Unit 5: Management Accounting Assignment

Zun Thet Hmu San
UB-05-19

Assignment front sheet
Learner name Assessor name
Zun Thet Hmu San Daw Khin Su Su Yin
Date issued Completion date Submitted on
5.6.2020 28.8.2020 28.8.2020
Qualification Unit number and title
Edexcel BTEC Level 5 HND Diploma in Business Unit-5: Management Accounting
Assignment
title Management Accounting
In this assessment you will have opportunities to provide evidence against the following criteria.
Indicate the page numbers where the evidence can be found.
Criteria
referenc
e
To achieve the criteria the evidence must show that
the student is able to:
Task
no. Evidence
P1 Explain management accounting and give the essential
requirements of different types of management systems. 1 2-18
P2 Explain different methods used for management accounting
reporting. 2 19-23
P3
Calculate costs using appropriate techniques of cost analysis to
prepare an income statement using marginal and absorption
costs.
3 26-28
P4 Explain the advantages and disadvantages of different types of
planning tools used for budgetary control. 4 29-46
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P5 Compare how organization are adapting management accounting
systems to respond to financial problems. 5 51-60
Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.
Learner signature: Zun Date: 28.8.2020
Table of Contents
Executive Summary....................................................................................................................1
Introduction...............................................................................................................................2
Company Profile of Vitacoco......................................................................................................2
P1.1: Management Accounting and its roles and principles.....................................................3
1) Designing and Compiling............................................................................................5
2) Management by Exception........................................................................................5
3) Control at Source Accounting....................................................................................5
4) Accounting for Inflation.............................................................................................6
5) Use of Return on Investment.....................................................................................6
6) Utility..........................................................................................................................6
7) Integration..................................................................................................................6
8) Absorption of overhead costs....................................................................................6
9) Utilization of Resources.............................................................................................6
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10) Controllable and Uncontrollable costs..................................................................6
11) Forward-Looking Approach....................................................................................7
12) Appropriate means................................................................................................7
13) Personal contacts...................................................................................................7
P1.2: Management Accounting Systems with their benefits....................................................7
Cost Accounting System.............................................................................................................7
Classification of Costs.................................................................................................................7
Benefits and Limitations of Cost Accounting System..............................................................10
Inventory Management System...............................................................................................11
Price-Optimizing System..........................................................................................................12
Pricing Policies..........................................................................................................................12
Management Accounting Systems in Vitacoco........................................................................13
Cost Accounting System...........................................................................................................13
Inventory Management System...............................................................................................14
Price Optimizing System..........................................................................................................14
P2.1: Differences between Management Accounting and Financial Accounting....................15
P2.2: Qualitative Characteristics of useful financial information............................................16
Relevant...................................................................................................................................16
Reliable.....................................................................................................................................16
Understandable........................................................................................................................16
Comparability...........................................................................................................................17
Consistency..............................................................................................................................17
P2.3: Types of Management Accounting Reports with their benefits.....................................17
Accounts Receivable Aging Report..........................................................................................17
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Cost Accounting Report...........................................................................................................18
Inventory Management Report...............................................................................................19
D1: Critically evaluate the impact of management accounting systems on accounting report
which is integrated with different functional areas.................................................................20
D2: Traditional and Activity-Based Costing..............................................................................21
Activity-Based Costing..............................................................................................................21
P4.1: Budgetary control as a planning tool..............................................................................23
P4.2: Different types of operation and capital budget for control..........................................24
M3: Analysis of two planning tools with their pros and cons for preparing and forecasting
budgets.....................................................................................................................................26
Balanced Score Card................................................................................................................26
Porter Five Forces....................................................................................................................28
P5.1: Financial governance, Benchmarks, Financial and Non-financial KPI.............................31
Financial Governance...............................................................................................................31
Benchmark...............................................................................................................................31
Financial and Non-financial KPI................................................................................................32
Financial KPIs............................................................................................................................33
Non-Financial KPIs....................................................................................................................33
P5.2: Financial problems by two organizations which currently using different management
accounting systems and ways to respond to problems...........................................................34
M4: Characteristics and skills of an effective management accountant and an effective
management information system in Vitacoco.........................................................................35
D3: Evaluation of accounting planning tools to respond appropriately to solve financial
problems and lead Vitacoco to sustainable success................................................................35
Conclusion................................................................................................................................36
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References................................................................................................................................37
Executive Summary
This report provides comprehensive management figures related to Vitacoco, a coconut water
producer. First, to understand how to work with a management accountant. It explains the
basics of a management accountant and his principles. Appropriate cost analysis methods are
designed to minimize penetration of income statements. Used to explain differences in
reconciliation values due to differences in results for the above costs. Vitacoco recommends
using action-based cost systems instead of traditional cost systems. Five strengths of the
Balance Scorecard and Porter: Vitacoco has budgeted to increase the accuracy and depth of the
project, and has suggested two more. Learn about the financial problems of soft drink makers
Vitacoco and Zico. It is found that project methods should be systematically incorporated to
solve financial problems and that qualified management accountants should be hired.
