Management Accounting Report: Income Statements and Budgeting

This report on management accounting provides a comprehensive overview of the subject, focusing on the application of accounting principles within the context of Tech UK Limited. It begins by defining management accounting, contrasting it with financial accounting, and emphasizing its importance in decision-making. The report delves into various aspects, including cost accounting systems, inventory management, and job costing. It analyzes the preparation of income statements using both absorption and marginal costing methods. Furthermore, it explores the use of budgets for planning and control, highlighting different types of budgets like master budgets, operating budgets, and cash flow budgets. The report also presents managerial accounting approaches and concludes with a summary of key findings and recommendations. This report is designed to provide a practical understanding of management accounting principles and their application in a business setting, offering valuable insights into financial analysis, budgeting, and costing methods.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explanation of management accounting and the essential requirement of management
accounting system.......................................................................................................................1
(II) Importance of management accounting in decision making tool.........................................2
(III) Cost accounting systems .....................................................................................................3
(IV) Inventory management systems..........................................................................................3
(V) Job Costing system...............................................................................................................3
P2 Determining the managerial accounting reports ...................................................................3
TASK 2............................................................................................................................................4
P3 Prepare income statement for the month of September using: .............................................4
TASK 3............................................................................................................................................5
P4 Explaining the use of budgets for planning and control purposes.........................................5
TASK 4............................................................................................................................................8
P5 Presenting management accounting approaches. ..................................................................8
CONCLUSION ...............................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Management accounting is the process of managing the accounting task is systematic
manner. It helps to perform in better manner. Company take full advantage by adopting the best
possible form of managing accounting. Moreover, it is the overall process of preparing
management reports and accounts that provide accurate and timely financial and statistical
information required by managers to make day to day and short term decisions. Present report
will be based on management accounting. For that, Tech UK limited company will be taken into
action. It is the special charger for mobile telephone and other carry on gadgets will be make.
Besides, this report will help company to measured the reasons of complained about the lack of
financial information to improve their decision making.
TASK 1
P1 Explanation of management accounting and the essential requirement of management
accounting system.
Similarities:
First and foremost similarities between financial and management accounting is that they
both are providing accounting information to users, its main purpose is to provide the best
possible outcomes to existing and potential investors, lenders and creditors so they can easily
make better target market share things (Chiwamit, Modell and Scapens, 2017). Along with that,
another similarities between both of them is both the reporting generating financial reporting for
the company to make better successful business. Management accounting and financial
accounting has generates balance sheet, Income statements, statements of cash flow etc. it helps
to focus on the actual company positions.
Distinguish management accounting from financial accounting
Basis Management Accounting Financial Accounting
Objective The main objective of the
management accounting is to
assist or to provide
management planning on
different issues in the company
Besides, financial objective of
the company is to provide the
best guidelines and
information system to the
company.
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(Christ and Burritt, 2017).
Time Frame Management accounting
reports prepared when its
required in the organization. It
depends on the financial
projects and plans.
Financial accounting reports
prepared at the end of the
annual period or at the end of
the every year to defined the
actual position of the
company.
User Management accounting
reports user are only internal
management.
Internal and external parties
both are includes.
Publishing and auditing Neither published nor audited
by statutory auditors.
Financial reports must be
published and audited by
statutory auditors to check the
company performance.
Format It has not been some specified
format.
It has specified format and
structure.
(II) Importance of management accounting in decision making tool.
Management accounting is the process of making reports and accounts that provide
accurate and timely financial and statistical information to managers along with that, whichever
is the process of making good task oriented process. More apart, management accounting is the
process of making good task oriented process (Cooper, Ezzamel and Qu, 2017). More apart, it
helps in various roles such as Helping forecast the future : it helps in making future decision
making approach by forecasting the approaches that where should company needs to invest, what
type of equipment Tech UK limited needs to adopt. However, management accounting is the
moreover, enlarging process of working which helps to take any decision making approach.
