Management Accounting Research and Applications

This assignment delves into the world of management accounting research. It requires students to analyze various academic articles exploring themes such as contingency theory, political resource use in accounting, and the impact of digitalization. The provided bibliography includes prominent works by authors like Kaplan, Atkinson, Otley, and Maas. Students are expected to synthesize information from these sources to understand current trends and debates within management accounting research.

UNIT 5 MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................4
LO 1.................................................................................................................................................5
P1. Explanation on management accounting and its essential requirement for different types
of management accounting system.........................................................................................5
P2. Explaining different methods of management accounting reporting...............................7
M1. Evaluating benefits of management accounting systems and its application within an
organisational context.............................................................................................................8
D1. Critically evaluating how management accounting system and management accounting
reporting is integrated within organisational process.............................................................9
LO 2...............................................................................................................................................10
P3. Calculating cost by using appropriate techniques of cost analysis for preparing an Income
..............................................................................................................................................10
Statement using Marginal and absorption costs...................................................................10
M2. Applying a range of management accounting techniques and producing appropriate
financial................................................................................................................................13
reporting documents.............................................................................................................13
D2. Producing financial reports that accurately apply and interpret data for a range of business
..............................................................................................................................................13
activities................................................................................................................................13
LO 3...............................................................................................................................................14
P4. Advantages & disadvantages of different types of planning tools used for budgetary
control...................................................................................................................................14
M3. Different planning tools and their implications for preparing and forecasting budgets.18
D3. Evaluating how planning tool for accounting respond to solve financial problems to lead
..............................................................................................................................................18
organisational sustainable success........................................................................................18
LO 4...............................................................................................................................................19
P5. Comparing how organisations are adopting management accounting systems for
responding financial problems.............................................................................................19

M4. Analysing how management accounting helps in responding to financial problems
leading organisation to sustainable success..........................................................................21
REFERENCES..............................................................................................................................24

INTRODUCTION
Management accounting is the process which used by managers in order to find the
provision which relates to accounting information so that effective decision will get develop for
better organisational operations. This is an accounting process which also include non-financial
information which helps in identifying the key performance indicators for various parts of
businesses. For this report selected medium size financial consultancy organisation is The
Berkeley Partnership which deals in providing the best commercial services. In this report,
explanation will be provided on managerial accounting and its essential requirement with
different methods of management accounting reporting. Further, calculation will be provided by
using appropriate cost analysis technique. Moreover, advantages and disadvantages of different
types of planning tools which used in budgetary control will also be discussed in this report with
the ways by which entity will use management accounting in for solving financial problems.
LO 1
P1. Explanation on management accounting and its essential requirement for different types of
management accounting system
Management accounting is the process of analysing costs which relates to businesses and
operations in order to prepare internal financial report, records and account so that managers of
the organisation will able to develop decision for achieving business objectives and goals. In
other words it is the process of analysing data which relates to financial and costing so that it can
be translated into useful information (Kaplan and Atkinson, 2015). Generally this is the process
which look into the events and transaction which happens in and around the business. These are
the type of accounting records which are often used for internal purpose and are confidential too.
Calculation of such accounting will only be based on the managerial need only. Therefore, it can
be said that management accounting considered as profession which plays role in decision
making process of the management, devise proper planning and performance management
system and will also provide expertise financial reporting and control in order to develop
effective organisation strategy. It is the process which provides effective way for communicating
the plans of management which is through upward, downward and outward process. However,

this is the process of identifying reliability of the plans which has been set up by the management
of organisation.
Distinction between management and financial accounting:
Financial accounting Management accounting
It is an accounting method which mainly
conducted for providing information to users
of the organisation.
It is an accounting method which provides
information to people and management within
an organisation (Otley, 2016).
There are specific standards and formates
which entity needs to follow in order to
prepare its books of accounts.
It is not specific. It does not require by law.
Its essential requirement of different management accounting system are as follows-
Inventory management system:
This is the discipline primarily process which helps in specifying the placement of
inventory of goods in the organisation. It is a method of controlling and overseeing the stock
which used in the production department of the entity. Thus, through this management
accounting method, managers of the organisation will able to understand present inventory level
and requirement of minimise and maximise the situation of the stock. Through this accounting
system, entity will able to improve its bottom line which will enhance accuracy of the inventory
for better production activity. It is a management system which helps in tracking the goods
through entire supply chain or about the portion of business operations. This is the process which
mainly covers everything which is from production to retail, warehousing to shipping anything
which relates to business operation.
Job costing system:
It is the type of system which allocates and manufacture cost for an individual item or
products of the organisational batches (Maas, Schaltegger and Crutzen, 2016). This is the
management accounting method which involve the process of analysing and practising data
which relates to cost of the particular products and services. Managers needs information related
to production job for determining the accuracy and capability of the entity in order to generate

