Report on Management Accounting Systems for Connect Catering Services

This report provides a detailed analysis of management accounting practices within Connect Catering Services, a family-owned catering business. It explores various management accounting systems, including inventory management, price optimization, and cost accounting, and their application in analyzing business performance. The report further examines different management accounting reports such as performance reports, cost accounting reports, and inventory reports. It delves into a range of management accounting techniques like absorption costing and marginal costing. The report also highlights the use of planning tools, such as zero-based budgeting and master budgets, in forecasting and controlling business expenditure. Finally, it discusses how management accounting techniques are used to address and resolve financial problems within the organization, offering a comprehensive overview of management accounting's role in decision-making and financial management for the catering business.

Unit -5 Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Understanding of Management accounting systems...................................................................1
Various methods of management accounting reports.................................................................2
TASK 2............................................................................................................................................4
Range of management accounting techniques............................................................................4
TASK 3............................................................................................................................................9
Use of planning tools in MA.......................................................................................................9
TASK 4..........................................................................................................................................12
Organisation use MA to respond financial problems................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting plays a important role in every business entity today and
therefore decision makers in the business must understand how to develop and use good
management accounting information. Good management accounting consist of responsibility to
arrange a broad area of critical management accounting information (Kim, 2020). This report
based on the Pearl Charted accountants are one of UK's best charted accountancy firms that
provides services to their customers like freelancers, small to medium size business entities.
Along with supports in business growth strategies, accounting tax and many others. The firm
provides service of new client Connect Catering Service which is a family owned and operate
catering service that depend on the Oxfordshire. In this report consist of various types of
management accounting systems and reports to analysis the performance of business. Along with
use different budgets to forecast future situation that helps in decision making and analysis
financial problems that sort out by management accounting techniques.
TASK 1
Understanding of Management accounting systems
Management Accounting: It is defined as technique which is used by the different types
of organization for analysing the cost of business. Along with it helps to determine operational
cost for the preparation of financial statements at the end of financial year. Manager of Connect
catering service use this technique on routine basis and provide guidance to top level executives.
Mainly management accounting use by entity for external analysis and supports its stakeholders
in decision making procedure.
Management accounting system: It is a accumulation of internal system of an entity
that presents actual performance of business entity. These systems guides internal stakeholders to
analysis their profitability and increase performance. Such as Connect Catering service use MA
system for track record of each department and make effective decisions (Mahajan and
Deobagkar, 2020).
Inventory management system: This method mainly related with the observing and
tracking stock information for conducting different operations is known as inventory
management system. Such as, Connect Catering use this system to track manufacturing
procedure and observe that how much raw material used by the company at different steps of
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making Pizzas. Along with it helps to keep detailed information of stock for operational
activities. For this use these types of activity:
 AVCO: This method apply by company when all the stock analysed on average cost basis
and sale out accordingly.
 LIFO: This method directs managers to used those goods firstly that are coming in last
for operational activities.
 FIFO: As per the method organisation can use those goods that are coming first in the
company for manufacturing foods.
Manage of company select FIFO methods to manage stock properly and reduce wastages.
Price optimisation system: It is most important system that apply by the every type of
business entity to set effective price of their products. It helps to attract large number of clients
and generate more profitability. For this purpose, Connect Catering apply this system to
determine the price of each products and set preferable rates for customers. The essential
requirement of system to figure out the right price of each product (Kumalawati and Muhammad,
2020).
Cost accounting system: It is a framework which is concentrated on estimation of cost
of different items produced by the entity. Connect Catering service manager use right cost for
manufacturing food and deduct extra expenditure. As a result it helps to generate profitability in
effective manner. The essential requirement of this system that estimating and analysing future
expenditure to perform in effective manner.
Job costing system: Different types of entities operate various activities to bring out
operations and job costing system record all of them. The management of Connect Catering are
using this system to roll up and provide manufacturing cost to different units that are produced
by it. The essential requirement of the system to discriminate expenditure that based on the
different jobs and performed as per the situations.
Various methods of management accounting reports
Management Accounting Report: It is mechanism that is used in the process of
planning, regulating, decision making, and measuring the performance (Farooq and De Villiers,
2019). Management accounting report uses the budget reports is to analyse the employee
performance and their department performance and cost control. Management accounting mainly
focus on the segments in the business. They provide the managers with the accurate and financial
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information. Some of these various methods of management accounting reporting within
Connect Catering Services are as discussed:
Performance Report: Performance report is used to analyse the performance of a entity.
Each and every department should be analyse at the end of a term. It involves collecting of
information, communicating project development and utilization of resources should be decided
in the management team. For the Connect Catering Services, Managers used their performance
to make a important decision about the upcoming of the organisation and to analyse the each and
every employee performance. It modify the management to realize the growth possibility within
the company and identify the overall performance of the company (Khorunzhak, Brukhanskyi
and Ivanyshyn, 2019).