Introduction
This report provides an overview of the necessary statistical information from executives and
top executives for decision makers. During the past two decades many organizations have
faced dramatic changes in their environment especially in information technology and global
market arena. To succeed in today’s highly competitive environment, to obtain customer
satisfaction is an overriding priority for every business. Therefore, organizations have adopted
new approaches for their management and ways of doing thing. Companies must adopt a
philosophy of continuous improvement that involves a continuous search to reduce costs,
eliminate waste and improve quality and performance of activities that increases customer
value or satisfaction. This philosophy has significant impact on management accounting system
from traditional role-providing information to managers to monitor the activities of employees.
Now, Management accounting supports continuous improvements by identifying opportunities
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for changes and then providing information to employees to empower them to focus on the
continuous improvement of customer value. Therefore, every organization should have
awareness on role of management accounting in creating values for customer, business and
society. As a new business, Vitacoco needs to adopt appropriate management accounting
systems to streamline operations and increase profits. Budget control is critical to the
effectiveness and efficiency of Vitacoco. It can be enhanced by other planning tools. According
to the report, Vitacoco is facing financial problems. Companies looking to reduce costs
continuously and eliminate waste to improve the quality and performance of businesses that
increase customer value and satisfaction should embrace the concept of sustainable growth.
This concept has a significant impact on the management accounting system. From information
to managers, it examines the performance of traditional staff.
Company profile
Vitacoco produces and distributes coconut water to keep consumers healthy and refreshed.
Vitacoco Coconut Juice contains a variety of nutrients and flavors, and is included in a modern,
convenient packaging that encourages consumers to maintain a healthy diet and maintain a
healthy lifestyle. Vitacoco obtains fresh coconuts and buys its bottles from trusted suppliers and
manufacturers. Vitacoco uses coconut water as a nutrient and sells it in bottles.
Address: No.105/107, Kha-Yae-Bin Road, between Pyi Daung Su Yeik Tha (Halpin) Road and
Road, Manawhari Road, Yangon 11191. Phone: [phone]. Email: [e-mail].
LO-1
P-1.1
For through understanding management accounting area, definition, role, principle and
differences from financial and management accounting are disclosed as a introduction.
Management Accounting
That branch of accounting deals with presenting, providing information management such
systematic perform managerial functions an effective, efficient manner [ CITATION Deb11 \
l 2057 ].
Management Accounting is the accounting system for making decisions of the business
enterprise. Management Accounting furnishes the necessary information to assist the business
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enterprise to make rational decisions through the development of policies, procedures in order
to meet the day to day commitments of the enterprise[ CITATION MPP09 \l 2057 ].
Internal financial report that helps manage managers' decision-making processes to achieve
business goals. In other words, it is about understanding financial and cost data and turning
that information into useful information for managers and officers within the organization.
The importance of management accounting
Many companies in order to survive in the competitive market, that is associated with rapidly
changing technology, have to using modern methods to work continuously improve quality
control and reduce the cost of their products. In this situation, many companies are changing
their information systems and to avoid traditional systems and move towards long-term view of
management accounting. Customers are looking for higher wages and shareholders are seeking
a greater share and competition takes place to produce better products with better features
and lower prices. Business success depends on how we manage all these factors and other
factors. Management accounting tools have followed the growing trend in recent years. This
process, with the introduction of ABC, ABM, ABB, Target Costing, Kaizen Costing, Back Flash
costing, JIT, TQM and recently started and tools such as ERP, Six Sigma is reached. Growing
economic competition imposes great pressure on managers to make business decisions in order
to maximize financial performance in this matter. To answer this, need a range of management
accounting techniques have been employed by the Company. The heavy competitive
environment prevailing in the world markets, the use of cost management and continuous
improvement of the organization is one of the critical success factors and managers can only
make the right decision about the efficiency of production and operations That have a good
understanding of how to conduct outreach activities and processes. This system, also
identifying and measuring the cost of the basic activities of the organization, to identify non-
value-added activities and introduce activities that improve organizational performance
Roles of Management Accounting
The following functions related with management accountant to reflect the roles of
management accounting [ CITATION Moh16 \l 2057 ].
Helping Forecast the Future
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