efficient income. This is the accounting system which used by organisation in order accumulate
information which associate with the cost about specific production or regarding the service job.
Mainly such information gets used by organisation in order to provide information to customer to
whom entity is under the agreement of cost.
Price optimization systems:
This is the process which involve mathematical analysis in determining the reaction of
consumers regarding the prices of goods and services which offered to consumers through
different types of channels. It also helps in determining the price which will be best of the entity
for earning its growth and maximise the operating profit.
This is the process by which management analyse internal areas which needs to improve
for earning better profitability. With its analysis managers of organisation creates budget so that
proper control will get develop on expenses of the entity. By analysing break-even-point,
managers will able to maintain profitability of the businesses (Cooper, Ezzamel and Qu, 2017).
This process used by organisation in order to analyse the willingness of customer in order to pay
for goods and services. It is the type of mathematical program which mainly helps in calculating
the demand which varies at different level of price.
Thus, these are the essential requirement of management accounting by which managers
of the Berkeley Partnership will able to develop effective strategies which will help in achieving
organisational objectives and to in meeting future goals with appropriate and sound business
operations. Through this costing techniques entity and users of organisation gets the information
which is relevant, reliable and also accurate by which they may able to develop economic
decision regarding investment in the capital of company.
P2. Explaining different methods of management accounting reporting
Management accounting generally focuses on generating internal information. This is an
accounting method which applied in the process of controlling, planning and in decision-making.
This mainly depend on the financial statements which generally consist of balance sheet, income
statements and cash flow statement. However, management accounting also applies in other
forms of accounting reports which are as follows-
Cost reports-
In this report of accounting management accounting helps in calculating costs which of
the items which relates to manufacturing (Accounting reports, 2018). This process generally

done by analysing raw product overhead, costs, labour and any other costs which take into
consideration in business operations. Sum of all these cost further divided into amount which has
been charged on goods purchased. Through this way all the data will get summarised into cost
report. Through this report of management accounting, management of organisation will able to
view the value of product cost in comparison to its selling price so that proper measures will get
developed on control of expenses and also on profit margin.
Budgets-
This is the term which is considered as one of the key element while preparing
management accounting statements. In this process of accounting, budget will get established by
comparing it with previous year and to adjust it with future forecasts. In this statement
management will list down all the expenses and sources of revenue (Quattrone, 2016). Further,
with this report entity will conduct its business operation in order to analyse money has been
incurred during the process of production and money which has been saved.
Performance reports-
This is the another method of management accounting reporting in which management
apply in order to compare actual revenue with the expenditure which is also to the set budgeted
amount. The difference amount which computed with comparison will further evaluate in next
process of creating budget. This is a management accounting report through which managers of
the entity will able to create efficient planning for increasing products demand in future with the
increase in cost.
Account receivable aging report-
This is the another type of management accounting report which mainly concerned with
managing account receivable for the types of entities who engaged in extending credit of the
consumers. This is the process where proper segregation has been with customer balance of
invoices in order to find out the problem which has been associate with entity's collection
process (Chenhall and Moers, 2015). This helps management of entity by reducing bad debt and
by maintaining its liquidity.