Cost Accounting Report: This report determines the cost of piece that are manufactured
like all raw materials, overhead costs, labour are considered. It is a summary of all the
information related to cost report. In context of Connect Catering Services, they use better
optimization of resources can be achieved all the expenses include inventory, labour costs,
overhead costs. It is also helpful in the organisations to identify where a firm is spending its
money, how much it gain and where money is wasted.
Inventory and Manufacturing Report: Inventory report helps to run the enterprise
without any happening and reduce costs to moving out of stock. In entity, inventory are used to
manufacture goods to be sold and it is the overall current assets of the business. The main
objective of the inventory management is to pitch a proportion between inventory management
and client service. With context of Connect Catering Services, it helps to keep stock, manage
double locations and check exact record keeping. To provide better customer services, fast
delivery, shipping charges is low, reduce costs and meet client demand.
Account Receivable Aging Report: Account Receivable report helps to realize financial
well-being of the entity that determines the power of assets, collections of functions and set the
existing balance in this process. This type of report is interested with succeed of account
receivables for organisations. It helps to keep product and services until the quantity is paid by
the customer on a specific period of time (Bergmann, Fuchs and Schuler, 2019). In case of
Connect Catering Services, it increase the cash flow activities, to identify the doubtful debtors
with the formulation in the account of report, to make the policy will attract the customer in
order for cash purchase. This report helps in decrease non- performing assets of the company.
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TASK 2
Range of management accounting techniques
In the context of business and accounting cost is monetary value that calculated by the
company of manufactured products. It is an expenditure that necessary for manufacturing or
selling products to get ready assets for normal use. It is amount that paid by business for
producing a product, buy stocks and get equipment ready to utilisation in business procedure.
Absorption costing: In this technique companies treated all producing costs in which
consist of fixed and variable manufacturing cost. This type of costing is used by the business to
create inventory valuation that is presented in the accounting books. Total cost modify
proportionately in total activity while fixed cost do not change as activity levels change. Such
costs are not identified as expenditure in the month if a business pays for them rather than they
remain in stock as an asset until stock is sold (Barr-Pulliam, 2019).
Marginal Costing: It is a accounting system that use by the entity for variable costs are
charged to cost units and written off fixed cost in specified period of time. The variable costs are
using for output changes and activated under marginal costing method. It is helping to determine
profitability at various level for the manufacturing and sales.
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TASK 3
Use of planning tools in MA
Budget and budgetary control: Most of the entities are prepared different types of
strategies and plans for controlling expenditure that helps to conduct operational activities.
Budget is a document that prepare by the management to forecast future expenses and income on
the basis of past operational activities. As a result it helps to generate profitability in large
manner and guides to management. Such as, Connect catering create various types of budget like
zero based budgeting, sales, purchase and many others. These are helping top analysing future
situation and help management to allocate funds accordingly.
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In order to facilitate controlling procedure is followed by manager of various entities in
called as budgetary control. It helps to managers to find out the variation in between actual and
budgeted plans. As a result it helps to analysis the actual performance and control those activities
that are not required for the business. Connect catering is concentrating on managers for proper
preparation, coordination and controlling the procedure of allocation of budgets. There are
mentioned different types of planning tools such as:
Zero based budgeting: It is a type of planning tools which is utilised by the manager to
assign funds to various department of business entity as per the necessity. For the preparation of
budget take zero value rather than consider last year budget history. Such as, Connect Catering
service use this method for reduce costs and increase profitability (Gerdin, 2020).
Advantages:
 It helps organisations to reduce their extra activities and focus on achieving their goals by
managing each activity. In Connect Catering Services case, zero based budgeting with
provide them ways to identify their opportunities and many cost cutting ways in order to
remove unproductive activities.
 Allocation of all resources is done efficient with this budgeting which leads to proper
utilisations of available resources. With this budgeting Connect Catering Services can
fully utilise their resources without looking into their past numbers. This will help
concern entity to make their pizzas with good quality of material at sufficient quantity.
Disadvantages:
 Processing of this budget is very time consuming as they are form every year. For
Connect Catering Services it will be difficult to plan their budgets every year. This will
affect their supplies of piazzas to superstores.
 This budget require trained managers and high workforce. As their company is expanding
it will be difficult for them to invest so much at this stage.
Master Budget:
Master budget is a planning tool that include all lower level budget including forecast of
cash flow, financial plan and budgeted finance statements. Its a planning document that
including both operating and financial budget. Operating budget include activity related to
income generation for the firm. Financial budget show firms financial position through inflow
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