization incur.
 Managers easily take decision about risk management and that solve problem.
 Budget prepare through this system very effectively.
Inventory management system :- this management system use by all types of manufacturing
organization because this system record all entries and statements that helps in management of
stock of organization. Excite entertainment ltd. use this system for track and trace all stock and
inventory related information and also analyze whole supply chain. It includes stock from
production to warehouse and warehouse to customers like whole seller and retailers. Sales of
products, order of products and deliveries these all process track by accounting firm. That helps
in gather and test of information about actual and accurate result and management of
organization get fair result so it easily takes decision about control of sales and purchase and
increase profit (Agrawal and Cooper, 2017).
Requirements :-
 This system is very necessary for analyze and track every movement of inventory of
within organization and work in progress.
 It helps in evaluate operation and inflow and outflow of inventory.
 This system also helpful in analyze need of stock and available stocks so all cost and
quantity of budgets and stocks are maintained.
Job costing system :- it is a management accounting system and excite entertainment ltd. use
this system for evaluate profit and cost as per unit of products because this system useful for
manufacturing organization that produce products according to demand and order from
customers. So different types of order receive by organization and it has to produce according to
demanded design, quantity and units. It incurs more cost and time so organization can not
evaluate about accurate cost so this system helps in analyze about fair and accurate things.
Accounting firm use this system of accounting for analyze all things like cost incur for produce
per unit and revenue earn on per items. So according to this result management of organization
make decision that about profit and loss and increase order receive according to profit.
Requirements :-
 This system need for calculate price, cost and profit as perv unit.
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 Management of organization easily evaluate and analyze cost and profit incurred in
department.
 Through this system it makes easy to work and these things helps in keep ecord easily
and reduce risk.
Price optimizing system :- this system of accounting use by all types of firms because it helps in
evaluate reaction of customers about price of product. Customers purchase more products and
services and increase demand of cost and price of products decrease. If price and cost of products
increase so it decreases their demands because they want quality products on low price so this
system helps in evaluate price of products that effect on customers and demand & supply of
products. Management of organization making decision according to respond of customers so it
helps in reduce risk and it produces products according to their respond (Bromiley, 2015).
Requirement :-
 This system is important for knows about customers needs and wants.
 Remove wastage because organization produce products according to demand.
 Control on demand and supply is undertaken of organization.
P.2 Methods of management accounting reporting.
Management accounting report includes many types of documents and records that helps
in evaluate and analyze condition and profit and loss of organization. It also includes many
things like tax collection, revenue and expenses. So for evaluation and management of
accounting many methods use by excite entertainment ltd.:-
Financial report :- financial report is very important for all types of organization that
includes all records, books and journal entries of financial transactions. It includes cash flow
statement, balance sheet, profit and loss accounts and income statement. All books keep records
and transaction of every financial year and these all books and statements use by management
for evaluation of performance of every year and then compare with previous year for make
strategy and plan about next year. Data and information about revenue and expenses easily get
by organization and this method of accounting helps in increase profit of organization.
Pro forma cash flow :- cash flow statement is a financial statement that method of
evaluate all flows of cash in organization. Excite entertainment ltd evaluate cash flow in
organization and report analyze by management and it easily evaluates all profit and loss
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through report and compare expected profit in year. This report includes inflow and outflow of
cash that means if cash comes in organization through sales of products and return on
investments that includes in inflow of cash. Cash outflow means cash goes out from organization
through pay of dividend and repayment of loans so it includes in cash outflow. So management
of organization evaluate given report by excite entertainment ltd that inflow is more than outflow
so it shows profit in organization and it takes decision about invest money for increase profits.
Sales report :- it is a report that helpful for management accounting. Excite
entertainment ltd. Evaluate and analyze this report for making decision. It includes all source of
revenue and income that increase profit of organization. This method also helps in compare that
source like whole seller and retailer who more sale and contribute in increase sales so
organization give incentives and reward for motivate to them and increase profit in organization.
It is the best method for analyze performance of members and provide incentives and bonus
according to their performance (Tieskens, 2017).