M1. Evaluating benefits of management accounting systems and its application within an
organisational context
Management accounting system helps The Berkeley Partnership business in such a way
that it will able to conduct business in a very smooth flow and also with greater efficiency. Each
management accounting system has its own importance in terms of revenue generation which are
as follows-
Management accounting systems Benefits with organisational context
Inventory management system  This management accounting process
helps Berkeley Partnership organisation
in improving its warehouse
management with transparency and
efficiency in complex system.
 It also helps in maintaining inventory
management in terms of supplier so that
entity will maintain enough supply of
goods for offering to their customers
(Granlund and Lukka, 2017).
Job costing system  It will help the Berkeley Partnership
organisation for estimating types of cost
which applied throughout the process of
manufacturing.
 It will also help in developing work
with good quality.
Price optimization system  Berkeley Partnership organisation will
able to measure the efficiency of the
process which currently has undertaken
and will also able to develop strategies
by which business operations will get
improved.
 It also helps organisation in providing

necessary information which required
in the process of planning.
D1. Critically evaluating how management accounting system and management accounting
reporting is integrated within organisational process.
Budget report:
With the help of this management accounting report the Berkeley Partnership
organisation will able to concentrate on its production process. It also helps in establishing a
proper path in order to target consumers and to earn income for the entity.
Cost report:
This integration of management accounting will help in calculating cost of items which
are manufactured in the entity so that capability of organisation for generating business profit
will get analysed. Management generally evolute this process through labour costs, overhead and
other cost of consideration. This is the process which helps in analysing the cost value of product
with the selling price.
Performance report:
This integration of management accounting will help managers to develop plan for the
future productions by which cost of production process will get reduced and entity will able to
achieve higher profitability (Dekker, 2016). This report will also help manager in analysing the
performance of the organisation in business market.
Account receivable aging report:
This integration in management accounting will help Berkeley Partnership organisation
in making efforts in order to develop timely collection of the account receivable and to create
proper collection policy by which flexibility and accuracy will get developed in business
operations (Malina, 2018).
LO 2
P3. Calculating cost by using appropriate techniques of cost analysis for preparing an Income
Statement using Marginal and absorption costs.
Income statement of TSR Pvt. Ltd as per marginal costing technique (10000 units)

Particular
Amount
(£)
Amount
(£)
Sales 250000
Less: Marginal cost
Direct material 50000
Direct labour 30000
Variable manufacturing overheads 20000
Variable selling and administration expenses 30000 130000
Contribution 120000
Profitability statement of TSR Pvt. Ltd according to absorption costing technique
(10000 units)
Particular
Amount
(£)
Amount
(£)
Sales 250000
Less: Marginal cost
Direct material 50000
Direct labour 30000
Variable manufacturing overhead 20000
Fixed manufacturing overhead 40000 140000
Gross profit 110000
Less: Selling and administrative overheads
Variable 30000
Fixed 30000 60000
Net profit 50000
Calculation of cost per units
Particular Amount (£)
Direct material 5
Direct labour 3
Variable manufacturing overheads 2

Variable selling and administrative overheads 3
Unit sold 5000
Marginal costing technique: Profitability statement with regards to 5000 units
Particular Amount (£) Amount (£)
Sales 250000
Less: Marginal cost of sales
Direct material 25000
Direct labour 15000
Variable manufacturing overhead 10000
Variable selling and distribution overheads 15000 65000
Contribution 185000
Profitability statement of TSR Pvt. Ltd. using absorption costing technique (5000 units)
Particular
Amount
(£)
Amount
(£)
Sales 250000
Less: Marginal cost
Direct material 25000
Direct labour 15000
Less: manufacturing overhead
Variable 10000
Fixed 40000 90000
Gross profit (GP) 160000
Selling and administrative overheads
Variable 15000
Fixed 30000 45000
Net profit (NP) 115000
Computation of variance for TSR Ltd.

