Unit 5 - Management Accounting L-4 Introduction Introduction

That assignment is settled on the demand of various kinds of management accounting reporting and requirement of the types of management accounting systems to get important insights and results. That assignment is settled on the demand of various kinds of management accounting reporting and requirement of the types of management accounting systems to get important insights and results.

Unit 5 – Management
Accounting L-4

INTRODUCTION
MA also known as cost accounting that is an chain of actions related with the
identification, analysing figures and facts, interpretation and communication to the higher
authority to obtaining structure goals and subjective by planning and coordinating. It related
with the all fields of the accounting to inform the management about business operation metrics.
In it information regarding cost of products and services that purchased by an organisation
should be evaluated. This assignment rely on the Oshodi PLC which is an manufacturer of the
JOJO fruit juice for all age group people. That assignment is settled on the demand of various
kinds of management accounting reporting and requirement of the types of management
accounting systems to get important insights and results. It also includes the various kinds of
tools and techniques to build income statement. Further it added different types of planning way
and techniques with their benefit and disadvantage to get important results for accomplishing
desirable outcomes. In that regards proper planning and implementation of the plans and policies
is very much important for gaining competitive advantages.
TASK 1
P1.
MA refers to planning and their application of the professional knowledge, techniques
and concepts to accumulate necessary accounting information that helps to management in
building plans and policies and control the operations of an organisation (Boučková, 2015.). In
that budget plays very much crucial role for quantitative expression related with the business
plan related with operations to get important knowledge and insights to get optimum outputs. In
context of Oshodi PLC that manufactures the JOJO fruits use management accounting to
transform the important data and analytics into important kind of knowledge and information so
that improved decisions should be taken by the management. Management accounting system
avails the information regarding the companies financial information and accordingly develops

various kinds of reports that confidentially use by internal managers to reap important insights
and knowledge. For an organisation different types of MAS should be used which are:
Cost accounting system:
A cost accounting that acknowledge as Costing system is an structured format which use
by organisation to evaluate and calculation price of commodity and services to get level of
profitability from them and inventory valuation with controlling cost for gaining large market
share (Alsharari, Dixon and Youssef, 2015.). To evaluate the actual value of good is very
much critical for an administration with motive of profitability evaluation. In context of Oshodi
PLC they produce the JOJO fruit juice in which it is very much crucial for them to estimate
correct value of good that incurs during the production of goods and services in positive way. On
other hand it also proved beneficial for calculation the closing measure of the substantial
merchandise, work in progress and finished products and services with the purpose of building
financial statement. In context of Oshodi PLC which manufacture the JOJO fruits they majorly
use two types of cost accounting systems in which job order costing and process costing to
accumulate necessary statistics and data for gaining competitive edge.
Job costing system:
JCS which is a chain of activities assistance to store important kinds of value that are
associated with the production and service jobs. That kind of knowledge and information should
be submitted cost relating information to customer in which cost should be reimbursed. In
context of Oshodi PLC that kind of information proved useful for them to determine the
accuracy of the organisational system in better manner by quote pricing for getting reasonable
profitability. That types of MAS also proved beneficial to assign inventory cost to manufactured
goods and services in order for gaining organisational goals and objectives.
Price optimisation system:
Price optimisation system is one of almost crucial kind of management accounting
system that helps to find out best price of products and services as per they happily willing to
pay prices (Hiebl And et.al ., 2015.). In Context of Oshodi PLC which expertise in producing
the JOJO fruits so it is very much important for them to utilise the one of best price for their
products and services by making decent profit. The reason behind that if he price fixed too high
then it may not sell at all and if organisation sell quickly or at low price then they restrain to earn
profitability. In context of Oshodi PLC they use one of best formula to optimise price on basis of

