Unicorn Grocery Performance Analysis

This assignment analyzes the financial performance of Unicorn Grocery, a small and medium enterprise (SME) with less than 50 employees and a turnover below £500,000. It examines income statements under absorption and marginal costing methods, comparing their results. The analysis emphasizes the importance of management accounting tools like benchmarking and key performance indicators (KPIs) for effective resource allocation and sustainable development. The assignment also highlights the need for employees to utilize data management techniques to achieve organizational goals.

Management Accounting

TABLE OF CONTENT

INTRODUCTION
Management accounting refers to the sourcing, analysing, communicating along with the
use of decision making which is related to finance as well as non-financial information or data
which helps in generating more profit for business organisation. Management accounting helps
in collating information which include revenue, cash flow along with the outstanding debts so
that they can produce trend reports as well as statistics which is important for the company to do
management on the daily basis and make appropriate business decisions (Baldvinsdottir,
Mitchell and Nørreklit, 2010). Management accounting is depend on the cost along with the
financial accounting. Prime goal of management accounting is to allocate the resources in a
proper and efficient manner. The present report is based on Unicorn Grocery which is offering a
organic food along with the sourced fruit and veg as well as fair trade deli products. It is based
on the core principles of co-operative organisation in that the business is owned and run by its
employees which helps in generating maximum revenue. In the below mentioned report,
discussion based on concept of administration accounting as well as different type of accounting
system related to management (Why lean accounting?, 2017). Along with this discussion on
various tools and techniques which is adopted by business entity for accounting reporting.
TASK 1
P1 Concept of management accounting and different system
Management refers to the process which helps business entity in gathering the
information and all the processing which is done by the qualified accountant which is having a
aim to supply the qualitative information to the managers and make proper decision. Along with
this all the decisions which is to be taken by the employees or managers of Unicorn Grocery it
should be in a budget and completed in a specified time (Bennett, Schaltegger and Zvezdov,
2013). Business entity have to use management accounting which aid in managing all the
business operations or activities of the company which includes better marketing strategies,
better risk management etc. Accounting system which is related to administration always focus
on cost and that is related to the manufacturing of products and services in Unicorn Grocery. The
most common system that involves the conventional cost accountancy, throughput accounting,
lean accounting along with the transfer pricing. These are the different system which helps the
business entity in reducing the cost while producing the products.

Accounting system help the company in making correct decision by doing appropriate
planning and the performance on the basis of management system. Along with this it provides
the expertise in financial reporting as well as controlling which helps in managing and
formulating the strategies. It helps in tracking the cost by using the job order method or process
costing methods (Busco, and Scapens, 2011). It helps in allocating the cost which are related to
direct cost, direct labour, direct material along with the manufacturing overhead. The employees
of Unicorn Grocery have to produce homogeneous product for their consumers and by using
project costing they can allocate the cost on the basis of distinctive processes.
Accounting is a term which is used at the time of making changes in the business entity
and by that they can control, measurement along with the management processes which aid in
supporting the manufacturing and lean thinking (Christ and Burritt, 2013). It is a method which
helps in reducing the cost by decreasing the waste and also assist in making appropriate decision
and measure the profitability.
Accounting system can help the cited company to manage there financial transactions. it
provides the support to managers for making the correct decision which helps Unicorn Grocery
in improving the profitability (Cinquini and Tenucci, 2010). Accountant of the company focuses
on identifying different constraints by using different production system of the business
enterprise. Constraints which are included in the production system are insufficient level of
materials, labour and production capacity. It succour in increasing the manufacturing volume by
decreasing cost on single unit which is produced by the employees. This system helps in making
all the arrangements which are related to the different business entities. By using this method,
companies will cost the goods appropriately via different departments (Contrafatto and Burns,
2013). In this system, transfer price includes the variable cost and opportunity cost. Opportunity
cost describe the amount of money or cost which assist in outsourcing the production. By using
the transfer pricing system, Unicorn Grocery attain the maximum benefits at the time of high
competition.
Different accounting system:
1. Inventory management accounting– To do the creation procedure stock is required in an
association. For this it is extremely essential that administration of same is done in such a way, to
the point that compelling utilization of stock is done as such that yield can be augmented.
Henceforth, the given technique helps in keeping up the suitable level of stock in the association.

