BTEC BUSINESS UNIT: BTEC BUSINESS UNIT: BTEC BUSINESS UNIT: BTEC BUSINESS UNIT

Unilever has been founded in the UK by Unilever brothers (the Unilever brand is one of the world's largest consumer goods companies). Unilever has been founded in the UK by Unilever brothers (the Unilever brand is one of the world's largest consumer goods companies). Unilever has been founded in the UK by Unilever brothers (the Unilever brand is one of the world's largest consumer goods companies). Therefore, to help people understand more about the management accounting and the content of the accounting relativity, the

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PROGRAM TITLE: BTEC BUSINESS
UNIT TITLE: MANAGEMENT ACCOUNTING
ASSIGNMENT NUMBER: 1
ASSIGNMENT NAME: 1
SUBMISSION DATE: February 2nd 2021
DATE RECEIVED: February 11th 2021
TUTORIAL LECTURER: Ms. Pham Huong Thuy
WORD COUNT: 4456 words
STUDENT NAME: Hoang Thi Phuong Thao
STUDENT ID: BKC1909
MOBILE NUMBER: ([phone]

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Summative Feedback:
Internal verification:

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TABLE OF CONTENT
I. PREFACE .............................................................................................................................. 5
II. COMPANY INTRODUCTION ........................................................................................ 5
III. MANAGEMENT ACCOUNTING DEFINITIONS AND EXPLANATIONS ............. 6
1. Management accounting definitions ................................................................................. 6
2. Explanations the role and principles of management accounting ................................. 6
a. The role of management accounting ................................................................................. 6
b. The principles of management accounting ....................................................................... 7
3. Explanations the distinction between management and financial accounting ............. 9
IV. MANAGEMENT ACCOUNTING SYSTEMS................................................................ 1
1. Job - costing system ............................................................................................................ 1
a. Essntial requirements for Job - costing system ................................................................. 1
b. The benefits are of a Job - costing systems....................................................................... 3
2. Inventory management system .......................................................................................... 4
a. Essential requirements for Inventory management systems ............................................. 4
b. The benefits of a Inventory management systems ............................................................ 5
V. MANAGEMENT ACCOUNTING REPORTING .............................................................. 5
1. Cost of production reports ................................................................................................. 5
a. Methods of making Cost of production reports ................................................................ 5
b. How to use Unilever's Cost production report .................................................................. 6
2. Sales report .......................................................................................................................... 8
a. Methods of making Sales report ....................................................................................... 8
b. How to use Unilever's Sales report ................................................................................... 8
VI. FINANCIAL STATEMENTS AND FUNDAMENTAL RATIOS ANALYSIS ........... 9
1. Balance Sheet .................................................................................................................... 10
2. Cash Flow Statement ........................................................................................................ 12

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3. Income Statement ............................................................................................................. 13
VII. CONCLUSION ................................................................................................................. 16
VIII. REFERENCE LIST ...................................................................................................... 17

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I. PREFACE
In the current fierce competition among technology companies in the world, it is a very big
challenge for businesses to stand firm in the market. And it can be said that management
accounting plays a very important role in making budget and cost plans to help the company spend
reasonably in the process of development and compete with strong competitors.
Therefore, to help people understand more about the management accounting and the content of
the accounting relativity, the accounting department of Unilever has released this report.
The report will consist of five main parts. The opening is to introduce Unilever with basic
information. Next is the definition and the roles and principles of management accounting along
with explanations of the differences between management and financial accounting. The
management accounting systems Unilever applies will be clearly analyzed in Part IV. In addition,
the report also provides management accounting reports that the company frequently uses. Part VI
of the report will analyze and evaluate the financial statements and fundamental ratios of Unilever
in 2019.
II. COMPANY INTRODUCTION
Picture 1: Logo of Unilever by CafeBiz
Unilever is a multinational company founded on September 2nd 1929 with the combination of
Lever Brothers (the soap maker in the UK) and Margarine Unilever (a Dutch food butter
manufacturer). Currently, Unilever has two headquarters in the UK city of London and the Dutch
city of Rotterdam.

