Management Accounting Solutions for Unicorn Limited

This assignment analyzes the application of management accounting principles to address the financial difficulties faced by Unicorn Limited. It explores key performance indicators, budgeting, targeting, and benchmarking as tools to enhance production quality, control costs, and boost profitability. The analysis highlights the importance of strategic decision-making based on accurate financial information for the success of small businesses like Unicorn Limited.

MANAGEMENT ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and essential requirements of different types of management
accounting system........................................................................................................................1
P2 Different methods used for management accounting reporting.............................................3
M1 benefit of management accounting system...........................................................................6
P3 Calculate cost using appropriate techniques of cost analysis to prepare income statement
and also explain difference among management accounting......................................................6
M2) Management accounting techniques and financial reporting documents..........................11
P4 Advantages and disadvantages of different types planning tools used for budgetary control
....................................................................................................................................................11
M3: Use of different planning tools...........................................................................................13
P5 Uses of management accounting system to respond financial problems.............................13
M4: Responding to financial problems......................................................................................16
CONCLUSION..............................................................................................................................17

Financial Report
To
General Manager
Unicorn limited
Date: 5 April 2017
Subject: reporting on management accounting tools and financial problems
According to the report it has been found that cost of the company is too high, it is because
managers are not taking support of tools and techniques effectively. Managers have to take
support of absorption costing method this can give accurate results to them. Furthermore, to
resolve financial problems of the organization, it is required to take support of key performance
indicators and budgetary tools. These are effective techniques and can help in improving
performance of the Unicorn.

INTRODUCTION
Management accounting is the supply of data and advices that helps in organisational
development of company and decision making and thus enhance the working of firm in market.
Thus, it provides managers with information regarding procedures of non financial and financial
decision making (Saladrigues and Tena, 2017). American Institute of Certified Public
Accountants (AICPA) considers management accounting as a practice that provides financial
and statistical informations to mangers which aids them in taking short term or important
decisions so that best practice could be carried out. Management accountant within firm plays a
significant role in undertaking different rules and regulations and follow appropriate accounting
standards to maintain financial information (Weygandt, Kimmel and Kieso, 2015).
Here, Unicorn Limited has been selected which is a small scale retail business. It
comprises of a workforce of 50 employees. Also, the company’s annual net turnover is within
Pound 500,000. In the current era, a significant contribution is made by management accounting
in the business functions. As a result of this, decision making could be made in an effective and
efficient way. However, business also focuses upon keeping track of their performance and take
effective decision related to cost that has been led through traditional financial accounts
(Horngren. and et.al, 2010). .
TASK 1
P1 Requirements of different management accounting systems
As per the Institute of Management Accountants its is considered as the profession which
involves partnering within management decision making and thus carrying out planning and
performance management systems so that financial information could be maintained within firm.
It also helps managers to formulate and implement business strategy (Kaplan. and Atkinson,
2015). It also helps them in interpreting and analysing the accounting information that aids in
effective decision making process. The objectives of management accounting are as follows: Strategic management- This process includes blending strategic business objectives with
management accounting that helps manger and its team to make effective business
decision. (Deegan, 2013).
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 Performance management- Further, it is another practice that assists management
accounts to participate in business decision making and also manage the performance of
firm (Bhimani. and et.al, 2013).
 Risk management- Management accounting plays an important role to identify, measure,
manage and report the involved risk. It ultimately helps in attaining the goals of the
business in effective way (Chenhall and Moers, 2015).
Advantages of management accounting:
 Reduction in the expenses: Management accounting will help Unicorn Limited, in
reducing their operational expenses. It provides them information regarding economic
resources and other involved business operations, which gives understanding regarding
how much is utilized in running company.
 Improvement in cash flow: Management accounting provides general mangers with
budget aspect, which aids Unicorn Limited company in preparing the master budget for
future business expenditures (Horngren. and et.al, 2010).
 Effective decision making: Management accounting acts as tool for Unicorn Limited and
helps General mangers in effective decision making.
