Free Agent: Management Accounting Strategies

This assignment delves into the application of management accounting principles to drive organizational success at Free Agent. It covers the use of budgets and forecasting, financial governance, resolving financial problems through management accounting, and employing planning tools for sustainable growth. The analysis is based on relevant literature and practical examples.

UNIT 5 MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P.1 Explaining Essential requirements of management accounting and its types..................2
P.2 Methods of management accounting reporting for Free Agent.......................................5
M.1 Defining benefits of management accounting system and application over Free Agent6
D.1 Integration of the management accounting system and reporting for Free Agent..........7
P.3 Calculations for various costing techniques for Free Agent............................................8
M.2 Benefits of the managements accounting techniques in financial reporting.................10
D.2 Financial report to the general manager and providing the necessary information to them
..............................................................................................................................................10
P.4 Type of planning and budgetary control in Free Agent and their merits and demerits..11
M.3 Uses of various planning tools for forecasting the budgets..........................................14
D.3 Implementation of planning tools in resolving obstacles..............................................14
P.5 Explaining management accounting system respond to financial problems..................16
M.4 Resolving financial problems with management accounting helps organisation in
sustainable success...............................................................................................................16
D.4 Sustainable success with the help of planning tools......................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

Illustration Index
Illustration 1: Management accounting system...............................................................................3
Illustration 2: Reports......................................................................................................................5
Illustration 3: Sales budget example..............................................................................................12
Illustration 4: Cash budget example..............................................................................................13

Index of Tables
Table 1: Income statement of Free Agent as Marginal costing technique.......................................8
Table 2: Income statement of Free Agent on Absorption costing technique...................................9

INTRODUCTION
Financial stability is the requirement in every firm which in turn helps them in having the
adequate business growth and planning. Thus, managerial accounting will help the firm in
achieving the adequate financial strength as well as provide various budgetary techniques such as
cost budgeting, sales budgeting etc. which in turn fruitful for the decision making. Hence, in the
present report there will be discussion bade on Free Agent and its internal efficiency. However,
this report will also highlight various costing techniques such as absorption and marginal costing
calculation which in turn facilitate the favourable profit results to the firm. Hence, it will also
help stakeholders in the organisation to adopt the effective costing techniques which will be
fruitful for enchanting the revenue gathering.
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Introduction: To have the favourable growth in this rivalry environment, thus there is need to
analyse the internal strength of the organisation. Hence, the management accounting is the
techniques which enables the professionals in the firm to make the adequate decisions as well as
can able to generate adequate solutions to the problems (Turner, 2014). Thus, in context with
enhancing the efficiency of business there is need to string the basic operational requirements of
the entity such as budgets, costs and the revenue from them.
P.1 Explaining Essential requirements of management accounting and its types
In accordance with management accounting methods there has been various kinds of
techniques which in turn helpful for Free Agent managers in context with producing the
adequate solutions or innovative ideas to enhance the firm's operational efficiency. Hence, it
will be fruitful for the industry in having the adequate amount of funds for such activities like
purchasing material, managing the company's accounts as well as generating effective solutions
to lower down the expense and the costs of the business (Kerzner, 2013). However, in
accordance with the following diagram we can clearly understand the requirements of the
managements accounting system in organisation as well as the areas of loopholes in firm:
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Illustration 1: Management accounting system
Source: (Mir and Pinnington, 2014)
By considering the above listed diagram which demonstrate the various components of
the management accounting system the organisation can be helpful for the firm in analysing the
actual internal operational ability. Hence, these can be explained as Tax Accounting: In context
with having the effective numbers of stakeholder or investors in the firm as well as the financial
growth in the legal manner that there is need to make payments of the taxes over the annual
turnover (Burke, 2013). Hence, these can be measured and analysed by the professional
accounting officers and the auditors in the firm which in turn give the effective tax solutions as
well as various deductions on some pieces of work can be allotted by HMRC in UK. Thus,
taxes can be levied over the purchase and sale and the transportation of the goods and services
which are variable and have to be paid by Free Agent. Financial Accounting: To have the
favourable disclosure of companies financial position and the operational efficiency that there is
need to measure various financial statements of Free Agent such as profit and loss accounts,
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changes in equity, income statements and the balance sheet which will reflect overall
performance of the firm in the annual year (Leach, 2014). Managerial Accounting: In context
with managerial accounting which has the overall control over internal transactions held in the
organisation such as costs and budgets over different deportment or operations of Free Agent. It
helps managers in monitoring the functional areas of the business as well as produces the
effective information relevant with the actual financial position of firm (Boud, Cohen and
Sampson eds., 2014). Hence, with the help of such data managers or professional heads can be
able to make the favourable investments decisions which are on the basis of expansion of the
business operations. Cost managements: In the context with managing the cost and expenses of
Free Agent there is need to examine the actual requirement in each departments as well as
analysing the returns will be gain through such costings (Meredith, Mantel Jr and Shafer, 2013).