2. Job costing framework – To give the final products different employments are performed in
an association. With a specific end goal to quantify the execution of each activity it is
fundamental that assessment of each is done independently so in like manner results can be find
out.
3. cost accounting conspire – Cost of any item assumes an extremely critical part in the
decision determination of the clients. Along these lines, it is exceptionally vital for an association
to set the most reasonable cost of the ware which can full fill the prerequisite of both purchaser
and maker.
Importance of cost accounting system is given below:
 In the generation of the item there are different cost which will be brought about and in
them a portion of the cost are such which are not essential for the business and won't be
adding to the benefits of association so by this every one of the exercises which are
unimportant will be distinguished and after that the cost in connection to them will be
spared as the procedures should be disposed of.
 In the organization there will be different methodologies which should be defined and
for that all the required information will be furnished with the assistance of the
administration bookkeeping.
 During the time spent control that will be set up there is the need to design the exercises
and it might be conceivable with the assistance of this and by this the execution of the
organization will be enhanced as all the work will be done by the arrangement made and
by this the general productivity of the organization will be made strides.
P2 Different methods used for management accounting reporting
` Different means and method that are utilised by Unicorn Grocery and these tools helps in
allocating the resources properly so that all the work managed accordingly.
Financial Planning: This technique is used by the business entity and it helps in maximising the
profit. The employees of Unicorn Grocery have to do proper financial planning as it is a best tool
to accomplish the business objectives (Dillard and Roslender, 2011).
Analysis of the financial statements: The main statements related to finance or in which data
can be recorded includes profit & loss account as well as balance sheet. This type of tool helps in

managing all the work by using appropriate resources and expanding the business. This analysis
can be done via comparative financial statements, ration analysis etc.
Cost Accounting: This tool helps Unicorn Grocery in presenting the cost data in a appropriate
and efficient manner on the basis of process, product, department etc. It helps in doing the
comparison between two cost so that employees can make correct decision for the betterment of
the company (Fullerton, Kennedy and Widener, 2014).
Fund flow analysis: It helps in doing the evaluation of the funds that where the company is
using from one period to another. Along with this it helps Unicorn Grocery to find out funds of
the business entity is properly used or not. Moreover, by this analysis they can find out the
changes in the working capital and funds from operations.
Cash flow analysis: This analysis helps in finding that where the Unicorn Grocery is using their
cash or from where they are earning. It also assist in finding out the remaining cash balance of
Unicorn Grocery (Håkansson, Kraus and Lind, 2010).
Standard costing: This tool is used by Unicorn Grocery which aid in finding out the cost which
is predetermined in nature. Along with this it helps in measuring the performance of the
corporation in the competitive market.
Marginal costing: It is technique which succour Unicorn Grocery in fixing their selling price,
selection of the best sales mix along with this they have to allocate and use the appropriate raw
material so that they can make correct decision for the betterment. This costing is based on fixed
cost, variable cost and contribution (Herbert and Seal, 2012).
Budgetary control: In this technique, Unicorn Grocery can estimate their future financial needs
and arranged them on a order basis. This technique is used by the business entity in controlling
the financial operations (Hiebl, 2014).
Decision making accounting: This technique helps in solving the business problem by choosing
any alternative solution which aid company in improving their profitability. By using the
appropriate accounting information helps in solving the business problems which helps in
increasing the complexity of the nature of business.
Management information system: Unicorn Grocery have to use this system as it helps in
managing all the work and the different functions of the business entity. It helps in doing the free
flow communication and have to design proper system so that they can access the information
and take qualitative decisions (Jansen, 2011).

Statistical technique: There are so many statistical tools and techniques which can be used by
Unicorn Grocery and it helps in removing all the management problems. Some statistical
techniques are regression, quality control etc.
Management reporting: It helps the accountant of Unicorn Grocery in preparing a profit and
loss account along with the balance sheet which will assist in finding out the strength and
weakness of operating activities. It helps in doing the control in the organisation and also assist
in making the correct decision (Kaplan and Atkinson, 2015). Different reports are prepared
which helps management in keeping records and doing taking them in use in future with
different reasons behind each. Some reports which are prepared in the given organisation are:
 Job costing reports – It is related to different jobs which are performed in the
organisation. It helps in keeping record of the performance of each activity which further
helps in evaluating its effectiveness.
 Inventory management reports – these are stock related reports which keeps the data of
present inventory status. It helps in marinating the adequate quantity of stock so that
situation of excess or deficit can be avoided.
 Performance report – This is another type of report which record the results of different
department and organisation as whole. It helps in making comparisons possible through
which reasons behind deviations can be identified easily.
 Service profitability report – it is another document which helps in evaluating the revenue
earned through different services which helps in taking the future decisions accordingly.
M1
Different management accounting system have their own work and company have to use
these system so that they can increasing efficiency of various functions which is associated with
the management. It assist in doing direct fixing, price fixing as well as decision making. Along
with this they have to select the appropriate product mix so that they can attain success (Lee,
2011). They have to do proper forecasting and budgeting which helps in planning the current and
future financial activities. These management accounting system helps in doing the effective
communicate at all levels of Unicorn Grocery. It also aid in improving the productivity and
proficiency of the business entity.