 Rise in Financial returns: On the basis of consumer demands and potential sales,
management accounting provide help to general manager in preparing the financial
forecast for Unicorn Limited.
However, management accountant within Unicorn Limited focuses upon
undertaking different decisions related to availability of cash, inventory management,
outstanding debts, etc. Thus, preparing and recording proper information results in undertaking
appropriate financial decisions that results in achieving desired targets (Kotas, 2014). The
different types of management accounting systems have been enumerated below- Throughput accounting system- It is one of the typical costing process within traditional
management accounting system. Management accountants within Unicorn focuses upon
identifying the restrictions within the production system of firm (Saladrigues and Tena,
2017). Thus, through minimizing such constraints it results in providing various facilities
to business and enhance their production volume.
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 Cost accounting system: It is the process by which company can estimate the cost of its
products for inventory valuation and control of cost. It can help Unicorn Limited in
checking the accuracy of their financial accounts (Englund. and Gerdin, 2011). Job costing system: It helps in providing manufacturing cost to all the individual and
batch products. Through this General manager of Unicorn Limited can calculate the
expenses that is required for labor and materials. Inventory management system: This system is manged by sophisticated applications that
created to effectively manage highly complex inventory plans. It will help General
manger of Unicorn Limited firm to maintain the balance of products stock in the
warehouses (Ambe, 2016).
 Price optimization: It the analysis by company to regulate how consumers gonna respond
to various prices of its products. Through this Unicorn Limited can focus on the different
goals such as margin and sales volume of units.
P2 Methods for management accounting reporting
The discussion of the different methods of management accounting has been done below:
Financial planning-
Main purpose of each and every business is to carry out financial planning and thus maximize
the profits so that set results could be attained. However, if company has sound economic
planning that it would help in gaining high profit and that would develop brand image of the
organization (Romano, 2015). With the assistance of sound planning Unicorn Limited will be in
position where it can minimize its unproductive variables and can improve its economic
performance.
Operating Budgetary report:
Operating budget report support in allocating resources properly. Individual can make
effective control over unnecessary cost and can increase cash inflow in the business. It is
essential method of management accounting, with the help of this tool companies can measure
their business performance and can make necessary changes which can support in improving its
performance. Budget report helps in allocation of resources so that unnecessary expenditures can
be minimized. Budget is one of the critical aspect on business operations. Good and accurate
budget can support organization in accomplishing their objectives significantly (Deegan, 2013).
With the help of budgetary report Unicorn Limited can make comparison between actual and
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expected budget performance of company in specific fiscal year. If there is huge difference
between expected and actual budget that can cause loss in the entity. All records are entered into
income statement and balance sheet of the company. On the bases of these reports cited firm
prepare its budget for next financial year (Chenhall and Moers, 2015. With the help of this
method managers of Unicorn Limited can get indication where to invest and how much
investment can be profitable for the cited firm. If organization uses this technique effectively
then it can help in minimizing the financial risk of the corporations (Ambe, 2016).
Job cost report
Job cost reporting is another method of management accounting that support the
managers in identifying cost of each job. This helps in improving working progress and
identifying the variance in estimated cost and actual cost. It supports in tracking the each cost
which are related to the business operations so that unnecessary expenditures can be minimized.
Financial statement analysis:
It is another method that is used by the organizations of management accounting reporting.
Balance sheet and income statement are two main records which are necessary to prepare by
limited firms. By analysing these statements Unicorn Limited can collect important information
about expenses of previous year and areas in which company has generated high profit
(Saladrigues and Tena, 2017). By this way organization will be able to analyses its market
position and will be able to make effective strategies that can help in increasing revenues and
fulfilling the objective of the company.
Performance report
It is considered as one of the effective tool that helps in management accounting.
Management can take support of performance review and can compare it with the previous
performance and with the competitor performance. This can support in identifying loop fall in
the system and managers can make necessary changes in its accounting system so that
performance of the organization can be improved.
