Management Accounting Systems and Techniques in Tesco

UNIT 5

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1. Demonstrate an understanding of management accounting systems.....................................4
Role of management accounting.................................................................................................4
Different methods used in management accounting reporting....................................................5
Benefits of management accounting systems and their application within Tesco......................6
LO2: Apply a range of management accounting techniques...........................................................7
Calculate costs using appropriate techniques of cost analysis to prepare income statement
using marginal and absorption costs............................................................................................7
Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents...................................................................................................11
LO3. Explain the use of planning tools used in Management Accounting...................................12
The advantages and disadvantages of different types of planning tools used for budgetary
control........................................................................................................................................12
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Management accounting is an accounting game plan that allows the board of directors to perform
their skills even more profitably. By the end of the day, the term that directors' accounting is
used to provide accounting information to the board of directors, for example, masterminding,
affinity, organization, control and dynamics, etc. Therefore, the organization's account focuses
on the effectiveness of the organization. It does this by decorating different levels of the game
board with the information needed for a particular asset.
This commitment relationship was responsible for a better understanding of the management of
accounting thinking; the specific key contraptions of the directors' accounting methods will
explore the level of this latter thought linked to money. The estimate of the payment order
through arbitrary cost and maintenance strategies updates the principle of the difference between
the two and also reflects the reason for the qualification in both data relating to the net benefits.
The chosen company for this project is Tesco plc which is a big multinational company having
operations all over the world.

LO1. Concept of management accounting system
Management accounting role
The task of the accountant is to direct the progress of the commissions to notice the cash security
of company, to manage all cases that identify with money and to follow these lines helps to
facilitate dealing with the general organization and approach of the 'organization.
Management accountants plays main role in identifying the position and performance of an
association. Few of them prefer to convert into a certified management accountant (CMA), a
credit almost equal to a CPA, but with increasing consideration on the basis of cost accounting,
cash association and administrative problems.
Important roles of management accounting are as follows:
1. Making plan for long term and short term:
Management accounting have an crucial job in estimating upcoming financial events and future
liquidity for preparation in next year, such as long-range plans, essential management
accounting, business method design, and display audit and so on.
2. Developing Management Information System (MIS):
Routine reports are in fact similar to reports for unparalleled long follow-up sent to authoritative
staff at all levels to update at the right time. Even an authoritative accountant uses these reports
to make meaningful decisions.
3. Maintenance of best fit capital structure:
Management accounting plays an important role in the acquisition and use of resources. He must
choose to maintain a legitimate mix of responsibility and value. Raising assets through obligation
is so expensive because of tax cuts. In any case, it is not safe due to the fact that a duty
commitment must be paid regardless of whether the company is receiving adequate benefits or

not. In this way, the owner of the board of directors must maintain a separate capital structure
and take due account of the different costs of capital assumptions, the impact and relevance of
the exchange on value.
4. Participating in Management Process:
MA involves a crisis situation in the society. He carries out staff activities and also has line
power over the book keeping and several agents at firm. It trains associates about requirements
for monitoring data and the best way to utilize it. It transfers important data from the small scale
and brings the same back into a logical structure for the administration and at some point to
interesting external meetings.
5. Decision-Making:
The MA provides the board having basic data in transition option, e.g. Adaptive combination of
items, creation or purchase, rent or purchase, estimate item, discontinue item, and so on, and
long-range options, e.g. Capital planning, risk assessment, risk financing and so on. Nonetheless,
the activities of the board of accounting officer are limited to providing the required data in a
broad structure that is equally compelling for dynamic administration. In any case, the
administration has a very dynamic role to play.
Different methods used in management accounting reporting
MA reporting: The top of the organization, once in a while, is opposed to the benefits of the organization
and chooses the research itself: it is beneficial and should go on. To find the answers, the director is
involved in the determination of costs and in the management of the costs of the products, in the
organization of consumption, in the planning of the focus of the tasks, in the analysis of outsourcing and
of the various intercom skills that they intend to give complete and unrestricted control of society; this
training is called as MA report. (Libby and Waterhouse, 1996).
Methods of MA reporting:
It is not the idea that can be implemented independently of the society; several detailed techniques must
be used as indicated by the needs. These strategies have been discussed underneath:

Debtors/Accounts receivable aging reports: Accounts receivable aging (now known as credit card
negotiation) is the way to adjust the amount each customer owes, including the time for unpaid (unpaid)
equity, so your age o Consider this “ripe” data (Hansen, Mowen and Guan, 2007). Using this report,
administrators of Tesco may avoid credit transfers for such debtors that do not pay the balance of the debt
on schedule. For example, their financial manager in the above-mentioned business may start making
plans to obtain debt sum from list of debtors.
Departmental reports: These reports are generated by different branches of the group as indicated by
several clips of elements. This report includes the revenue and expenses of each department
independently and also shows any expansion or reduction of all transactions compared to past meetings.
Performance reports: These reports use cash-related KPIs that are bankruptcy tests to review its current
performance by taking your own report from the previous year or by considering a report execution of the
conquerors. Within it is included comprehensive information about profitability, gain, loss, supply of
currency, etc. This report can be used by the manager of Tesco to take further action according to the
requirement.
Operating budget report: These reports uses financial on the cost of estimating general labor costs and
the costs required to maintain the activity. The consumption of working capital is considered in this type
of relationship.
Uses and implementation of management accounting systems in Tesco
Cost accounting system:
Benefit: A cost accounting system can be progressively complex and transparent, especially to
the extent that it involves cost sharing and general evaluation. Unfortunately, this opportunity for
exploration of a multicolored nature continually becomes expensive and is appropriate given the
ability and precision of the company's experts.
Application: Cost accounting can be applied to Tesco for regular estimation of cost control,
stocks and gains. The necessity for this accounting system is to manage unnecessary costs, in
order to raise sales. This becomes possible when cost utilization is continuously monitored
during each operation in TESCO. This accounting system is key in company to allow for the