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Unilever is a world-famous brand in the field of manufacturing fast-moving consumer products,
including personal and home hygiene products, food, tea and tea drinks, and products sold in more
than 190 countries. Unilever's food, home and personal care brand is trusted by consumers around
the world - the average consumer buys 170 billion packages of Unilever products each year.
Unilever's typical brands are widely consumed and accepted worldwide such as Lipton, Knorr,
Cornetto, Omo, Lux, Vim, Lifebuoy, Dove, Close-Up, Sunsilk, Clear, Pond's, Hazeline, Vaseline,
etcs. With sales of over millions of dollars per brand, it is proving that Unilever is one of the most
successful companies in the world in the consumer healthcare business.
III. MANAGEMENT ACCOUNTING DEFINITIONS AND EXPLANATIONS
1. Management accounting definitions
Accounting is the process of identifying, measuring and communicating financial information
about an entity to permit informed judgements and decisions by users of the information. (Pauline
Weetman, 2006)
Management accounting is the process of preparing reports about business operations that help
managers make short-term and long-term decisions. It helps a business pursue its goals by
identifying, measuring, analyzing, interpreting and communicating information to managers.
(Freshbooks, nd)
Management accounting is the process of identification, measurement, accumulation, analysis,
preparation, interpretation, and communication of information that assists executives in fulfilling
organizational objectives. (iEduNote, nd)
2. Explanations the role and principles of management accounting
a. The role of management accounting
The role of management accounting include:
❖ Make-or-Buy decision
Management accounting insights on cost and production availability are deciding factors in
purchasing choices. Data from managerial accounting empower decision-making at both an
operational and strategic level. (Freshbooks, nd)
❖ Forecasting cash flows

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Estimating cash flows and the impact of cash flows on the business is essential. Considering where
the costs companies will incur in the future and where its revenue will come from can help a
business make its next moves. Management accounting involves creating budgets and trend chars
that managers use to decide how to allocate money and resources to generate the projected revenue
growth. (Freshbooks, nd)
❖ Understand performance variances
Performance discrepancies in business are variances between what was predicted and what was
achieved. Using analytical techniques, management accounting helps management build on
positive variances and manage the negative ones. (Freshbooks, nd)
❖ Analyzing the rate of return
Knowing the rate of return (ROR) is essential to know before embarking on a project that requires
a lot of investments. The management accountant must know to choose the project that is most
profitable and the fastest break-even for the company among other projects. And must estimate
the cash flow to be invested in that project is suitable for the company. (Freshbooks, nd)
b. The principles of management accounting
❖ Influence
Communication presents insight which is crucial. Communication constitutes the start and end of
the management accounting. It strengthens the process of making decisions by corresponding
insightful details at all phases of decision making. Sound communication of critical information
makes it possible for management accounting to cut across silos as well as encourages integrated
thought process. The impact of actions taken in one division of the business on the other divisions
can be easily comprehended, approved, or modified.
By discussing the requirements of the business decision makers, it is a lot simpler to devise and
assess the most pertinent information. It implies that recommendations are important for the
decision makers and also to gain authority.
(Alika Cooper, 2020)
❖ Relevance
Information is valuable for one and all. Management accounting checks for the best available
resources for information pertinent to the decision that is being taken, the people making the

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decision along with the decision method being employed. By getting to grips with the requirements
of shareholders, the most relevant and useful information for decision-making is determined,
obtained, and arranged for evaluation.
It needs maintaining a proper balance between: Past, present, as well as future-dependent info;
External and Internal information; Financial as well as nonfinancial details, such as ecological and
social concerns.
(Alika Cooper, 2020)
❖ Value
The influence on value is estimated. Management accounting links the organization’s processes to
its core enterprise model and demands an intensive knowledge of the broader macroeconomic
atmosphere. It entails assessing information along the value-generation pathway, gauging possible
opportunities, and concentrating on the risks, expenses as well as the value-generation possibility
of opportunities.
Situation analysis adds rigor to the review of organizational decisions. By using situation models
to assess the effect of specific opportunities and challenges, businesses can make better decisions
regarding terminating or taking advantage of them. The models furthermore allow firms to
quantify the possibility of a chance to become successful or risk arising and the value which needs
to be produced or eroded.
(Alika Cooper, 2020)
❖ Credibility
Stewardship forms credibility. Responsibility and scrutiny help in making the decision-making
process a lot more purposeful. Managing near-term business interests against long-run value for
shareholders improves trust as well as reliability. Management accounting experts are known to
be ethical, responsible, and aware of the organization’s ideals, governance prerequisites, and
interpersonal commitments.
Being aware of inconsistent interests boosts stakeholder management and is also an essential factor
when it comes to prioritizing stakeholder units. Proactively trying to get feedback and being
receptive to queries or bad feedback allows for surveillance by people that have a vested interest
in the organization’s overall productivity. This improves the credibility, reputation, and
authenticity of the company and bears a favorable effect on strengthening processes and authority.