Hence, it can be said that company must seek the actual revenue they gain through such
investment on the pieces of work. If the activity is not fruitful than managers can makes the
alternative decision of can stop such activities. Activity management: These component of the
managing the operational functioning in Free Agent which in turn helps the firm in analysing
the cost requirements as well as labour in completion of such piece of work. Hence, it will help
in enhancing the work efficiency and the profitability of the firm (Heagney, 2016). Investment
Management: In context with strengthening the capital structure of fir there is need to adopt
various techniques which help Free Agent to attract maximum numbers of shareholders of
stakeholders (Mir and Pinnington, 2014). Thus, which in turn helps the firm in acquiring the
large amount of investments and they can generate effective solutions in relation with where to
spent such funds. Internal Auditing: The main managerial accounting system which facilitate
the internal auditing of the company's accounts. Hence, Free Agent has various activities held in
firm so there is need to examine all the accounts of the firm as well as generate the effective
solutions for firm in context with acquiring outcomes from such activities (Gido and Clements,
2014).
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P.2 Methods of management accounting reporting for Free Agent
Introduction: To facilitate effective business results and outcomes which in turn helps Free
Agent in getting the adequate information relevant with operational activities hence, such
reports are being prepared by the accounting professional in the entity and which presents the
overall business transactions held during the period. Thus, the main motive behind presenting
such data set is to analyse loopholes of firm, requirements of efficiency as well as managing the
operational expenses (Martinelli and Milosevic, 2016). There has been favourable impact of
such reporting techniques such as:
 Reports are prepared on the basis of financial and non-financial performance which in
turn indicates professionals in making the effective decisions and facilitate new policies
and procedure for such operational activities.
 It will enhance corporate social responsibility of firm as well as enhances the work
efficiency of workforce.
 The data presented in such reports are authenticated and belongs to the specific sources
from it has generated.
There has been use of such reporting methods which are listed below as:
Illustration 2: Reports
Source: (Lock, 2014)
Inventory management: To meet the demands generated in the market for the products
or services there is need to analyse the inventory storage of Free Agent. Hence, managers of the
firm can go through the data sheet where all the transactional informations were listed with their
actual quantity and price per order (Shields and Rangarajan, 2013). Thus, such informations
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will help them in measuring the requirements of such products in the market. Hence, these
reports will help them to monitor the utilisation of resources, control over wastage as well as
enhance the adequate production of such goods to meet consumer demands. Budgetary reports:
These reports helps the managers in Free Agent to make the effective decision relevance with
the requirements of costs in operating organisational activities (Sears and et.al., 2015). Hence,
these includes various kinds of budgets such as sales, purchase, production, marketing budgets
etc. which in turn benefited the firm in measuring requirements as well as expenses to be made
within the decided limit of expenditures. Job cost Report: Such reports will be fruitful for Free
Agent in measuring costs and expenditure incurred in the completion of the particular piece of
work. Hence, it can be said that there is requirement of various factors in order to complete the
tasks (Hwang and N g, 2013). Thus, such labour costs, material cost and the working hour of
the workforce plus machines must be analysed and measured which in turn facilitate the actual
cost incurred the particular job. Accounts receivable aging: It helps organisations in analysing
the due payments which are to be recovered from the creditors in the coming time such as
consumers, suppliers, distributors etc. Thus, it will be fruitful to make the balance between
company's cash inflow and outflows as well as the collection of the funds (Lock, 2014). Hence,
these are the necessary reports which helps them in making allowable deductions while paying
the tax returns.