Item cost report :- this report of management accounting is the method of analyze all
cost and expenses according to material, labor and other expenses. So it takes more cost and
lengthy process of test of accounts. Because per product cost analyze in this report but
management of organization get helps and make decision easily. It incurs more cost and time
because it calculates cost and profit according to per product so that things helps in make
strategy for future production and plan about earn profit.
Budgetary reports :- this report includes all records related to budget that prepare by
organization for proper and systematic work. Through these managers of excite entertainment ltd
easily analyze needs of funds and resources for achieve goal and target of organization. So it is
also method of management accounting for decision making.
Performance report :- it is a method of management accounting that helps in evaluate
all performance of members, employees and departments. So through this report management
evaluate all performance and achievements and give rewards and incentives for improve work
and take decision about increase investment.
M.1 Benefits of management accounting.
Management accounting is very important for excite entertainment Ltd and that helps in
make decision for increase profit and revenue of organization through prevent loopholes.
Systems of management like cost accounting system that use for analyse cost and make budget
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and it provides benefits in proper and systematic work. Inventory management system is useful
and necessary for organization to track and trace all information of stock that provide benefits in
control of inventory and remove wastage in organization that helps in save cost. Job costing
system is beneficial for organization because it easily calculates profit receive enough or not
according to incur cost per unit son this system helps in keep record as per unit. Price optimizing
system use by organization for track reaction of customers due to price changes (Gooneratne and
Hoque, 2016).
D.1 Management accounting system and reporting elate with organization.
Management accounting system is a process of evaluate all things like cost, performance
and profits and revenue by management of organization and make decision according to books
and statement so through this it makes strategy and plan for increase investment for well return
and expand business. Management accounting system also compare actual performance to past
records for make strategies for future.
Management accounting reports compare actual budget with required budgets for
measure profit and revenue. It also calculates profit as per product so it consumes more time and
consume more cost. These all reports useful in check all books and statement of financial
account for make budgets and expect profitability because it includes all expenses of excite
entertainment ltd like labor, material and other expenses so that very important for organizations.
P.3 Prepare income statement using marginal and absorption costing.
In management accounting many types of techniques use by organization like income
statement, budgetary reports etc that use in financial accounts and keep all data and records.
These all reports are prepared by organization through use of techniques like absorption costing
and marginal costing. All techniques and tools of management accounting use for make decision,
make strategy and plan, reduce and decrease risk.
Marginal costing :- it is a cost that includes all variable cost and ignore fixed cost of
products. Its major use is fix price of products and services, select best sales mix and optimum
utilization of available resources. Many types of cost incur in production so this technique helps
in evaluate all variables cost and it means all cost that change remain not fixed. So it changes
according to size, design and everything of services and products (Maelah and Yadzid, 2018).
Absorption cost :- it is also a technique and it includes all cost like fixed and variable
cost. All cost that consume and important in produce products and services that it includes all
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things. It divides according to distribution, selling and administration so it gives accurate and fair
report for make decision.
Income statement using marginal costing technique
particulars amount Amount
sales 120000
less: cost of production
opening stock 2000
variable cost of production 20000 22000
Contribution 98000
Less: fixed production overheads 40000
Net profit 58000
Income statement using absorption costing technique
particular amount Amount
sales 120000
cost of production
opening stock 2000
variable cost of
production 20000
fixed cost of
production 40000 62000
gross profit 58000
Interpretation :- in above table marginal cost shows that sales of products is very high
120000 and organization spent on their production very low so profit earn high 98000 through
marginal costing techniques. That helpful for management of organization for make decision
about investment. In absorption costing sales is equal to marginal 120000 but through this
organization earn 58000 profit that is very low compare to marginal costing techniques. It has
main purpose is earned more profit and increase revenue and profit so marginal costing is the
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best technique for earn more profits because it only includes variable costs but absorption
method of costing include fixed and variables both that it reduce profit of organization.
P.4 Advantage and disadvantage of planning tool for budgetary control.
Budgetary control is a tool that helps in control cost and increase profit in excite
entertainment ltd. It includes in management accounting system because through this
management of organization predict financial resources for make budgets. It makes only for
specific time period and for accomplish specific objective. Budget is make by cost accounting
system for all department of organization and budgeting tool helps in control and maintain of
budgets.