need of good, steady of rivalry and the price related to producing the products and services. The
major objective of price optimisation system is to keep balance in the profit and value that are
very essential part of an organisation due to in food industry the absolute value of products and
services constantly changing that is never ending process for a particular business unit.
Inventory management system:
IMS is a great combination of technology consisted both software and hardware with
various procedures that helps to oversee the stocked goods and services whether it is
organisational assets, raw material and suppliers with finished products and services that are
ready to send to vendors or the end users (Malina, 2017.). Inventory management is very
essential part of organisation to keep record about each and every important attribute related with
inventory item and their associated information for an example barcode labels or important asset
tags. In context of Oshodi PLC which manufacture the JOJO fruits evaluate the level of
inventory in their organisation so that ratio of demand and supply should be equalised in proper
manner to provide in proper manner goods and services to the consumers.
In that regards it has been concise that for an administration various kinds of management
accounting systems plays major role by present accurate kind of worth to get desirable
objectives.
P2.
Management accounting which also known as cost accounting that centring on inside
collection that are accepted by financial accounting. Management accounting reports proved
beneficial for organisation for planning, regulating and decision making to measure the decisions
to get optimum level of outputs by delivering the exact kind of value by understanding the
cognition and message associated in accounting reports. In context of Oshodi PLC they use
various types of reports that are as:
Budget reports:
Budget reports are very much crucial to firm to get important insights about the level of
performance of personnel that are generated as an whole for the performance of the organization
as department wise specifically for the large administration. In context of Oshodi PLC they
prepare the overall budget to acknowledge the scheme of business for gaining desirable
outcomes. In budget estimation should be based on the income and expenditure and best budget
should be build on the unforeseen circumstances of the organisation so that they predict in best

manner to get potential outcomes. That kind of report helps the managers to offer in better
manner the incentives by cutting their cost and renegotiate the terms in the vendors and
suppliers to get important outcomes to remain always relevant and in leading position in
marketplace. In context of Oshodi PLC they by using that kind of reports organisation can be
able to predict in better manner the organisational works and activities to remain always
competitive by accumulating important knowledge and data.
Account receivable aging report:
ARGR is very much important for firms that are highly rely on the extending credit
limits. It enables to breaking down the remaining balance of potential client of an system as for
peculiar time frame that allows decision maker to insight out the individuals that can be
defaulters with to find out the concerns regarding he companies collection process. By using it
that report system easily evaluate non-remittal so that organisation can bring complete
transformation by tightening the credit policies due to the cash flow is very much critical for
organisational operation for the business. In context of Oshodi which manufacture the JOJO
Drinks they have some kinds of bad debts that they have to written off so that recovery should be
faster and better results should be identified by the organisation and their stakeholders.
Cost managerial accounting reports:
Managerial accounting reports aid to compute the price of different kinds of piece that are
manufactured. In that every kinds of price associated with the production process that are
overhead cost, labour and other related cost that are added with taken into consideration. To get
important outcomes the total amount divided into the products produced. In context of Oshodi
PLC that manufacture the JOJO Drinks use cost managerial accounting report which give detail
information about the capacity to realize the price with the selling price. In that profit margins
should be monitored and evaluated onitored by giving broad image of all cost that went into the
procuracy of various kinds of section in an organisation. In that regards the inventory waste,
labour waste and overhead cost that are all important parts of cost managerial accounting reports
to get better outcomes. So that reports are very much important to better understand the all kinds
of expenses while producing the products and services that are essential for optimisation of the
resources in better manner.
Performance report:

Performance report is very more crucial for an administration to valuate the performance
of employees so that they can give appreciation to them and helps for getting desirable outcomes
(Gibassier and Schaltegger, 2015.). Assorted kinds of organisation builds the various kinds of
performance reports such as large organisation build on the various bases that helps in taking
strategic decisions for the future projection of an organisation. With help of it individuals could
be better awarded as per their performance and they are committed for that. In context of Oshodi
PLC that manufacture the JOJO fruits give better insights for working of a company. It assist to
get rid of the gaps in performing in best manner by giving some kind of cognition and data for
gaining competitive edge. So it can be said that performance management report evidenced
advantageous for administration by determining best performance measures so that desirable
goals should be achieved.
So it can be summarised that all kinds of managerial accounting reports proved beneficial for
organisation in setting their desirable goals and then build strategies to get optimum kinds of
objectives.
TASK 2
P3.
For an organization different kinds of cost associated that assist in giving right kind of
insights that proved crucial to firm in taking important decision that are as follows:
Absorption costing:
Absorption costing that denotes all kinds of manufacturing cost that are assigned to
producing the various units to be produced. In that kind of cost includes the various kinds of
value that are direct material cost, direct labour and variable manufacturing overhead with fixed
manufacturing cost to get essential kinds of insights (Ahmad, 2012.). In that costing outside
financial costing and income tax reporting that are important for giving major insights for getting
desirable outcomes.