Particulars
Budgeted
Figures Actual figures
Variance
(budgeted –
actual) Variance %
Material cost
variance 20900 22000 1100 (adverse)
5.26 %
(adverse)
Material price
variance 2000 2200 200 (Adverse) 10% (adverse)
Direct labour
cost 15000 17680 2680 (adverse)
17.86%
(adverse)
Direct labour
hours 3000 3400 400 (adverse)
13.33%
(adverse)
M2. Applying a range of management accounting techniques and producing appropriate financial
reporting documents.
Management accounting techniques used are as follows:
1. Marginal Costing - The Marginal Cost is defined as the cost of one additional unit of output
produced. Marginal Costing helps the manager in making important business and management
related decisions such as purchasing of a new machinery or replacement of any plant and
manufacturing units. It helps in making profit plans for future with the help of break even
analysis (Holopainen, Niskanen and Rissanen, 2019).
2. Absorption Costing - It is a costing technique basically used for valuing inventory and stock. It
ensures that all the cost related to production and manufacturing process are properly absorbed
by the number of units produced. It considers both the variable and fixed cost as a product cost.
It ensures that product cost calculated is accurate and fair.
D2. Producing financial reports that accurately apply and interpret data for a range of business
activities.
From the above calculation it can be interpreted that TSR Pvt. Ltd. is using Marginal Costing
method and Absorption Costing method as management accounting techniques for evaluating the
net profit earn by the company at different production level of 10000 and 5000 units. The
company by using Marginal Costing is earning more profit than Absorption costing method at

10000 units of production. When company is producing 5000 units, at that time also using of
marginal costing helps the company in earning more profit ad compared to absorption costing
method. By using Marginal Costing method, the company is earning more profit which is
improving the financial performance of the company, which is considered as a good factor from
the point of view of investors and other stakeholders as it will lead to wealth creation for them.
Strategic planning: A process in which organisation formulates different business
strategies and plans for better working of organisation's business processes and operations and
using such strategies in achieving the goals and objectives of company in a cost effective manner
(Maas, Schaltegger and Crutzen, 2016).
PEST analysis - PEST stands for Political, Economic, Social and Technological aspects of
business organisation.
 Political factor includes government rules, policies, regulations, taxation, legal issues. It
studies that how these political factors affects the company's ability of earning maximum
profits and becoming successful.
 Economic factor includes inflation, unemployment, exchange rates, gross domestic
products and gross total income. It studies that how these factors affects the company's
economic and growth aspect thereby impacting the economic survival of the company.
 Social factors includes social and cultural issues, gender inequalities, age, demographic
conditions. It studies that a company should change with the change in social factors to
remain compatible and to survive in the market.
 Technological factors includes technological development such as use of internet for
conducting business operations online, adopting new, innovative, better and improved
technology etc. helps business in achieving its goals more effectively.
SWOT analysis - an analysis which is undertaken to identify the internal strengths, weaknesses
as well as external opportunities and threats of company. SWOT stands for Strength,
Weaknesses, Opportunities and threats.
 STRENGTHS - Company should identify its internal strengths and makes efforts to use it
in right areas to gain profits.

 WEAKNESSES - These are negative factors that detract from strengths which needs
improvement to remain competitive.
 OPPORTUNITIES - Opportunities are external factors of business environment which
contributes to success.
 THREATS - Are external factors need to be control over with regards to competitors.
LO 3
P4. Advantages & disadvantages of different types of planning tools used for budgetary control.
Different types of planning tools used for budgetary control are as follows:
1. Financial Budget – deals with the financial planning and decisions made by the company
related to cash inflows and outflows during a financial year and its impacts on business. It helps
in ascertainment of true financial position of the company (Hiebl, 2018). It is of 3 types:
Cash Budget – It forecast about the actual cash inflows and outflows, availability of surplus
cash with the business.
ADVANTAGE – It helps in ensuring the availability of men, material, manpower, machines and
money by managing cash flows activity timely.
DISADVANTAGE – As cash budget is prepared for meeting the day to day expenses, it is not
possible to draw accurate cash budget for acquiring the 5 M's.
Capital Expenditure Budget – It focuses on the large investment made by the company for
acquiring new assets, plant & machinery, land etc. by borrowing either short term or long term
loans from outside.
ADVANTAGE – It helps in economic planning of the business operations and investment to be
made. It ensures effective and economic expenditure of the business i.e. cost effective
investment.
DISADVANTAGE – As the budgets are prepared for meeting future expenses, but as the future
is unpredictable including its prices and availability of assets, plants and machinery, so it is very
difficult to prepare the accurate budget (Holopainen, Niskanen and Rissanen, 2019).
Balance sheet Budget – It emphasizes on the overall balance sheet transaction of the company.