D1
According to Luft and Shields, (2010), it was observed that management accounting
system helps in managing all the business activities and the operations so that all the work should
be managed and through this they can achieve their desired results. All the management
accounting system aid in declining the value of the goods and employment. Along with this
management accounting report helps in finding out the strength and weakness of the distinctive
operating activities so that all the work should be managed and by that they can generate more
profit.
TASK 2
P3 and M2 Gain results as per minimal and absorption costing
Soaking up cost accounting: It is a tool which helps in computing the price of product or
merchandise by adopting indirect spendings along with the direct cost (Lukka and Modell,
2010). This costing includes all expenditure of Unicorn Grocery which are related to
manufacturing with the labour as well as cost of raw material. In this costing, direct cost can be
easily identify and calculate where as indirect cost can not be well known and measured.
Income statement as per Absorption costing
Marketing cost
Unit costs
Direct materials
Direct Labour
Variable Production overhead
Variable sales overhead
Budgeted production for the period is 600 units
£35
£6
£5
£2
£1
Fixed costs for the month are given below
Budgeted cost Actual cost
Production overhead £1,800 £2,000
Administration cost £800 £700
Selling cost £400 £600

Absorption costing
Working 1: Calculate full production cost
Direct material £6
Direct labour £5
Variable cost £3
Fixed cost £5
Total £19
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*19 = £13300 100*19 = £1900
Working 3: under/ over absorbed fixed production overhead
Actual fixed production: £3300
Fixed overhead: £3500
Total £200(over absorbed)
Net profit using absorption costing £ £
Sales
(-) Cost of Sales:
Inventory at the beginning
Production
Inventory at the end
0
13300
(1900)
21000
(11400)

(Under)/ Over absorbed fixed prod. O/h
Gross Profit
Less Expenses
Variable sales expenditure
Fixed administration expenses
Fixed selling expenditure
Net Profit
1800
700
600
200
9800
(3100)
6700
Minimal cost accounting: This is related to alteration in possibility price that arises when
the quantity is increases by one unit that is producing one more unit of products. Marginal cost at
every level of manufacturing which includes any additional cost which is required to produce the
another unit of the merchandise (Macintosh and Quattrone, 2010). The formula which is used by
Unicorn grocery to calculate the marginal cost is:
Minimal cost accounting = Modification in intake/ Change in amount of the good.
This costing assist in determining the changes which occur at the time of total production.
If marginal costing is higher than the price, then this situation is not better for the business entity
in doing production of any merchandise.
Income statement as per marginal costing
Working 1: Calculate variable production cost £
Direct material 6
Direct labour 5
Variable production O/h 3
Variable production cost 14
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 700*14 = 9800 100*14 = 1400

Net profit using marginal costing £ £
Sales
Less Variable costs
Inventory at the beginning
Production
Inventory at the end
Variable sales
Contribution
Less Fixed costs
Fixed Production expenses
Administration cost expenditure
Selling cost
Net Profit
0
9800
(1400)
2000
700
600
21000
(8400)
(1800)
10800
3300
7500
Unicorn Grocery and its team which are doing different management functions, they have
to use different management techniques for its operations. The company having less than 50
employees and also having turnover less than £500,000. Different techniques are:
Expenditure volume income investigation: This investigation is used by the business entity
which helps in determining the alteration in the cost and volume which is affected by the
operating as well as net income of Unicorn Grocery (Nandan, 2010). According to the given
income statement of the business entity, variable cost of corporation is 10200 and after deducting
this variable cost from sales is 21000, so contribution will be there which is 10800. Hence, the
PV ratio can be find out by using the formula of PV ratio which is total contribution divided by
sales, i.e.
= contribution /sales x 100
= 10800/21000 x 100
= 51.42%
Absorption costing technique: By using this technique, it has been observed that the employees
of Unicorn grocery having over absorption of expenditure which is related to fixed production is
200 and gross profit which they are earning is 9800. it means that gross profit of the business
entity is affected by the over absorption of fixed expenses.