M.1 Defining benefits of management accounting system and application over Free Agent
There has been record or all the internal transactions held In the premises as well as
evaluate the efficiency of managers in decision making. Hence, the use of accounting system
such as cost managements, investment, activity management, tax accounting, internal auditing as
well as financial accounting are the main parts of the managerial accounting system. Thus, such
techniques will help Free Agent in managing the budgets and controlling the costs of such
internal operations of the entity (Pemsel and Wiewiora, 2013). However, in accordance with the
various reporting techniques which indicated that the transaction incurred in the internal
environment of the organisation must be formed into the several reports like inventory
management, budgetary control, accounts receivable aging and job cost reports.
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D.1 Integration of the management accounting system and reporting for Free Agent
By considering the use of the management accounting system the managers at Free Agent
will be beneficial in analysing the internal strength of the firm as well as find the effective
solutions to over come with such obstacles (Svejvig and Andersen, 2015). Hence, these
techniques will also help them in improving the work efficiency and strong decisions making.
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P.3 Calculations for various costing techniques for Free Agent
On the basis of management accounting cost techniques accounting professionals of Free
Agent organisation will use the two following techniques which differs from each other (Turner,
2014). Hence, it can be beneficial in analysing the profitability and revenue gathering of the firm.
Thus, in the tables listed below will describe marginal and absorption costing methods which
will reflect lights on the profit gathering of Free Agent such as:
Table 1: Income statement of Free Agent as Marginal costing technique
Income statement of Free Agent on the basis of
Marginal costing
PARTICULARS
Amount
(£)
Amount
(£)
Sale revenue on production 600*35 2100
Cost 700*13 9100
Less: cl. Inventory 100*13 1300
variable expenses 7800
per unit contribution 13200
less: variable overheads on sales 600*1 600
less: fixed expenses
overheads for production 2000
fixed cost on selling 600
fixed cost administrative 700 3900
NP 9300
Interpretation: By considering the above listed table it can be said that the firm has the
valuable profitability which is on the basis of Marginal cost method. Hence, these costing
technique will be calculated at the 600 units of production out of which 500 were sold so 600
units will be multiplied with the selling coat of £35. Thus, the revenue will be gathered by the
firm is for £2100. The cost over producing such articles will be calculated as 700 of the units will
be multiplied with the direct materiel labour and the variable cost of product which together
produces the rate of £13. Hence, the overall cost of production is £9100 and after making the
sales of such products the remaining cl. Stock was of 100 units which were amounted on the
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basis of production cost that is £13 and will be deducted from the cost of production. Thus, Free
Agent has acquired contribution or the gross profit for £13200. There will be deduction of the
various operational expense such as variable overheads fixed expense, production overheads,
fixed expense over selling and administration amounted at £3900. Thus, the net profit acquired
by the organisation is for £9300.
Table 2: Income statement of Free Agent on Absorption costing technique
Income statement of Free Agent on the basis of
Absorption costing
PARTICULARS
Amount
(£)
Amount
(£)
Sale revenue on production 600*35 2100
Cost 700*16 11200
Less: cl. Inventory 100*16 -1600
Less: production overheads fixed -100
Cost of production 9500
per unit contribution 11500
less: variable overheads on sales 600*1 600
less: fixed expenses
fixed cost on selling 600
fixed cost administrative 700 1900
NP 9600
Interpretation: In accordance with the table listed above which presents the income
statement of Free Agent on the basis of absorption costing techniques. Thus, the revenue
gathered by the organisation is for 600 units at selling cost of £35 per unit which produces the
revenue of £2100. Hence, for the further calculation these techniques involves the fixed
production overheads before the gross profit is for 100 and the cost of production will be
measured at the selling price of £16 which is the total production amount will be divided by the
units of production that presents the rate of £35 per unit. Hence, production cost will be
measured by adding direct material, variable cost of the production and the production rate.
Thus, cost was measured at £11200 and the closing stock of the firm will be measure on the
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remaining 100 units at 16 per unit. Hence, such deduction brings gross profit or contribution for
Free Agent for £11500. However, there will be deductions of operational expense for £1900 as
well as it brings the net profit for £9600.