ADVANTAGE – The purpose is to make sure that all the estimated budgets prepared for
different departments are working and yielding results in the favour of the organisation thereby
leading to growth and profitability.
DISADVANTAGE – Sometime, its very difficult to prepare an accurate balance sheet budget
when the market condition is not favourable or under inflation.
2. Operating Budget – Prepared for estimating business operations including revenue and
expenditure to be made during the financial year. It is of 3 types:
Sales or Revenue Budget - It helps in estimating revenue and income, the organisation is going
to receive from upcoming business operations and determining its future market position.
ADVANTAGE - Helps in forecasting the estimated return or revenue to be generated by
achieving the set defined goals, plans from future business operations thereby reducing the cost
of production.
DISADVANTAGE - Budget prepared for future period may sometime brings resistance to
development, innovative and creative ideas, changes required in plan.
Expense Budget - It enhances on predicting the upcoming expenses to be made by the
organisation during a specified time period.
ADVANTAGE - Helps in reducing the expenses such as cost of production, operating expenses
by minimizing or reducing the unnecessary expenditure.
DISADVANTAGE - Inaccurate or inadequate assumptions may result in becoming the budget
unrealistic which in turn make decision-making process inflexible.
Project Budget - It defines the estimated profit which a business is going to have from the
difference between sales and expenses figure of a specified period.
ADVANTAGE - It monitors the effective allocation of all resources to project use in achieving
business goals.
DISADVANTAGE - Is a time consuming process, sometime separate departments are there for
budget control and planning (Tekathen, 2019).
3. Non monetary Budget - Budget prepared for meeting the non monetary business operation
depending upon the economic conditions. It is of 2 types:
Fixed and Variable Cost - Those expense which organisation has to incur even not working like
rent, salary etc. are Fixed cost. Variable cost means the cost which vary with the business
operations.

ADVANTAGE - By encouraging employees about cost factor & providing cost friendly budget
control techniques helps in effective accomplishment of business operation (Otley, 2016).
DISADVANTAGE - Budget sometimes may be prepared keeping in view current organisational
structure which may not fit in current business condition.
Semi - Variable Cost - Such cost may vary but in less proportion as compared to variable cost.
These cost don't directly vary in relation to business operations.
ADVANTAGE - Helps in profit maximization by ensuring proper coordination, communication
between employees and different department and having control over cost factor and other
business expenditure (Kaplan and Atkinson, 2015).
DISADVANTAGE - Preparing Budget involves a heavy cost of expenditure which cannot afford
by small business.
Pricing strategies meaning and how do competitors determine their prices on Supply and demand
considerations - Pricing strategy is a strategy in which company set a price in accordance with
rivalry firm pricing strategy for is products and services in order to maximize its profits. Price is
sensitive and can change with time on basis of a number of factors such as changes in
competitive price, demand of product, quality and uniqueness.
Competitors determine their price on basis of:
1. Supply - Inverse relationship between supply and price of goods and services. When supply
increases in the market, prices and demand for its products and services will fall down and visa
versa.
2. Demand - In case of demand, when demand for a particular product or service increases then
price for such product and services will also increase and vice versa. There is a direct
relationship between price and demand of product and service (Cooper, Ezzamel and Qu, 2017).
3. Competitive pricing strategy - The company charges for its product or services in accordance
with what the competitor firm is charging.
Common costing systems:
 Actual costing - Is the process of recording the product costs on basis of labour, material
and overheads.
 Normal costing - A method used for derivation of cost on basis of actual costs of
material, labour and standard overhead rate that are used for allocation purpose.

 Standard costing systems - It involves a process of estimating costs required for a
production process.
 Job costing - Job costing involves accumulation of costs of materials, labour and
overhead for a specific job.
 Process costing - It involves determination of costs of materials, labour and overhead for
a specific process (Quattrone, 2016).
 Batch costing - It is a form of specific order costing similar to job costing where each
batch are a number of identical units but each batch will be different & has its own cost.
 Contract costing - It tracks costs associated with a specific contract with a customer.
M3. Different planning tools and their implications for preparing and forecasting budgets.
For preparing and forecasting budget, different planning tools are there:
1. Cash Budget - It ensures proper coordination, communication and coordinating between the
business activities concerned with cash inflow and outflow, receipts and payments. Also, it
provides an estimate about future cash receipts and payments, requirement of cash for meeting
any contingent expenses and also indicates the cash position of business.
2. Capital Budget - It helps in planning & estimating the expenses related to capital expenditure
such as long term investment, business expansion etc. It also helps in making big capital
investment decisions related to capital resources used in the business operations.
3. Sales Budget - Sales budget is prepared by considering the past sales and profit earned, price
trends, market demand, customer's taste & preferences and purchasing power. It also helps in
estimating the future sales.
4. Production Budget - It emphasizes on how much number of units are required to be produced
for a definite time period. It also considers expenses related to production function, labour and
raw material required for future business operations (Chenhall and Moers, 2015).
5. Selling and Distribution Cost Budget - It prepares budget for meeting selling and distribution
expenses of any future project such as: packing, storing, transporting, advertisement cost etc.