D2
Business reports of Unicorn grocery includes the many information or data. So, the
company have to present that information in a good way in front of its users as it helps in making
correct and efficient decisions for investing in some financial instruments in the business entity.
Along with this it helps in providing a brief summary of the commercial enterprise point of the
company so that they can discover out the ability to attain any objective which have been
decided by it (Pipan and Czarniawska, 2010). Net earnings as per minimal costing is 7500 and
share is 10800 and net profit according to absorption cost accounting method is 6700. So, it has
been interpreted that there is a deviation in net earnings by using both the methods. As in the
marginal costing, variable cost is related to production of Unicorn Grocery and only variable cost
is included in cost which are related with products. On the other side, hen company is preparing
income statement by using the absorption costing method then all the cost related to products
they are absorbed on a certain or a particular basis. Another reason for figure out the differences
between the new profit by using both techniques in the fixed as well as variable overheads are
apportioned on the pre-decided basis (Quinn, 2011).
TASK 3
P4 Benefits and disadvantage of different tools of budgetary control
In management accounting, control is divided into two parts that is financial as well as
budgetary control. Budget refers to that statement which helps in forecasting the expenses in the
specific period. Budgetary control alludes to that how the supervisors use the financial plans with
the goal that they can screen and control the expenditure and dealings in the given accountancy
time frame. This is a process which causes chiefs to set the monetary alongside the execution
objectives with the financial plans and by that they can compare the actual results and according
to that they can adjust the performance (Renz, 2016). Various budgetary tools which Unicorn
Grocery is using they are:
Master Budget: It is the accumulation of all the lower level spending plans which is delivered
by the different practical regions of unicorn Grocery. Alongside this it likewise incorporates the
planned money related proclamations which incorporate a money estimate and a financing
design.

Operational Budget: This budget is a combination of the different expenses, expected future
costs along with the forecasted income in a year. It helps in requiring the estimated expenses and
revenues (Significance of Management Accounting Techniques in Decision-making: An
Empirical Study on Manufacturing Organizations in Bangladesh, 2011).
Cash flow Budget: It is an estimation of all money receipts and all the consumption of money
that are relied upon to happen amid a specific day and age. Evaluations can be month to month,
quarterly and so on.
Financial Budget: It grasps the effects of the monetary choices of the firm. It is an arrangement
which incorporates the planned monetary record which help with demonstrating the impacts of
the arranged operations alongside the capital speculations on the benefits, liabilities and also
values.
Static Budget: It is also a type of budget that incorporates the anticipated values about the inputs
and outputs. It helps in finding out the differentiation with the actual results (Sánchez-Rodríguez
and Spraakman, 2012).
Advantages and disadvantages of the different type of planning tools that are used by
Unicorn Grocery in doing the budgetary control are:
Advantages:
 Budgetary control planning tool helps in supporting the management accounting for the
preparation of the different strategies which are related to their operational activities in
future.
 These planning tools helps in communicating the different facts and figures that can
affect the operations of Unicorn Grocery (Setthasakko, 2010).
 By using these planning tools employees get all the information about their
responsibility.
 It also succour in the performance appraisal of the staff members of Unicorn Grocery.
Disadvantages:
 Budgetary control planning tool can put a pressure on the employees of Unicorn grocery
as these budgets helps in providing the targets but these targets not achieved properly.
 These tools and techniques helps in allocating the resources but they may create dispute
among the different departments of Unicorn Grocery (Shah, Malik and Malik, 2011).

 If the targets will not get achieved then every person or employee in the cited
organisation will blame each other and it will create the dispute among employees.
 All the budgets may include high cost which is prepared by the managers of Unicorn
Grocery (Talha, Raja and Seetharaman, 2010).
M3
There are various tools which are helpful in management accounting and by the
administration of Unicorn Grocery have to solve various problems which affect the daily
operations of the business entity. Different tools and techniques are
 Based on financial accounting: By using financial accounting, it become easy for the
business entity to manage all the data. It includes ratio analysis, cash flow, fund flow etc.
 Based on cost accounting: There are some methods which can be used by company as it
helps in reducing the cost of the products (Vaivio and Sirén, 2010). It includes marginal
cost, cost variance analysis etc.
 Basis of future information: Some techniques which can be used by Unicorn Grocery
helps in maintaining the information which helps in future. It includes monetary control
and budgets and estimation.
D3
Unicorn Grocery having less than 50 employees and for that all the information as well as
data should be maintained and recorded in a proper manner. By using the financial accounting
techniques like ratio analysis, comparison on the different financial statements or fund flow
analysis helps the business entity in managing the data (van der Meer-Kooistra and Vosselman,
2012). There are some techniques which is based in the cost accounting and by using those tools
they can reduce the cost of the products. The company have to manage the cost as it helps in
generating maximum revenue. To manage the cost, the employees of Unicorn Grocery have to
use marginal costing, analysis of the cost variance. There are various management techniques
which are being used by the corporation as it is a issue for any company that they face different
obstacles which are related with the projects. To maintain the future information they can make
budgets and use also estimation.