Inventory management report
It is another method of management accounting in which managers have to look upon the
report of inventory. Total management of assets can help in analysing the financial performance
of the company. If inventory are not being utilized properly and if company is unable to generate
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funds by using assets it means accounting techniques of the firm is poor. By using this method
entity can improve its performance to great extent.
Cost accounting:
It is one of the important toll that supports in gathering information, classifying activities,
summarizing and allocating resources (Kaplan. and Atkinson, 2015). Through this company can
make effective control over its cost and reduce operational cost of the entity. By gathering these
details management of Unicorn Limited can identify unnecessary expenses and can make plan
for future development. With the help of this method cited firm can collect information about
production cost, process cost and department wise costs (Chenhall and Moers, 2015). After that
it can calculate deviation in order to improve business performance of the company.
Sales reports:
It is one of the important tool of management accounting report in which companies gather all
information about sales of previous year. It provides in depth information about cost of per unit
sales (Ambe, 2016). With the help of this method Unicorn Limited can find out gap between
expected and actual sales volume. That would help cited firm in making effective strategies for
improving the business performance of the company. With the assistance of sales reports
company can find out that if there is continuous declining sale records that means organization is
not providing satisfactory products to consumers (Romano, 2015). That would help in improving
the process so that cited firm can get high profit and can gain competitive advantage.
These management accounting system is beneficial for the organizations.
One of the main advantage of using management accounting reports is the it supports in reducing
the expenses of the company. In these techniques company review the expenses and other
resources of the organizations (Deegan, 2013). It can develop better understanding about the cost
of the organization thus managers of Unicorn Limited can make plan to reduce expenditures of
the organizations. In addition to this, this can help in improving cash flow in the entity. By
minimizing unnecessary expenses of the company, Unicorn Limited can improve its cash
inflow. By this way cited firm will have sufficient working capital for further development of
organizations (Kotas, 2014). Unicorn Limited takes support of these management accounting
system in order to enhance its financial returns. Forecasting related to future expenses and
consumers demand can be done effectively thus, cited firm can make sound planning for further
development of the corporations. These are the significant tools that supports entities in
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managing their risk and minimizing them. That supports management in improving the business
performance and to enhance profitability and suitability of the organization to great extent. It is
concerned for planning and help in delivering effective operations so that company can get
benefited and can get optimistic outcome.
Performance report:
It is prepared by combining budget and cost report of entity. It is the management
accounting tool that assist in measuring overall performance of the organization and minimizing
issues. Through this report management can compare their standards and expenses with their
competitors. That will support in making effective strategies which can help in improving
business performance.
M1 benefit of management accounting system
Management accounting supports the organization in effective allocation of resources and
tracking the each cost. Management accounting is beneficial tool that helps in effective
utilization of resources and reducing expenses of entity. With the help of cost report and budget
report Unicorn Limited can easily improve its cash inflow (Romano, 2015). Because these
techniques are able to manage cash flow in the organization effectively. By this way entity can
make sound business decision which supports in its growth and gaining competitive advantage.
The main benefit of applying management accounting tools in Unicorn Limited is that to
increasing financial returns.
P3 Calculate cost using appropriate techniques of cost analysis to prepare income statement and
also explain difference among management accounting
Income statement is a financial statement through which organisation can effectively analyse
their financial position so, they can understand its effectiveness. Therefore, they can easily able
to know its position through net profit / loss in the profit and loss statement. It is mainly dividend
into two major parts that is revenue and expenses that are come from operating and non-
operating activities of a company. Thus, it can be prepared on the basis of two costing techniques
that are marginal and absorption costing. The marginal costing can be define as there is an
increment as well as decrement or change in the opportunity cost it can be due to production of
extra units produced. Beside this, there is an another techniques that is absorption costing in that
it takes both variable and fixed cost due to which it can be said that it is a type of full costing.