D3. Evaluating how planning tool for accounting respond to solve financial problems to lead
organisational sustainable success.
Accounting helps in recording, analysing, evaluating and managing the company's
financial statements and information. It provides various tools for solving financial problems of
an organisation;
1. Budget - It helps in preparing an outline for meeting future business operation expenses to
mitigate any financial risk associated and also compares actual results with estimated budget
prepared, to ascertain the actual variances, if any thereby maximizing the profitability.
2. Cost Allocation Analysis - It helps in identifying & allocating cost to various objects,
products, goods and services such as raw materials, labour and overhead. It ensures proper
allocation of cost for making of financial reports accurately (Granlund and Lukka, 2017).
3. Financial Statements - Reflects the true financial position of every business organisation. It
helps in determining the effect of business operation on the financial status of the organisation
that whether company is generating profits or not.
4. Forecasting - It is a process of making predictions & estimation of future by using past and
present data of the business operation. It is essential for making business strategy, marketing
plans, budgets, cash flow for meeting the future expenses.
5. Cash Flow - It tells about cash inflow and outflows done for the period. It helps in
determining difference between cash available at beginning of period and at the end of the period
thereby ensuring proper and timely cash availability for conducting future business operations.
LO 4
P5. Comparing how organisations are adopting management accounting systems for responding
financial problems
In order to solve financial problems, there are various ways of management accounting
through which the Berkeley Partnership organisation will adopt and solve. Following different
ways are as follows-
Benchmarking:
It is the type of process which helps management in measuring the performance of
entity's goods and services and its process against those of another business consideration so that
policies which suited best for industry will get adopted. The main process of benchmarking is to

identifying internal opportunities which will improve business operations of the entity (Dekker,
2016). In this entity will first analyse its financial statements with its competitors and then
evaluation will take place on their strategy by which they are achieving business success and
then by comparing it to business process entity will able to implement necessary changes. In this
process of analysing there are generally two types of improvements opportunities which include
continuous and dramatic. Continuous improvement involve only small adjustments and dramatic
improvement will come out through process of re engineering which will change whole internal
process of production.
Key performance indicators:
It is the another type of performance indicators which will helps in evaluating the success
of the organisation which is for particular activities, programs, products, projects and for other
initiatives in which business engage its operations. In order to solve financial problems The
Berkeley Partnership will able to choose this method which helps in developing good
understanding about factors which will be important for the organisation. This method also helps
managers in analysing each and every department of business by which sales volume will get
increases (Malina, 2018). These are the tools which often leads to identify the potential
improvement which needs to develop in business operations so that financial problem will not
get raised and profitability and performance of entity will get improved.
Non-financial indicators:
These are the part of key performance indicators which cannot be expressed in monetary
value. This involve a particular adjustment in internal structure of entity so that work will
effectively get completed. First and major important process of this step is the management of
human resource because this is the department which has the responsibility of hiring employees
which have efficiency of producing goods and services which has the best and valuable quality
(Holopainen, Niskanen and Rissanen, 2019). Increase of product quality and services is the
another management by which financial problems of the entity will get resolved. In this process
entity must have to develop strategies by which goods and services produced with effective
quality so that consumers will automatically get attracted in the organisation.