Differences between MC and AC Methods
In accordance with the above mentioned calculations for analysing net profit of the firm
on the basis of marginal and absorption techniques it can be said that the techniques has produces
the positive balance for such income statements (Kerzner, 2013). Hence, the marginal cost
technique will reflect the balance for £9300 while the absorption at £9600. Thus, it can be said
that the absorption costing method is the best and favourable technique which are need to be
followed by Free Agent in having the effective profitability.
M.2 Benefits of the managements accounting techniques in financial reporting
Professionals at Free Agent must use the Absorption cost techniques in analysing the net
profit for the year. Hence, this method has facilitated the profit Acquired for £9600 which is
£300 more than the marginal cost method for £9300. Thus, it can be suggested to managerial
professional to prefer such costing technique in analysing the income statements of organisation.
D.2 Financial report to the general manager and providing the necessary information to them
From: Management accounting Officer (Free Agent)
To: General Manager (Free Agent)
Subject: Use of financial reporting which is in turn helps in analysing business activity
Introduction: In order to have the favourable financial health of the organisation as well as the
profitability than there is need to adopt various reporting techniques which will enhance
business strength. Hence, such reporting techniques includes preparation of profit and loss
statements, income statement, preparation of various budgets and the statements of financial
position of the entity (Prepare financial reports - Budgeting and forecasting, 2016). Hence,
these are the indicators for firm and which makes it profitable in analysing the actual strength or
ability of them in meeting the short term as well as long term debts. Thus, it can be suggested to
General manager in the organisation to adopt such financial reporting techniques for enhancing
the profitability of company.
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P.4 Type of planning and budgetary control in Free Agent and their merits and demerits
Use of various planning and Budgetary tools which will help Free Agent in analysing the
adequate information and requirements in the firm (Burke, 2013). Hence, these techniques are to
be used in building the organisation strong to meet the future obstacles which they may face in
sales, production, cash flow etc. Hence, there is need to make the proper assumptions over
company's future requirements as well as it has many benefits and loopholes which are need to
be measured as follows:
Sales Budget: This technique will help Free Agent in analysing the requirements of
production in upcoming period which are based on the current demands and the volume of
monthly, quarterly and annual sales (Leach, 2014). Hence, on this assumption the firm produces
which has several benefits and disadvantages as follows:
Merits:
 This budgets help the entity in analysing requirement of product to be demanded in the
upcoming period on the basis of current sales of firm. Mangers will be beneficial in assuming the costs that will be utilised in the completion
production activity.
Demerits:
 Mangers will not be able to produce the adequate decision which in turn related with the
returns of such investments as well as it cannot facilitated the actual demand will be
generated in the future.
 The demands over the sales and production will be fluctuating as per the changes in the
consumer choices and preferences.
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Illustration 3: Sales budget example
Source: (Leach, 2014)
Cash budget: It will be helpful for the managers in Free Agent in analysing the over all
cash disbursement and receipt in the operating period (Gido and Clements, 2014). Hence, it can
be said that, this technique will help the managers in making fruitful measurements of the
requirements of the funds in the particular departments and in the specific tasks. Thus, there will
be several benefits and disadvantages of these budgets.
Merits:
 It facilitates adequate estimation relevant with the funds and finance to be required in the
completion of any operational tasks in the organisation.
 It builds up the favourable and healthy communication bridge between employees and
supervisors. There will be proper utilisation of funds which will help the business in analysing the
business's revenue and expenditure.
Demerits:
 Entity needs to depend over the analysis made by accounting professionals and auditors
which in turn quite time consuming and expensive.
 No adequate information were facilitated through such report as well as it is not sufficient
for the firm in analysing the cash requirements.
 It does not affect in raising the productivity and profitability of entity as well as in
meeting the goals and objectives.
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Illustration 4: Cash budget example
Source: (Gido and Clements, 2014)
Zero based budgeting: These techniques indicates the preparation of budgets on zero
base. Hence, Free Agent will be beneficial in identifying all the line items included in the cash
flow statement if the firm (Shields and Rangarajan, 2013). Thus, there will be several benefits
and demerits of such accounting techniques as:
Merits:
 It builds up the accuracy and efficiency of the organisation in operational activities which
in turn helps the firm in achieving the desired goals (Zero Based Budgeting, 2017).