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(Alika Cooper, 2020)
3. Explanations the distinction between management and financial accounting
Content Financial accounting Management accounting
Meaning Financial Accounting is the branch of
accounting which keeps track of all the
financial information of the entity.
Management Accounting is that branch of
accounting which records and reports both
the financial and nonfinancial information
of an entity.
Function Management internal and external to
the company.
Corporate internal management
Information Only monetary information is
contained in financial accounting.
Management accounting contains both
monetary and non-monetary
information such as the number of workers,
the quantity of raw material used and sold.
Format Done in the prescribed format No prescribed format
Objective Focuses on providing information Focuses on providing information to

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about the functioning of the entity’s
business to its users.
help them in evaluating the performance
and devising plans for the future.
Time Frame Financial Accounting is mainly done
for a specific period, which is usually
one year.
The management accounting is done as
per the needs of the management say
quarterly, half yearly.
Publishing
and auditing
and auditing
Financial accounting information is
required to be published and audited by
statutory auditors.
Management accounting which does not
require information to be published and
audited, as they are for internal use only.
Financial accounting must be reported
publicly.
Used for organization and therefore very
confidential.
(Surbhi S, 2018)
IV. MANAGEMENT ACCOUNTING SYSTEMS
There are many types of accounting systems such as: Cost accounting system, Inventory
management system, Job pricing system, Price optimization system. And Unilever chose the Job-
costing systems, Inventory management system to use because it has requirements and benefits
tailored to the company's operations.
1. Job - costing system
Job costing refers to the system of allocating manufacturing costs to the individual item or batches
of the products. It is applied if the goods processed are different from one another. It involves the
practice of accumulating data on the costs related to a particular service or production job. The
information can be needed to submit cost data to a consumer under the contract in which costs are
refunded. Also, the information is important for determining the accuracy of the estimating system
of the company that must be capable of quoting prices which permit for a reasonable income. The
information may also be applied to assigning inventoriable costs to processed products. (Katherine
Alexander, 2019)
a. Essential requirements for Job - costing system
A job costing system needs to accumulate the following three types of information:

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Direct materials: The work cost system should be able to track the cost of materials used or
rejected during the job performance. Therefore, during the implementation of the Omo Matic
Comfort project of Unilever, the costs of the chemicals in the manufacture of detergent must be
accumulated and calculated for the work. The system can aggregate these costs through manual
tracking of materials on price sheets or information that can be billed using online terminals in the
warehouse and production area export. Usually, Unilever will rely on the raw materials used for
the work in the warehouse and the specificity of the job at that time. If any remaining materials
are returned to the warehouse, the cost will be deducted from the work and returned to the
warehouse.
Direct labour: The job cost system must keep track of the labour costs used for a job. Direct labour
covers nearly the entire cost of work for Unilever. Direct employees will be assigned a job by the
company with a time card (using a stopwatch) or with a computerized time clock application. This
information can also be recorded on a smartphone or over the Internet. In all cases, the employee
must identify the correct job so that the cost information can be applied to the correct job.
Overhead: The job costing system assigns overhead costs (such as depreciation on production
equipment and building rent) to one or more cost pools. At the end of each accounting period, the
total amount in each cost pool is assigned to the various open jobs based on some allocation
methodology that is consistently applied.
In practice, a job costing system may have to be tailored to the requirements of the customer. Some
customers only allow certain costs to be charged to their jobs. This is most common in cost-
reimbursement situations where the customer has contractually agreed to reimburse a company for
all costs charged to a specific job. Consequently, a job costing system may contain a large number
of specialized rules that are not broadly applicable to all jobs for which it is compiling information.
(Accounting tools, 2020)
Below is a table of Job Costs Sheet for Unilever's project to manufacture 1000 Omo Matic Comfort
detergent products:
JOB COSTS SHEET
UNILEVER
Job number: 5416 Date started: December 1, 2018
Department: X Date completed: February 28, 2019
Item: Omo Matic Comfort detergent Unit completed: 1000