Planning tool for budgetary control:-
Planing tool of budgetary control is very best way for develop and improve budgets for
development in effective manner. Through this management of organization evaluate and get
accurate and fair position of organization so they easily perform. Following types of budgets use
by organization :-
Cash budgets :- this budget is useful and important for all types of organization because it
provides detailed information about sources of cash that excite entertainment ltd earns cash. So
organization develop sales, purchase and capital expenditures in budget. This budget helps in
make decision for pre plan about expenditure and revenues. It also prepares plan about invest
money in well place that give high return on investment so this budget includes all cash related
pre plan (Nascimento, 2017).
Advantage :-
 It is important for every organization and helps in optimum utilization of cash according
to budget.
 Management and department easily evaluates income and expenditure through this
budget.
 It also beneficial in investment of cash at right place.
Disadvantage :-
 This budget are susceptible to manipulation.
 Organizations prepare budget every year for pre plan so it makes according to previous
year but it not trues.
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 Department utilize over cash of budget so it creates problem and balance do can not
maintain.
Operating budgets :- this budget include all revenue and expenditure that create and generate
through operation of excite entertainment ltd. Operations of organization like labor and raw
material. Sales and purchase budget also includes in this budget so this budget prepare in
organization according to functions and department. Through sales budget it controls on
expenditure that is use by it for sales like transport and communication. Through purchase
budget it controls on raw material and equipment that needs in operations. So this budget is
important for control on expenditure.
Advantage :-
 This budget is use for control on expenditure through track and evaluate all operation
activity.
 Functions of organization get help related to funds and capital because management
prepare budget properly time to time.
 Through this budget management of organization easily make and pre plan about future
expenses bases on current and previous budgets.
Disadvantage :-
 This budget has disadvantage that it consume more and more time and cost for prepare of
budget.
 It has to need high skills and efficiency for make budget.
 Employees that engage in operations of organization so they get less flexibility that effect
work of organization.
Master budget :- this budget prepare by organization completely for future and it makes plan
about all things like purchase, sales, production and investment related budget. That helps in pre
determined all things and make strategy for achieve organization goal and achieve target. This
prepare through prediction and include information of all types of budget. So management easily
prepare this budget.
Advantage :-
 This budget has bird eye view because mostly through this organization prepare accurate
and perfect budgets.
 This budget reduce time and cost because all are includes in one budget.
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Disadvantage :-
 It creates confusion and create conflicts because in this budget all functions of
organization not have fix amount.
 If management wants top update and modify so it very difficult process.
 Evaluation of master budget become complex.
Zero base budget :- it is very important for all organization and justify all expenses for new
period. This budget prepare by excite entertainment ltd so it has to start from zero level. All
function of organization is evaluated by managers and analyze need of cost. It prepares for fix
time period and after accomplish of time of budgets so it has to evaluate and analyze all things
from zero level (Herschung, Mahlendorf and Weber, 2017).
Advantage :-
 Its advantage is that mangers check all things in detail and deeply for increase profit and
generate more revenue.
 Through this organization easily make proper and systematic plan for generate more
revenue.
 It is very detailed budget and many things and condition mention in it.
 It is a profit center because it generates more revenue because all department work
separately for increase and earn profit.
Disadvantage :-
 It is very complex budget because management of organization has to evaluate things
from zero base and starting.
 It does not focus on cost center that incur more cost because it generates immediate profit
so invest more cost.
P5 Adapting management accounting system to respond to financial problems
Management accounting refers to system or a process through which the business
analyses the cost of its business and operations with the aim of preparing the internal financial
reports and different accounts to help the managers in taking the decisions in order to achieve the
goals and objectives of the business (Ibarrondo-Dávila, López-Alonso and Rubio-Gámez, 2015).