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The Unicorn limited company adopting both the costing techniques are the marginal and
absorption for the purpose of preparation of income statement. These are describe as follows-
INTERPRETATION:
From the above Table1 and Table2 there is an income statement has been prepared
through marginal and absorption costing. Therefore, the information from the both table it has
been seen that sales are to be taken in both income statement same that is £21000.Furthermore,
for the purpose of preparation of income statement they deduct cost of goods sold from the sales
revenue that is £6600. Thus, it can be calculated by take all such values are the direct material,
labour, variable production overhead and fixed production overhead. Thus, after calculation of
gross profit in the income statement by using marginal costing technique they take only variable
expenses and ignore the fixed expenses. It involve both variable production overhead £1200 and
£600 in the variable sales overhead. From this, there is an total variable expenses incur that is
£1800 that are deducting from the sales revenue minus cost of goods sold then there is an net
profit determined. On contrast to this, the cited company adopts the absorption costing
techniques in which they calculate the net profit but there is a vast difference among these that
are explained further. They will consider both types of expenses that are fixed and variable
expenses for the purpose of calculating net profit. Thus, in the marginal costing techniques the
cited company take sale revenue same and cost of goods sold that is £2100 and £6600
respectively. Regard to this, there is little difference from the absorption costing is that it takes
both total variable and total fixed expenses that are £1800 and £5100. For the purpose of
calculating net profit it takes both type of expenses is deduct from the sales revenue minus cost
of goods sold that is £9300. It has been asserted that from the both techniques in which the
marginal costing have a higher net profit than the absorption costing as it does not takes both
type of expenses.
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There is a lot of research has been done in which it has been said that the absorption
costing is more suitable than the marginal costing. It is only because it consider both type or
expenses that is fixed and variable expenses due to which accurate net profit can be accurately
determined.
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Difference among marginal costing and absorption costing techniques
Basis of difference Marginal costing Absorption costing
Meaning  The marginal costing
can be define as there
is an increment as
well as decrement or
change in the
opportunity cost it can
be due to production
of extra units
produced.
 There is an another
techniques that is
absorption costing in
that it takes both
variable and fixed cost
due to which it can be
said that it is a type of
full costing.
Cost recognition Under this marginal costing it
takes both type of cost that
are fixed and variable
expenses
Under this absorption costing
techniques it will take all
fixed and variable expenses
Profitability calculation With the help of profit
volume ratio the net profit
can be calculated
The company takes all the
expenses are the fixed and
variable due to which there is
a variation in the
organisation’s net profits.
Variation in net profit Under this marginal costing
the is high variation in this as
it only consider variable cost
Under this method these is
less net profit incur due to
only it take both the expenses
such as fixed and variable
expenses.
Cost recognition Under this marginal costing
the calculation among net
profit is more as it the cost is
not highly impact if there is
any variation in opening and
closing inventory.
Under this absorption costing
method it will highly
impacting if there is any
fluctuation in the opening as
well as closing stock.
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Purpose The main purpose of this
management technique is that
it can effectively make
decisions for the purpose of
improvement
It can be used by the company
as for the main purpose of
report the external
management.
M2) Management accounting techniques and financial reporting documents
Financial reports are able to measure performance of the Unicorn and managers can
identified its market position as well. This helps in addressing loop fall in the system and making
improvement in its accounting techniques so that profit of the organization can be increased.
Furthermore, budgetary system is great financial reporting technique that helps in allocation of
resources in effective manner and reducing cost as well. Management accountant of Unicorn
analyses financial records of the enterprise to identify its economic position (Ambe, 2016). It is
done through using profit and loss account, balance sheet, income statement etc. Therefore,
different ideas are generated for reducing expenses and increasing sales revenue. However,
management of entire business operation is possible through this method helpful for further
activities and improving quality services. Thus, financial reporting documents are beneficial for
forecasting and decision making regarding business activities in the future time efficiently.