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Direct Materials Bags Price ($) Amount (Bags x
Price = $)
Bleaching chemicals 10 600 6000
Fragrance chemicals 7 386 2700
Coloring chemicals 5 260 1300
Total direct materials 10000
Direct labour Hours Wage rate ($) Amount
(Hours x Rate =
$)
Chemical engineer 5 260 1300
Material handling 15 66 990
Production support 67 33 2211
Total direct labour 4501
Manufacturing overhead Cost
($)
(Total
direct
labour)
Rate(%) Amount (Cost
x Rate =
$)
Total manufacturing
overhead
4501 120 5401
Total cost 19902
Total units 1000
Unit cost (rounded ) 19.902
★ Note:
Total cost = Total direct materials + Total direct labour + Total manufacturing overhead
Unit cost (rounded) = Total cost : Total units
b. The benefits are of a Job - costing systems
Following are the benefits of Job cost accounting:

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Detailed analysis of raw material costs, salary and general costs classified by function, division
and cost nature, helps Unilever more clearly define the operational efficiency of different factors
of manufacturing, production centers and functional units.
The company will record costs more accurately and facilitate cost control by comparing facts with
estimates.
It allows management to determine with certainty which Jobs are more profitable than others,
which jobs are less profitable, and which jobs are losing money.
It can be said that the cost-per-job system will help Unilever to estimate all types of costs in the
manufacturing process. The work cost system will prevent duplication of efforts because the same
jobs will be reflected. Helps evaluate the quality of completed work done.
2. Inventory management system
Inventory management refers to the method of controlling and overseeing the ordering, use, and
storage of components which the corporation applies in the production of the goods it sells.
Inventory management system combines the application of barcode scanners, desktop software,
mobile devices and barcode printers to streamline the inventory management such as consumables,
goods, stock, and supplies. Also, it is the practice of controlling and overseeing quantities of the
finished goods for sale. The objective of inventory management is to accurately understand present
inventory levels and minimize overstock and understock situations. Through efficient tracking of
quantities across the stocking location, managers will have insight and be capable of making
sufficient inventory decisions. The inventory of a business is one of its key assets and accounts of
the investment which is tied up to the products sells. (Katherine Alexander, 2019)
a. Essential requirements for Inventory management systems
Unilever will have two requirements for the Inventory management system:
First, warehouse managers must track inventory at all stages such as purchasing, use, storage to
each person in charge of implementation (warehouse keeper, sales staff, material staff).
In purchasing: The manager must keep track of market information, supplier information (Supply
capacity, marketing policy, stability). In addition, must closely monitor quality, quantity,
specifications, types, costs, and progress of purchase. Ensure timely production and business plans
of the company.

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In storage and preservation: warehouse management accurately determines the level of inventory
to ensure timely supply for production, warehouse in accordance with storage standards. One week
to report to superiors once to timely inventory norms for warning to adjust in time, improve
production efficiency.
In the use of inventory: comply with the rational and economical use of the basis of consumption
norms, cost estimates, production progress in order to reduce costs, lower product costs, track,
capture is forming product production, implementation schedule.
Second, inventory management must regularly ensure an appropriate correlation between value
and reality, between detailed and aggregated data, between carrying data and actual inventory
figures.
(Misa, 2016)
b. The benefits of a Inventory management systems
Without an inventory management system, Unilever's stock of goods and products would
inevitably be disturbed because Unilever has so many different items. An inventory management
system enables Unilever to maintain a centralized record of all assets and items under company
control, providing a single honest source of where all items and suppliers are located and supplier
information, specifications and total number of specific items currently in stock.
Because inventory often consists of liquid assets, the inventory management system is crucial to
keeping track of current inventory levels and understanding which items are moving fast and which
are moving slower, thus allowing Unilever to time reordering with greater accuracy.
It can be said that the inventory management system offers a multitude of benefits for Unilever.
The inventory management system has helped Unilever improve cash flow in the production and
business process with better inventory forecasting, thereby reducing inventory and labor costs. It
also helps Unilever improve relationships with suppliers and partners.
(Nicole Pontius, 2021)
V. MANAGEMENT ACCOUNTING REPORTING
1. Cost of production reports
a. Methods of making Cost of production reports