P5 Compare different organisation by using different system related to
accounting
Managerial accounting refers to the process which helps in
identifying, evaluating, recording as well as presenting the financial
information so that they can do proper management internally in the
business entity as it helps in making the proper planning, appropriate
decision-making for the betterment of Unicorn Grocery. In management
accounting, managers use the provisions of the accounting information so
that they get better information by deciding all the matters within the
business entity so that they can improve their performance (Van Helden and et.
al., 2010). Management accounting is a process which helps in gathering the
data along with this they can make appropriate decision by making proper
plans and using performance management system they can make proper
financial reports. Management accounting helps in managing the strategies
of Unicorn Grocery. Along with this it helps in developing the practices
which helps in making correct decisions and by that the employees of the
firm can improve the performance in the competitive market. Management
accounting also succour in contributing to the different practices so that
they can identify, measuring, managing as well as reporting the risk so that
they can attain the goals and objectives of the organisation (Ward, 2012).
Moreover, they can accomplish the targets and improve the productivity
and profitability in market. Management accounting system along with its
techniques can be useful for Unicorn Grocery which helps in responding
towards their financial as well as non financial issues. It aid in providing a
base to the entity so that they can achieve the sustainable development. If
company is facing heavy loss it means business entity is not using
management tools and techniques and also they can not make quick and
efficient decisions. On the other side, Unicorn Grocery can make quick
decisions by using the accounting tools and techniques (Weißenberger and
Angelkort, 2011). Moreover, they can also make some provisions against these
uncertainties between the two companies which are using the different

tools of management accounting so that they can respond to the financial
problem are:
Unicorn Grocery Vectair Holdings
 Company is using techniques which are
related to budgetary control so that they
can put proper control over the future
affairs. These tools helps in finding out
the investment which is required by
them in the particular project for future.
 Unicorn Grocery is using evaluation
related to variance as it is a quantitative
examination among the difference
between actual as well as planned
behaviour (Cost Volume Profit
Analysis, 2013). If they are removing
this factor then the manager of
company can not attain positive output.
 Cited business entity is using capital
budgeting technique so that they can
get the optimal capital structure and by
that they can provide the better returns
to it without any obligations against
any financial techniques.
 Vectair Holdings is also using certain
specific budgets which helps the
managers or higher authorities of the
company for deciding the investment
and by that what return they get.
 Vectair Holdings is also using different
tools of management accounting
techniques so that they can get best
results and by using the financial
resources they can control the cost off
the products which assist in improving
the productivity and proficiency
(Baldvinsdottir, Mitchell and Nørreklit,
2010).
Different tools that can be used in order to increase the performance of the company are:
 Benchmarking – it is a positive tool through which standards are met by the head
management which helps in getting the desired results.
 Key performance indicators – various tools and techniques are utilized in order to
evaluate the skill of various employees so that training can be provided to them
accordingly.

Unicorn Grocery have to use proper tools and techniques which helps in developing
various financial problems by utilizing the various resources and by that company can attain
good outcomes and results. If they will use management accounting methods then it will helps
them in recording or maintaining all the data or information. Managers have to do market
research which aid in identifying the elements which affect the strategies which are using by the
cited organisation (Bennett, Schaltegger and Zvezdov, 2013). For attaining the growth or doing
the sustainable development helps in making the correct decisions by allocating the funds into
different activities of the business according to the requirements. For accomplishing the goals
and objectives sustainable development is necessary.
M4
Different performance indicators are used in order to maintain and develop the performance of
the organisation. Some of them are:
Benchmarking – It is a process through which standards are set for the present operations and
than the end result is compared against it.
Financial governance – It is that aspect which is concern with the finance of the company.
According to this the funds of given origination must be effectively managed so that maximum
returns can be achieved.
CONCLUSION
After summing the report it has been analysed that all the facts and figures of the income
statements as well as new profit which is find out by using the absorption costing as well as
marginal costing method are different. Along with this Unicorn Grocery have to use appropriate
management accounting tools and techniques which succour in managing the resources of the
entity whether it is financial or non-financial. Unicorn Grocery which is a small and medium
enterprise which is having less than 50 employees and also having a turnover which is less than
£500000. so, it is important for the company to manage all its financial resources by which they
can get the best results. Moreover, it is helpful in doing the sustainable development and also
achievement in consistency. The employees have to use different tools so that they can manage
all the data and become successful. Along with this they can accomplish their goals and
objectives.

REFERENCES
Books and journals