Marginal costing:
MC is an type of costing techniques which consisted marginal value by charging the
variable cost per unit of cost on other hand fixed cost should be completely written off in against
the attempt (Hiebl And et.al ., 2015. ). It implies for the producing the extra unit of cost by
producing the extra unit of output. In context of Oshodi PLC which manufactures the JOJO
Drinks in which they can easily classify the fixed and variable cost and they can easily determine
value related while producing the production and services by doing valuation of cost to get
crucial outcomes.

Interpretation:
From the above calculation it has been summarised that in context of Oshodi PLC they
earn profit in November that is 79000 with the help of absorption costing on other hand by
marginal costing they use 61000. in month of December the profitability of an organisation
83000 from the absorption costing that are less then profits of marginal costing which is 101000.
that kind of changes arise in the producing product and services that are due to the fixed
overhead cost by both the tools and techniques as a result the calculated opening and closing
stock. So it should be evaluate that for an organisation marginal techniques is very much suitable
by gaining desirable objectives and goals.
TASK 3
P4.
Budget is one of most essential kind of financial plan of a definite time period basically
for a year that includes the sales volume and revenue, resources and quantities with cost and

expenses, liabilities, cash flow for attaining desirable goals and objectives in market (Ng, A.
Harrison and Akroyd, 2013.). For an organisation budgetary control which refers to the efforts
to better utilization of the budgets by monitoring and operational the cost in a accounting period.
It is an chain of activities used by managers to fit fiscal and accounting goals and objectives by
alikeness actual effect to get best performance that are potential for organisation. In context of
Oshodi that by with help of budgetary control enables to eliminate gaps so that best results
should be achieved. By using the budgetary control it helps in policy making and control and
acts as an instrument for coordination various works and activities. So budget and budgetary
control is crucial for an administration in estimation of fiscal projection to acquire essential
insights to get desirable outcomes. By using that tool organisation can be eliminate the
expenditure that are not so much important for organisation to determine the major deliverables
to put best efforts in the right direction. So budget is very much important for organisation by
taking approvals from the various authorities to get important kind of outputs.
Organisations use types of planning techniques that are:
Operating budget:
Operating budget that consist of the expenditure and revenue of an organisation in a
definite time period that plan and coordinate by cooperation, government and other organisations
to get desirable objectives. The operating budget planned and coordinated in an advance of a
reporting period that are expected to achieve. The major section of the operating budget is
revenue, variable cost,fixed cost and non cash expenses with the non operating expenses that are
major part of the operating budget. In context of Oshodi PLC that produces JOJO Drinks use
operating budget to attaining the measure the reporting time period by taking various attributes in
positive manner. There are some advantages and disadvantage of that operating budget that helps
to organisation in taking important decisions.
Advantages:
The dependent benefit of operating budget that helps to track the whole business and their
associated activities . It indicates both the money which is spend and projected on the business to
get important insights. In context of Oshodi PLC they by checking operating budget they can
easily evaluate that their business on the track or requires some more attributes to remain always
competitive in market. It accomplish the financial responsibilities by accumulating important
knowledge and information by present accurate kind of measure.

Disadvantage:
To prepare the operating budget organisation requires too much time and cost as it
requires long term planning to acquire in demand goals and subjective in proper manner. Further
it requires through understanding regarding the income and expenditure of an administration. In
context of Oshodi PLC they with help of operating budget plan and coordinate the strategies that
build to adopt the budget in positive manner.
Cash budget:
Cash budget is an figuring of the cash inflows and outflows in overall business for a
special period of time. It proved useful for organisation to access the business entity have cash
to successfully operate in environment (Coad, Jack and Kholeif, 2015.). By forecasting the
sales and production by creating cash budget with necessary assumptions regarding the spending
and account receivable so that desirable goals and objectives can be achieved. If an organisation
not have enough liquidity to operate in the business environment then they raise the capital by
issuing the stock and track the debts record. In context of Oshodi PLC they by using the cash
budget estimate the inflow and outflow and their related activities to accumulate important
knowledge and information.
Advantages:
The major benefit of cash budget that it allowed to business to spend the available cash
rather then avoiding debts (Yalcin, 2012). It give proper knowledge and information regarding
the significant matter on which organisation have to spend their valuable sources and money. It
improves the communication and create better understanding by building harmonious
relationship in between the employees so that they can give their best.
Disadvantages:
The major disadvantage of that kind of budget that its success rely on the cooperation or
operations of the staff members and sometimes with the lack of cooperation employees and
organisation not able to give their best. In context of Oshodi PLC they deliver roles and
responsibilities to employees so that they can give their best.