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The cost of production report (CPR) is a document used in the process costing system that
summarizes the information about the flow of units and costs through the work in process account
of a processing department. It is equal to the job cost sheet prepared in a job order costing system.
A separate cost of production report is prepared for each processing department.
Methods for cost of production reporting are divided into three parts:
Quantity schedule section: Quantity schedule is the first section of a cost of production report. This
section summarizes the flow of physical units through the relevant processing department and
shows the equivalent units for materials and conversion costs. The percentage of completion of
any units in work in process beginning and ending inventory is also shown in this section. The
quantity schedule also guides in preparing the other two sections of the cost of production report.
Price per unit equivalent: In this section, the price per unit is calculated by dividing the beginning
inventory cost and the incremental cost in the period by the corresponding units.
Cost reconciliation section: In this section, the cost charged to the department is reconciled or
accounted for. Usually, the total cost charged to a department consists of the following: Cost of
beginning work in process inventory; materials, labor overhead costs incurred by the department
during the current period; cost transferred in from the preceding department during the period.
And the total of above costs is accounted for by computing the following amounts: Cost of units
transferred to the next department or finished goods storeroom; cost of units transferred to the next
department or finished goods storeroom.
(Rashid Javed, nd)
b. How to use Unilever's Cost production report
Unilever will use a calculation process based on the parts that make the product. The calculation
units of the following department will get the data from the previous department.
In March 2019, The Unilever Company manufactured Omo Matic Comfort laundry detergent
products. The company uses a computational process and has divisions X. Detergent production
units begin to bear costs in division X for 1000 products. By the first week, 600 products were
finished and 400 left unfinished. 100% of direct material had been incurred. But 75% conversion
cost was yet incurred on the incomplete work. Detail of cost incurred by the department X as
follows: Direct material 500$, Direct labour 225$, FOH(Factory Overhead) 135 $. Below is the
Cost production report of Department X:

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OMO MATIC COMFORT
Cost of Production Report (Department X)
March 9th, 2019
Quantity schedule Units Units
Units started in process 1000
Units completed and transferred
to next department
600
Units still in process 400 1000
Cost charged to the department Amount Amount ($)
Direct material 500
Direct labour 225
FOH 135
Cost charged to the department 860
Equivalent units produced Units Units
Material (600 + 400*100%) 1000
Labour (600 + 400*75%) 900
FOH (600 + 400*75%) 900
Cost per unit Units Units
Material (500/1000) 0.5 per unit
Labour (225/900) 0.25 per unit
FOH (135/900) 0.15 per unit
Cost per unit 0.9 per unit
Cost accounted for as follows Amount ($) Amount ($)
Transferred to finished goods store
(600*0.9)
540
Work in process:
Material (400*100%*0.5) 200
Labour (400*75%*0.25) 75
FOH (400*75%*0.15) 45
Total work in process 320
Cost accounted for 860

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Based on the Production Costs Report, Unilever will know how much it costs the company to
produce 600 products. From there, it will adjust the production cost of the remaining 400 products
to be reasonable, to avoid loss when selling products to the market.
2. Sales report
a. Methods of making Sales report
Here are 3 specific steps that Unilever requires to create a Sales report:
Determine the purpose of the report: Knowing the purpose of the sale will help the company to
income and analyze the appropriate data type. The reporting also helps Unilever define the scope
of the report as the time period for which it is to report.
For example, when Unilever wants to understand the margins of a certain customer segment, then
the sales report will focus on the revenue that this segment generates for the company.
Know the customer: Once Unilever knows the exact reason for creating a sales report, it will begin
to identify the audience so that it can make the customer understand the company's opinion as best
as possible.
For example, Unilever's marketing manager always asks for a sales report detailing the marketing
campaigns that will lead to the highest sales.
Data income: Start by outlining the metrics that will be included in the report. Unilever always
requires the sales report to include: sales growth, sales by region, new opportunities, team
performance and a few other metrics. And the company encourages the use of charts in the reports
to help people see and study more closely.
b. How to use Unilever's Sales report
Below is Unilever's Sales report and Turnover and Operating profit performance chart of Unilever
for 2019
UNILEVER
GROUP
SALES REPORT
DECEMBER 31, 2019
Beauty &
Personal Care
Foods &
Refreshment
Home Care Group