P4 Advantages and disadvantages of different types planning tools used for budgetary control
Budgetary control can be defines as how the management of a company utilizing their
budgets for the purpose of monitoring and controlling costs as well as operations. It can be
define in another word in which it is that procedure through organisation’s managers can set up
their performance as well as financial goals regard to budget. It assist the management to
effectively used for the purpose of comparing the actual results for the purpose of adjusting the
company’s performance if it necessary. It can be used by the Unicorn limited for main purpose is
that to control the budgets by make comparison among actual number with the budgeted
numbers to finding out the deviation. The main advantages of budgetary control help the
company as it fixed the targets due to which they can easily controlling the various activities in
departments of business entities. The another major advantages of budgetary control is that it
effectively and securely made effective coordination among the various kind of departments.
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There are various planning tools that are used by the Unicorn limited it has some advantages and
disadvantages that are as described below-
Zero base budgeting:
It can be define as a in that all type of expenses used to make justification for each and
every new period. It has start from the zero Base for the purpose of analyzed firm’s cost and
needs. it is a very simple process in most of the organization used this planning tool make budget
and for the purpose of maintaining the financial resources. However, ZBB needs a approval in
other words it takes the zero base that begins completely each and every year. It can be used for a
personal use as it can be used to budgeting money and it does not require huge amount of money
to spend over it. Further, it has some advantages and disadvantages that are as described below-
Advantages
 Encourage efficiency- The main advantages of zero base budgeting is that it can
effectively enhance the efficiency. It can help the Company as it fixed the targets due to
which they can easily control the various activities in departments of business entities. It
will make assumption with the help of previous year budget was the accurate amount
figure and it is only essential for the purpose of make adjustments which are highly based
upon the future project budgeted. It will the management to justifying the various projects
due to which it mainly focuses on encouraging to finding out the most appropriate
solutions.
 Better coordination and communication- The main benefits from the Zero base budgeting
is that it can effectively make the better coordination as well as communication with the
various departments. It will also used to motivate the employees through involve them in
decision making.
Disadvantages
 Time consuming- The whole process in the zero base budgeting is more time consuming
as it requires exercising the for the government funding entries each and every year that
are against the incremental budgeting.
 High man power needed- To make the entire zero base budgeting the whole process
needs to be hiring a expertise. It is not an easy task it requires a larger involvement of
manpower. The main disadvantages for those firms who does not have enough money to
spend over the expertise and they have enough time as well.
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Variance Analysis
It is one of the most helpful planning tool in the budgetary control due to which the
company can make quantitative investigation for the purpose of finding out the deviation. It can
be among the actual number and budgeted numbers that help the company to make necessary
adjustments and control the business functions.
Advantages
 Controlling expenditure- The main benefits of variance analysis is that it can effectively
control the expenses of a company. Therefore, in this analysis management finding out
the variance as it help them to take the effective action of adverse results.
M3: Use of different planning tools
Variance analysis, zero based budgeting both are effective planning tools that supports
Unicorn Limited in forecasting future scenario and minimizing risk to great extent. With the help
of this tool company can identify its expenses and can allocate resources accordingly. By this
way entity can reduce its unnecessary expenditures and can increase its revenues. With the help
of variance analysis company can identify difference between actual and projected budget and
can work on minimizing this gap (Chenhall and Moers, 2015). That will support in effective
forecasting of budget so that cited firm can accomplish its objectives. With the help of zero
based budgeting Unicorn Limited can research properly about each task and involved activities
and accordingly it can plan budget. That is effective technique that may support in improving its
business performance. Variance analysis is the useful tool that helps in identifying the difference
between actual and estimated cost. By this way managers can make necessary changes to
minimize this gap. Zero based budgeting is another effective planning tool which is used to make
effective budget by considering all aspects again. With the help of this tool management of
Unicorn Limited can plan the activities well and can control over its unnecessary expenditures.
P5 Uses of management accounting system to respond financial problems
There are much management accounting system that can support in dealing with financial
problems.