Different types of management accounting system
There are many types of management accounting system which are used by the business for the
smooth and cordial functioning of the business. These different types of system are as follows-
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 Key Performance Indicators- it is a technique used as a measurable value which
illustrates that how effectively the company tries to achieve the key business objectives
and the goals of the business. It can also be defined as a measurement or indicator which
is used to analyze, monitor and track the performance level of the business operations for
a specified period. There are many types of key performance indicators used by the
different companies like sales, revenues, profits, customer base, the cost of goods sold,
total available market share, the competitors and the competitive pricing techniques used,
social media engagement, after sale services for the customers and many more attributes
or the characteristics.
 Balance score card- the balance score card is a strategic planning tool used to align the
different types of business activities in accordance with the vision, mission and the
strategy of the company in order to improve the internal and external communication and
monitor organizational performance (Oboh and Ajibolade, 2017). It is a system which is
designed in order to divide the company's mission and vision statements into smaller but
well defined goals. This breaking gown the vision helps the company in monitoring the
performance in respect to overall objectives and goals which were set in mission
statements.
For instance, the Volkswagen uses this strategy to align all the project and financial
resources to motivate the employees and communicating the strategies to them and installing the
recognition and rewards programs.
 Bench marking- it is a process of comparing the organization with its competitors within
the same industry (Vasarhelyi, Kogan and Tuttle, 2015). This technique can be used for
any type of product, service, process or any function or any parameter. By comparing one
firm with another firm of similar type the firm can access its own strengths and the
weaknesses and can use different types of measures to improve the weaknesses and to
maintain the strengths. Many organization compares themselves with their competitors in
order to identify and eliminate the gaps in the product delivery to gain a competitive
advantage (Granlund and Lukka, 2017).
For example, Toyota uses the bench marking in order to compare its company with all its
competitors and by this it came to know that the company needs to improve its quality control
system, and also needs to make improvements in the whole productive system.
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 Variance analysis- it is a type of quantitative investigation which is referred to as the
segregation of the total cost variance into different types in such a way that it indicates or
demonstrate clearly the reasons or the causes for such variance and also the persons who
are responsible for them. There are different types of variances such as material variance,
overhead variance, labor cost variance, controllable and uncontrollable variance and
many more. To analyze the variance the company compares the previous year's actual
results and the current years budget. This comparison is done with the purpose of
planning.
 Financial governance- it is defined as a way through which a company tries to
accumulate, manage, monitors. Analyze, evaluate and control all the financial
information relating to the company. It involves that how the companies track their
financial transaction, manage the performance and controls the data its compliance and
disclosures. It also involves the policies and procedures which the company uses in order
to manage the business data and to make sure that the data collected is correct. The
financial governance results in a faster close and expedites the completion of the other
financial processes just by using standardized work flows and by automating the time
consuming process.
Break even analysis- this is a technique or a financial tool which is used by the company to
determine that at what stage the company is currently working and to determine the number or
quantity of the products or the service which the company must sell to recover all the cost. It
may also be referred to as a situation wherein the company neither makes the profit nor incurs
losses (Arnaboldi, Lapsley and Steccolini, 2015).
Calculation of Break Even Analysis
Particular Amount
Budgeted fixed cost 120000
Variable cost 10
Sales 40
BEP in units= Fixed cost/ (Price of products- Variable cost per
unit)
2990
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Contribution margin= Price of product – Variable costs 4
BEP (sales dollars)= fixed cost / Contribution margin 30000
Add: Profits 60000
Sales 90000
CONCLUSION
With the help of the report it was easy to conclude that any organization cannot work
without the help of management accounting and the use of the budgets. Both are very important
and crucial for the success of any organization. The management accounting refers to the art of
presenting the accounting information in such a way that it helps the management and the
managers so that they can make policies, strategies, rules and regulations to achieve the objective
of the firm and to maintain the day to day operations of the company. Firstly the report outlined
the meaning of the management accounting and the essential requirement of the different types
of management accounting system (McVay, Kennedy and Fullerton, 2016). Secondly it
discussed some different methods which are used for management accounting reporting. Further
the report displayed some calculations of cost with the help of the techniques of cost analysis
using the technique of marginal costing and absorption costing. Furthermore, it demonstrated
some advantages and the disadvantages of different types of the planning tools which are used in
the budgetary control. At last the report highlighted that how organizations uses management
accounting systems in responding to the different types of financial problems.
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