Financial indicators:
In order to solve specific problem of the entity it is the another option which include
gross profit margin, net profit, net profit margin, ageing accounts receivables and also current
ration. This is the method by which entity accurately able to solve the financial problems.
Financial governance:
It is the process through which an entity collects, manage, monitor and control all the
financial problems through effective information. It is the process which track transactions
related to finance, it also helps in managing the performance and to control specific data in order
to conduct smooth business operation (Hiebl, 2018). It is the process through management will
able to monitor the strategies which has been developed for smooth business operations.
M4. Analysing how management accounting helps in responding to financial problems leading
organisation to sustainable success.
Management accounting helps in making long term and short term decision about company's
business operation such as inventory details, cash flow statement etc. Management accounting
helps in solving problems arises when results deviate from expectation. It helps in solving
financial problems by using following management accounting tools:
1. Historical Cost Accounting - It gathers historical data about cost which is involved in each
business operations and compare it with present standard cost. The result obtained helps in
decision-making, controlling cost and making future budget planning.
2. Fund Flow Statements - It checks that from where funds are coming and proper allocation of
such fund in the company for meeting the financial needs of the business (Holopainen, Niskanen
and Rissanen, 2019). Thus, fund flow and cash flow statements helps in controlling cost, making
future planning on how cash can be better utilize.
3. Cost Accounting - It finds out the differences between estimated cost of a product and actual
cost. The data calculated is then compared with the estimated cost for making future planning.
4. Analysing Financial Statements - It helps managers in predicting and forecasting future
earnings, cash & fund flow, business and financial risk etc. It helps in taking better & economic
business decision effectively.
The financial problems and issues can be identified and solved by the company with the
help of various management accounting methods such as key performance indicators including

both non-financial and financial matters, budgetary targets, benchmarking. By this company can
make evaluation of variances and problems associated with the business operations, processes by
providing relevant and adequate solution without making any delay (Tekathen, 2019). Financial
governance helps business organisation in formulation of business strategies and plans which can
be used for eliminating the financial issues & problems faced by company in the best suitable
manner.
For smooth functioning of business organisation, it should have experienced and
expertise personnel having skills and knowledge of management accounting. The management
accountant should have adequate and effective knowledge related to managerial accounting
techniques. They should understand the proper use of management accounting techniques for
preventing and solving problems related to using resources in misappropriate manner for
business growth.
Company should focus on formulation and its implementation of effective business
strategies and plans for achieving the goals and objectives. These plans and strategies should be
reviewed timely for assessing any changes required or not (Kaplan and Atkinson, 2015). The
company should provide financial reporting thereby making full disclosure about the financial
statements and performance of the organisation.
The company can proposes in its report various ways which can be used by management
accountant for achieving the sustainable growth and success of the business in following ways:
1. By identifying the factors related to social and environmental having impact on the
organization’s operational capacities in building good value (Cooper, Ezzamel and Qu, 2017).
2. Meeting sustainable corporate challenges and framing of strategies, outlook for measuring
performance, licensing and making of business model.
3. Sustainability issues creating impact on the business operations and also describing how and
when they would affect the company.
4. Maintaining and establishing Key Performance Indicators and how they help in achievement
of sustainable objectives and business strategic goals.
How different management accounting tools and techniques can be applied related to
availability of natural resources, its planning, reducing carbon foot-print thereby helping the
issues related to incorporate sustainability in decision-making (Maas, Schaltegger and Crutzen,
2016). Generating reports and statements disclosing information of effect of sustainability on

strategic planning, procedures, pricing methods, decisions made with the help of budgeting and
investment options.
The report should be prepared by following reporting strategy which emphasizes on
disclosure of all relevant financial and non - financial information related to incorporate
sustainability for example The International Incorporated Reporting Framework established by
IIRC (International Integrated Reporting Council).
CONCLUSION
From this report, conclusion can be made that Management Accounting is a process of
evaluating, monitoring, analysing, identifying, interpreting and communicating information to
the management of organisation for making important business decisions for the benefit &
attainment of organisational goals effectively. Different planning tools of accounting and
management accounting are used by organisation for making budget, solving financial problems
the organisation is facing respectively. Thus, it can be said that management accounting helps in
developing planning related to cost & budgetary control, analysing the financial status , taking
management decisions. It also provides assistant to the management of the organisation in
formulating, implementing and interpreting organizational & business strategies for achieving
the set defined goals of the organisation effectively thereby generating maximum profits timely.

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