Financial problems can take place in the business any time so it is essential for the
organization to respond these problems well. Cited firm has to adopt accounting totols to deal
with these issues. This can help in monitoring expenditures and making control over these
expenses.
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Throughput accounting system:
It is performance measurement tool and with the help of this technique Unicorn Limited
can measure financial aspects easily (Englund. and Gerdin, 2011). This method focuses on cash
That explains the revenue generated by the cited firm in particular financial year. With the help
of this company can identify its loop falls and can work on improving these areas. Costing
system assists in getting relevant information about economic performance of the organization
thus, it is an effective tool through which companies like Unicorn Limited can deal with their
financial problems (Romano, 2015).
Key performance indicators
It is considered as one of the effective tool that helps in resolving the financial problems
to great extent. For example if company's sales are continuously decreasing because of poor
quality of products. By using key performance indicator company can improve its production
quality and can attract more people towards the brand. This can support in resolving issue of
cash inflow. Because by proving quality products sales volume of the entity can get improved.
By this way company can grow well and will be able to sustain in the market for longer duration.
Budgetary targeting
It is another tool which is used to resolve financial problems of the organization. Unicorn
can apply this method at the time of high expenditures and cost. In such situation entity can fail
to run its business smoothly. But by budgetary targeting it can control over unnecessary cost
which will raise profit of the entity. This can also be beneficial in resolving issue related to the
production because company will have sufficient funds which will help in producing desired
output.
Benchmarking
It is another effective management accounting tool that can support in responding to
financial problems effectively. If performance of the firm is not good and it is unable to earn
profit. In such condition company may adopt this tool and can improve its standards. This can
raise quality of its products by this way consumers will get attracted. This may increase sales
volume of organizations and can support in raising its performance level. Fianncial
benchmarking can support in identifying strength and weak areas of business units and through
internal benchmarking system entity can meet with its objectives soon.
Financial governance
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Financial crises may take place any time in the organization. For responding to such
issues financial governance is the great strategy through which entity can develop set of
recommendations which can help in resolving these issues soon. By following these regulations
issues can be minimized and financial performance of company can be improved.
Lean accounting system:
It is another tool of management accounting system that focuses on eliminating the
wastage so that cost can be minimized. There two types of cost which have to bear by the
Unicorn Limited, these are direct and indirect (Chenhall and Moers, 2015). It is simple type of
management accounting system in which managers pay more attention on reducing the direct
and indirect costs of the organization so that production and can increased and company can
increase its net earnings.
Cost accounting system:
It is one of the essential tool that helps in responding to financial problems. Suh type of
system assist in developing a framework in order to eliminating cost so that company can gain
high profit in particular financial year (Weygandt, Kimmel and Kieso, 2015). It is the beneficial
tool that supports Unicorn Limited in reducing its production and operational costs. With the
assistance of this technique cited firm can accomplish its objective soon.
Transfer pricing:
It is the type of accounting system in which Unicorn Limited can transfer its products to
other similar subsidiary organization. In such type of process cited firm has bear transfer costs as
well (Deegan, 2013). Due to this cost of the entity can get increased. Apart from this, to deal
with such type of process, company needs to hire extra manpower that increases its cost to great
extent. In addition, such type of system creates situation of dysfunctional behaviour between
employees and employer (Kaplan. and Atkinson, 2015). Though transferring accounting system
is costly but it can help in resolving financial problem of the organization.