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Turnover (€
million)
21868 19287 10825 50982
Underlying sales
growth (%)
2.6 1.5 6.1 3.2
Underlying
volumegrowth (%)
1.7 0.2 2.9 1.9
Underlying price
growth (%)
0.9 1.7 3.1 1.2
Operating profit
(€ million)
4520 2811 1377 12639
(Unilever, 2019)
Thanks to this sales report, every year Unilever will know which products of the company are
interested in and consumed by many customers. From there, the company will have plans to
produce best-selling products and research to improve products that are not well received by
consumers. It is thanks to the Sales report that Unilever will know which products are produced
more and which products are less to avoid inventory.
VI. FINANCIAL STATEMENTS AND FUNDAMENTAL RATIOS ANALYSIS
Based on data from Unilever's activities, the following are reports on statement income, balance
sheet, cash flow report for 2019 of the company.

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1. Balance Sheet
UNILEVER GROUP
BALANCE SHEET
DECEMBER 31, 2019
Assets Liabilities and Equity
Current assets € million Current liabilities € million
Cash and cash equivalents 4,185 Financial liabilities 4,691
Inventory 4,164 Current tax liabilities 0,898
Trade and other current
receivables
6,695 Trade payables and
other current liabilities
14,768
Current tax assets 0,397 Provisions 0,620
Other financial assets 0,907 Liabilities held for sale 0,001
Assets held for sale 0,082
Total current assets 16,430 Total current liabilities 20,978
Non - current assets € million Non – current liabilities € million
Property, plant and equipment 12,062 Financial liabilities 23,566
Pension asset for funded
schemes in surplus
2,422 Non - current tax liabilities 0,182
Deferred tax assets 1,336 Funded schemes in deficit 1,157
Financial assets 0,874 Unfunded schemes 1,461
Other non - current assets 0,653 Provisions 0,664
Deferred tax liabilities 2,573
Other non – current
liabilities
0,339
Total non - current assets 17,347 Total non - current
liabilities
29,942
Goodwill and intangible
assets
31,029 Equity € million
Shareholders’ equity 13,192
Non - controlling
interest
0,694
Total equity 13,886
Total assets = 64,806 € million Total liabilities and equity = 64,806 €

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million
(Unilever, 2019)
★ Note :
Total assets = Total current assets + Total non-current assets + Good and intangible assets
Total liabilities and equity = Total current liabilities + Total non-current liabilities + Total equity
 Data analysis
Goodwill and intangible assets increased to €31.0 million (2018: €29.5 million) mainly as a result
of acquisitions which contributed €1.2 million and favourable currency impact of €0.5 million
driven by strengthening of the US Dollar and Pound Sterling.
In current assets, cash and cash equivalents increased by €1.0 million (2018: €15,478 million ).
The increase is primarily due to strong cash delivery in several countries which will be used to
repay short term debt in due course.
Current and non-current financial liabilities increased by €1.5 million (2018: €28,844 million) as
a result of commercial paper issue and bank borrowings.
 Ratios from the Balance Sheet
Current ratio = Current assets / Current liabilities 0.78
Debt ratio = Total liabilities / Total assets 0.79
Debt to equity ratio = Total liabilities / Shareholder’s
equity
3.86
Current ratio: The rate in 2019 is 0.78, which means the company's current assets can cover 78%
of short-term debt. However, this index less than 1 shows that the company is having some
difficulty in paying short-term debts.
Debt ratio: With a ratio of 0.79, Unilever owns more assets than liabilities and the company can
think of using some assets to meet short-term liabilities. This also shows that the company is still
in the safe zone. However, the company is financed mainly by loans.
Debt to equity ratio: The company's Debt to equity ratio of 3.86 with total liabilities of €50.92
million and Shareholders' equity of €13,192 million shows that Unilever is operating on financing