 It enhances the business coordination as well as improves healthy communication in the
firm.
Demerits:
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 These budgeting took must time and efforts to be consumed as well as it don not come up
with the adequate informations. There will be requirement of experienced and qualified accounting professionals who can
make such data sheet.
Activity Based Budgeting: These budgeting techniques are relevant with the activities
held in premises and the cost to be required for them. Hence, these budgeting technique will
influence the work of Free Agent in order to have the better operational growth and monitoring
over each budgeting techniques (Meredith, Mantel Jr and Shafer, 2013). There will be various
advantages and disadvantage such as:
Merits:
 This is the most accurate cost techniques in deciding the costs over products and services
and the consumer demands. It preferred using the unit costs and processing techniques which in turn to be done by the
organisation.
Demerits:
 It will require the substantial resources as well as its very complex and time consuming
one person has to make analysis over the use of such techniques.
M.3 Uses of various planning tools for forecasting the budgets
Planing or budgeting tools are to be required by the professional in the organisation in
context with having the adequate information related with operational ability of Free Agent.
Hence, it can be said that there is need to make the proper analysis of all the accounts in
organisation as well as it must bring the favourable outcome. It helps the managers in
investigating all the transactions held during the period as well as which in turn helps them in
making the adequate declensions relevant to the firm's budgets and future plans.
D.3 Implementation of planning tools in resolving obstacles
By considering the importance of such planning tools such as activity based budgeting,
zero based budgeting which in turn helps the firm in making the adequate decisions relevant to
the financial positing and strength (Hwang and N g, 2013). Hence, it can be said that, with the
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help of such planning tool the managers in Free Agent will be able estimate the adequate
requirement of budget and they can make the changes in such decision as per the outcomes they
gain.
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P.5 Explaining management accounting system respond to financial problems
In order to enhances the operational work and efficiency of Free Agent there is need to
adopt the fruitful techniques which helps the firm in achieving the targeted goals. These are as
follows:
Benchmarking: It is the techniques on which the firm will set the small targets for their
workforce and they make efforts in achieving such targets. Hence, it can be said that with the
help of such techniques there will be development of healthy environment as well as good
communication relationship with employees (Burke, 2013). Free Agent need to implement such
methods and measure the targets to be achieved in context with achieving the big aims.
Key performance indicators: This method is used for analysing the coat and expense
incurred in each task and in each operational activity (Mir, and Pinnington, 2014). Hence, it can
be said that, it will help Free Agent in improving the quality of the work as well as developing
the good strength in achieving the targets.
Budgetary Control: After preparation of budgets and setting the limits over the costs'
consumption there is need to execute and assessing the overall performances of the organisation
which in turn will be fruitful for them in developing changes in previously made decisions
(Pemsel and Wiewiora, 2013). Hence, managers at Free Agent need to timely analyse the
company's budgets and examine them.
Financial governance: Business and workforce need to be executed by the person who
has tendency, ability and quality of handling such major responsibility (Svejvig and Andersen,
2015). Hence, in Free Agent there is need to appoint the qualified leader, managers and
supervisor to such jobs on which they can easily understand the requirements of the internal and
the external stakeholders of the firm.
M.4 Resolving financial problems with management accounting helps organisation in sustainable
success
Monetary and financial problems were faced by the organisation which will be due to the
inefficient efforts of the firm. Hence, the managers accounting system helps the managers in
making the adequate decisions as well as generate the adequate information which are need to be
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measure and analysed by them (Turner, 2014). Hence, it will help them in making the decisions
and finding ways to overcome such problems.
D.4 Sustainable success with the help of planning tools
Free Agent will be beneficial in increasing the productivity and achieving the sustainable
growth which are to be made by them in context with using such planning tools like
benchmarking, governance and the key performance indicators (Leach, 2014).
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CONCLUSION
On the basis of the present assessments, there has been discussion based on the uses and
importance of the management accounting in context with achieving the organisational targets.
Hence, such tools helps the firm in acquiring better operational efficiency as well as making the
fruitful efforts to attain such targets. Further, various budgetary tools will help the firm in
analysing the actual requirements and position of the firm.
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REFERENCES
Books and Journals
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