Traditional accounting system:
It is traditionally used method that supports entities in responding to financial problems
effectively. It helps in producing quality food, it identifies the economic problems and make
arrangement for producing more products in lower costs (Englund. and Gerdin, 2011). It is
beneficial tool through which company like Unicorn Limited can improve its reporting system to
great extent. Carrying out job order costing it is being used by Unicorn Limited so that and thus
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allocates costs relating to direct materials, direct labor and manufacturing overhead. With the
help of job order costing it is being used by businesses where all the costs are traceable to
different individual projects
Ratio analyses is one of the best way through which managers of Unicorn Limited
can evaluate the financial performance of the cited firm. It supports in identifying the situation
whether company has gained profit or not (Ambe, 2016). Profitability ratio assists in analysing
the revenues of the company and in identifying that whether organization has earned good profit
or not as compare to previous year. By this way, Unicorn Limited can find out the drawback of
current process and can make strategy for overcoming the financial issues (Kotas, 2014). For
example, by taking best pricing decisions cited firm can enhance its sales volume that would help
in increasing revenues of the company. Furthermore, by looking upon liquidity ratio Unicorn
Limited can make balance between assets and liabilities. That would help in identifying the
liquidity position of the company thus, cited firm can make strategy to reduce its liabilities in
order to prove its working capital position (Weygandt, Kimmel and Kieso, 2015).
Investment appraisal techniques are another tool that helps in comparing the different
projects and supports in investing in higher profitable project. It suggests that higher NPV
projects can give higher returns as compare to others thus, it can help the Unicorn Limited in
minimizing the financial risk of the organization (Kaplan. and Atkinson, 2015). Variance
analyses is the tool that aids managers in making strategic decisions so that organization can
accomplish its object and can gain good profit.
Management accounting tools are very effective and supports in minimizing the issues in
the business. With the help of these techniques companies can respond to their financial
problems. Key performance indicators are great method that helps in identifying ways to conduct
business operations in effective manner. Profitability ratio assists in determining loop fall in the
system and improving those so that economic condition can be improved soon. Unicorn Limited
is facing the main issue of increasing expenses it is because it is unable forecast expenditures.
That is why difference between actual and expected budgets is very high. With the help of
performance key indicators it can manage its operations effectively. Cash flow management of
entity is also improper that increases financial burden of the firm. By using investment appraisal
techniques and benchmark tools Unicorn Limited can make sound business decisions and can
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manage its cash effectively. By this way issue related to cash shortage can be handled in the cited
firm.
M4: Responding to financial problems
Unicorn is facing financial problems such as low production, poor growth, poor quality,
high expenditures etc. These issues can be resolved by using management accounting tools. By
taking support of key performance indicators cited firm can improve quality of production . By
this way it will be able to provide satisfactory products to consumers. This will enhance
profitability of the company and by this way wastage will be minimized. Inability to achieve
performance targets is another financial issue in the Unicorn Limited. For responding this issue
company can take support of budgeting targeting in order to respond this issue. That will help in
making effective control over it and minimizing this issue for longer duration (Englund. and
Gerdin, 2011). Service and product quality is poor in the Unicorn Limited due to which it is
unable to satisfy its consumers. That is creating issue and its revenues are decreasing. For
minimizing this issue cited firm needs to take support of benchmarking tool. That will assist in
improving its products and making it as per the standards. That will help in satisfying consumers
and meeting with their needs. By this way they will buy company;'s products and it will increase
its revenues.
CONCLUSION
From the above discussion, it can be concluded that management accounting is the
essential tool that supports manager in gathering the relevant information about business
activities. By looking upon this detail information Unicorn Limited can make effective plan to
control over the unnecessary cost. It can take essential strategic decision that can assist in
improving economic performance of the organization. From the study, it is found that managerial
decisions play significant role in the success of the company. It aids in reducing the direct and
indirect cost in order to generate high profit. Corporations have to use management accounting
records by this way they will be able in keeping records of day to day cost information of
companies. There are several techniques such as cost analyses, variance analyse, budgetary
reports etc. that supports Unicorn Limited in managing their business operations effectively.
Management accounting system is very useful that helps in interpreting financial information of
organization and in making such strategies that can maximize profit of the entity and can help in
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accomplishing their goal. Unicorn Limited has been selected which is a small scale retail
business with no more than 50 employees and an annual net turnover not exceeding Pound
500,000. In the current era, management accounting plays a crucial role within businesses and
therefore decision making could be made in an effective and efficient way. However, business
also focuses upon keeping track of their performance and take effective decision related to cost
that has been led through traditional financial accounts
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