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from creditors (bank loans) being used more than funding from investors (shareholders). This
shows that the company is having a hard time operating, so the new investors have little funding
for the company.
2. Cash Flow Statement
UNILEVER GROUP
CASH FLOW STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2019
Cash flow from operations € million
Operating profit 8,708
Additions to cash
Depreciation, amortisation and impairment 1,982
Provisions less payments 7
Elimination of (profits)/losses on disposals 60
Non-cash charge for share-based compensation 151
Other adjustments 2
Subtractions from cash
Changes in working capital (9)
Pensions and similar obligations less payments (260)
Cash flow from operations activities 10,641
Income tax paid (2,532)
Net cash flow from operating activities 8,109
Net cash flow (used in) from investing activities (2,237)
Net cash flow (used in) from financing activities (4,667)
Net increase/(decrease) in cash and cash
equivalents
1,205
Cash and cash equivalents at the beginning of the
year
3,090
Effect of foreign exchange rate changes (179)
Cash flow at end of year 4,116
(Unilever, 2019)
★ Note:

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Net cash flow from operations activities = Operating profit + Additions to cash - Subtractions from
cash
Net increase/(decrease) in cash and cash equivalents = Net cash flow from operations activities -
Net cash flow from investing activities - Net cash flow from financing activities
Cash flow at end of year = Net increase/(decrease) in cash and cash equivalents + Cash and cash
equivalents at the beginning of the year - Effect of foreign exchange rate changes
❖ Data analysis
The net cash flow from investments is € 2,237 million compared with a cash flow of 4.644 million
euros in the previous year.
The net outflow from financing activities was 4,667 million euros compared with 12.13 million
euros in the previous year. The year 2018 includes € 6.0 million in connection with stock
repurchases. In 2019, net debt to repay debt was 1.4 million euros higher than the previous year.
However, in 2019, Unilever still grew positively. This has ensured the company always has enough
budget to operate stably.
Unilever's operating cash flow is defined as an indirect method. Since operating cash flow
increased by 1.0 million euros, it was mainly due to improving working capital in 2019 compared
to the previous year due to the handling of differences.
 Ratios from the Cash flow statement
Operating cash flow ratio = Operating cash flow /
Current liabilities
0.39
Operating Cash Flow (OCF) is also very important in a company's account. And Unilever is in
need of more capital to have enough cash to pay its short-term debts because the operating cash
flow ratio is only 0.39 with operating cash flow is €8.109 million compared to current liabilities
là €20.978 million.
3. Income Statement
❖ Income statement using marginal cost

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UNILEVER GROUP
INCOME STATEMENT (MARGINAL COST)
FOR THE YEAR ENDED DECEMBER 31, 2019
Sales (€ million) 51,980
Marginal cost of sales (€ million)
Direct materials 12,475
Direct labour 7,277
Variable production overheads 4,678
Variable distribution and admin, expenses 2,340
Total marginal cost of sales 26,770
Contribution (€ million) 25,210
Fixed cost (€ million)
Production overheads 3,727
Distribution and admin, expenses 2,511
Total fixed cost 6,238
Net income (€ million) 18,972
(Unilever, 2019)

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Unilever's profit in 2019 when calculated on a positive marginal cost basis shows that the company
is operating smoothly, production and business are not affected much.
★ Note:
Contribution = Sales - Total marginal cost of sales
Net income = Contribution - Total fixed cost
❖ Income statement using absorption cost
UNILEVER GROUP
INCOME STATEMENT (ABSORPTION COST)
FOR THE YEAR ENDED DECEMBER 31, 2019
Sale (€ million) 51,980
Less cost of good sold (COGS)
COGS 29,102
Gross profit 22,878
Less marketing and admin, expenses (€ million)
Variable marketing and admin, expenses 2,077
Fixed marketing and admin, expenses 4,753
Total marketing and admin, expenses 6,830
Net operating income (€ million) 16,048
(Unilever, 2019)