TASK 4
P5.
For an business various kinds of financial problems or concerns they are facing that
requires lot of planning and their proper implementation for gaining desirable outcomes (Coad,
Jack and Kholeif, 2015). That kind of problems are due to the both internal and external factors
that directly affect on organisational works and activities. Concerns should be unexpected
expenses, not proper management and delayed payments to employees and recession in the
economy directly affects on their business for effective attaining organisational goals in the
marketplace. In context of Oshodi PLC they faces some kinds of issues or concerns that are as
follows:
Business cycle:
This is one of concern that faces by the organisation while expanding in the market with
the advent of suddenly change in the demand of products and services without any kind of
indications (Ng, A. Harrison and Akroyd, 2013.). In context of Oshodi PLC they faces some
kind of changes in periodically down sizing in the goods and services that affect on their
business for achieving desirable objectives. To overcome from that issue organisation plan and
coordinate in proper manner with their employees to give their best.
Unexpected expenses:
The another major kind of concern or issue that face by organisation that is organisation
planned and operate each and every attribute in proper manner but instead of that they faces
some kinds of unexpected expenses that back self interest of an governance in giving their best.
In context of Oshodi PLC that manufactures the JOJO Drinks occurs some kind of unexpected
expenses that are technological changes, machinery breakdown and many more that create some
issues in organisational development and enhancement. by help of diverse kinds of direction
indicators and tools which assist to organisation in eliminating the above mentioned concerns in
positive manner that are as follows:
Benchmarking:
Benchmarking is an kind of chain of processes to standard and measure execution of
organisational product and services or processes in comparison to other business to give their
best. It finds out the internal opportunities to bring improvements in positive direction by
studying the superior performance and put efforts to get one of great outcomes for attaining

desirable objectives. In context of Oshodi PLC they by using benchmarking to set standards to
attain potentiality of market.
Key performance indicator:
Key performance indicator is one of important instrument to measure value to effectively
achieve the business goals and objectives in positive manner. In context of Oshodi PLC they use
KPI at aggregate level to appraise the occurrence factor in evaluating overall performance of
the business. So all these tools and techniques proved beneficial for organisation in set standards
by evaluating the performance of an business on various measures.
Basis Innocent Drinks Limited Coca cola
Financial problems In that regards organisation
faces some kinds of issues or
concerns that hinders their self
interest that organisation have
higher expenses in comparison
to their income (Yalcin,
2012). It is one of major issue
in front of them to remain
always competitive in the
marketplace. With the help of
management accounting
system they can control and
coordinate the extra cost that
incurs while producing
products and services.
Coca cola which is one of well
known brand name in the
whole world that also faces
some kind of financial
problems or concerns in that
they not easily manage the
available stock that they have
that create problem in front of
them that hinders self interest
of employees as well as
organisation to achieve
desirable goals and objectives.
With the help of management
accounting tools organisation
can resolve the issue in best
possible manner.
Management accounting
system
On other hand innocent drinks
which faces the problem of
inequality in the income and
expenditure that expenditure is
To resolve the problem of not
managing the inventory in
proper manner organisation
plan and coordinate each and

high in comparison to the
income but innocent drinks use
cost accounting system that
helps to organisation in
controlling and managing the
excessive expenditure by
controlling cost and reducing it
at maximum level (Zaleha
Abdul Rasid, Ruhana Isa and
Khairuzzaman Wan Ismail,
2014. ).
every event in proper manner
with the help of inventory
management system
organisation may responding
in positive manner by holding
available level of inventory so
that they can supply products
and services in rationally in the
business environment.
So it can be said that by using different kinds of instrument and method organisation can
implement their plans and policies in positive manner. By using cost management accounting
and management accounting system organisation can respond in positive manner various
problems or concerns that they are facing. So all are very much important for an organisation for
attaining desirable goals and objectives.
CONCLUSION
From the above document it has been concise that for an administration managerial
accounting is very much crucial to reap out important knowledge and information by data and
analytics. To determine it organisation uses different kinds of planning instrument and method to
get important kinds of insights to remain always competitive in market-base. In order to various
kinds of cost that are associated with the organisation that should be evaluated by income and
expenditure with inflow and outflow in a business to take important decisions in context of an
organisation. For an organisation in which various kinds of management accounting system that
helps to respond in positive manner with financial problems so that desirable outcomes can be
achieved.

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