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Just like marginal cost, net income when calculated as absorption cost is also positive, indicating
that Unilever manages variable and fixed costs of marketing and admin very well. Besides, the
company has controlled the cost of goods sold as planned to get a high gross profit to keep the net
income from being negative.
In addition, the profit when calculating the absorption cost is different from the marginal cost
because the pricing methods for calculating the two types of costs are different. In marginal cost,
cost is specific to each product and can vary like direct labor and materials, profit is a calculation
of both sales and production. And absorption cost includes fixed costs allocated to products and
profit is the calculation of sales.
★ Note:
Gross profit = Sale - COGS
Net operating income = Gross profit - Total marketing and admin, expenses
Gross margin ratio = Gross profit / Sale = 44%
 Ratios from the income
Gross margin ratio in 2019 increased slightly (1%) compared to 2018 (43%) showing that the
company is doing very well, has high interest rates and effective cost control.
VII. CONCLUSION
Through the above report, everyone has a better understanding of Management Accounting, the
roles that management accounting brings to the company as well as the principles that management
accounting requires for accountants. Besides, the report also helps people to find out the difference
between Management Accounting and Financial Accounting. In addition, when the company
chooses a suitable accounting regime, it will bring benefits in the process of operation and
development. The method of preparing a Cost report, Sale report is clearly explained in the report.
And the financial statements: Balance sheet, statement of cash flows, income statement along with
fundamental ratios of Unilever 2019 are calculated accurately and transparently.
Unilever Group will always unite and select the right accounting system to control the most
optimal costs of the company, helping the company to develop increasingly with the best quality
products for consumers.

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VIII. REFERENCE LIST
 Alika Cooper, Four Managerial Accounting Principles Every Business Must Comply With,
cogneesol.com, viewed (February 2th, 2021), <https://www.cogneesol.com/blog/four-
managerial-accounting-principles-to-comply-with>
 Accounting Tools, Job costing system definition, accountingtools.com, viewed (February 2th,
2021), <https://www.accountingtools.com/articles/what-is-a-job-costing-system.html>
 CafeBiz, Chiếc logo đẹp bậc nhất thế giới của Unilever, cafebiz.vn, viewed (February 2th,
2021), <https://cafebiz.vn/chiec-logo-dep-bac-nhat-the-gioi-cua-unilever-
2020083117135545.chn>
 iEduNote, Management Accounting: Definition, Functions, Objectives, Roles, iedunote.com,
viewed (February 2th, 2021), < https://www.iedunote.com/management-accounting>
 Katherine Alexander, Management Accounting Application, researchprospect.com, viewed
(February 2th, 2021), <https://www.researchprospect.com/management-accounting-
application/#:~:text=There%20are%20many%20kinds%20of,objectives%2C%20elements%
2 C%20and%20functions.>
 Lumen, Accounting Information, courses.lumenlearning.com, viewed (February 2th, 2021),
<https://courses.lumenlearning.com/boundless-business/chapter/accounting-
information/#:~:text=The%20American%20Accounting%20Association%20defines,by%20
users%20of%20the%20information.%E2%80%9D&text=It%20provides%20information%2
0f or%20decision%20making%20and%20company%20strategy.>
 Misa, Yêu cầu cần thiết trong quản lý hàng tồn kho, sme.misa.vn, viewed (February 2th,
2021), < https://sme.misa.vn/52224/yeu-cau-can-thiet-trong-quan-ly-hang-ton-kho/>
 Mahnoor Sheikh, How to create a successful sales report, close.com, viewed (February 2th,
2021), < https://blog.close.com/how-to-create-a-sales-report/>
 Nicole Pontius, What is an Inventory Management System? Definition of Inventory
Management Systems, Benefits, Best Practices & More, camcode.com, viewed (February 2th,
2021), < https://www.camcode.com/asset-tags/what-is-an-inventory-management-system/>
 Freshbooks, What Is Management Accounting?, freshbooks.com, viewed (February 2th,
2021), <https://www.freshbooks.com/hub/accounting/management-accounting>
 Pauline Weetman, Financial and Management Accounting: An Introduction, pearson.com,
viewed (February 2th, 2021), <https://www.pearson.com/us/higher-
education/program/Weetman-Financial-and-Management-Accounting-An-Introduction-4th-
Edition/PGM166662.html>

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 Rashid Javed, Cost of production report (CPR) – weighted average
method, accountingformanagement.org, viewed (February, 2th, 2021),
<https://www.accountingformanagement.org/cost-of-production-report-weighted-average-
method/>
 Surbhi S, Difference Between Financial Accounting and Management Accounting,
keydifferences.com, viewed (February 2th, 2021), <https://keydifferences.com/difference-
between-financial-accounting-and-management-accounting.html>
 Unilever, Unilever Annual Report and Accounts 2019, unilever.com, viewed (February 2th,
2021), <https://www.unilever.com/Images/unilever-annual-report-and-accounts-
2019_tcm244-547893_en.pdf>