Helping in Make or Buy decisions: it is the another process of working which helps to
make the proper working environment in the company. Management accounting is the more
flexible and best processing level. Management accounting will easily measure the process and
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accounting method which helps to take the decision. Through management accounting, insights
will be developed in more systematic manner.
There are some more forms where company makes better decision making process such
an in making forecasting cash flow, helping understand performance variances, analyzing the
rate of return etc (Eldenburg, Krishnan and Krishnan, 2017).
(III) Cost accounting systems
Cost accounting system is a systematic framework used by firms to estimated the cost of
the products or profitability analysis, inventory valuation, cost control. It is the critical system to
estimate the accurate cost of the overall process of product making. It also helps to knowing
which products are most profitable for the company functions. Moreover, cost accounting system
is the overall framework of estimating the closing value of material inventory, work in progress
and finished goods, inventory for the purpose of financial statements' preparation.
(IV) Inventory management systems
Inventory management software is the system software under which company measure
and tracking the records of stock, sales and delivers (Eldenburg, Wolcott and Cook, 2016). This
process generally used in manufacturing plant, where raw material will be used in the form of
making finish products. This process will help Tech limited to maintained proper information of
the raw material and equipment. Along with that, it will be helping and enlarging the process of
making work. It is the ongoing process of moving parts and products in order to get the best
productive results.
(V) Job Costing system
This system of management accounting has defined a systematic manufacturing costs to
an individual products and services. This system has been used in those organizations where
more than one product has been used or products are different from each others. It is the another
process of making good process of making goods oriented work (Fullerton, Kennedy and
Widener, 2014). Apart from that it will also work in more efficient manner to take the better
target market goals.
P2 Determining the managerial accounting reports
Different types of managerial accounting reports
Financial Reports : It is the report which helps to take care the needs of the business
operations. It helps to make the better performance level of work. It is the process of making
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good task oriented goals and task performance level. Financial report is the most required and
better technological performance level of work. There are some essentials reports which is very
much essential for the company such as balance sheet, income statements, which helps to analyse
the actual process of making performance (Goddard and Simm, 2017).
Budget Report : it is the another report which is the fundamental report in managerial
accounting. It is the necessary report to assess some essential forms of making goods. It is the
process of making good task process. Along with that, it will be the better opportunity level to
make sure the better opportunity level.
Accounts Receivable Aging reports : this is the another essentials reports which helps
to make the better opportunity and growth for the organization. It helps Tech limited to offer the
credit facility to consumers. It enables company to make the proper changes or measuring the
credit balances according to age typically including separate categories.
Job Cost Reports : Job cost reports provides the side by side view of the total cost
accursed in a single project compared to the expected revenue yielded by that project. This report
helps to analyze the job evaluation on the basis of better objective task (Messner, 2016).
Presenting Financial information
Financial information is the most challenging and competitive task oriented task for the
every organization. It gives efficiency and level of performance to the company in order to
handle the overall situation and performance for the company organizations. Furthermore,
financial information and statements will be more convenient and sufficient to define the actual
situation making performance.
TASK 2
P3 Prepare income statement for the month of September using:
(I) Absorption Costing
Absorption costing is the system which helps to evaluate the proper evaluating process of
making method and performance. It is also known as full costing method, overall it includes, cost
of material, labor, fixed and variable overheads etc (Otley, 2016). it takes help from their
essentials components such as direct material, direct labor, variable manufacturing overhead etc.
Income statement for absorption cost Tech (UK) Limited as on 1st September 2010
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Particulars Amount
Sales 1500*35 52500
Less: COGS
Direct material 2000*8 16000
Direct Labor 2000*5 10000 26000
Fixed Production overheads 15000
cost of production 11000
Closing inventory 500*20 10000 1000
Gross Profit 53500
Less: Variable overheads 2000*5 10000
Less: Fixed production overheads 2000*5 10000
Less: selling and administrative fixed over heads 10000
Less: selling and administrative variable overheads 7875 37875
Net profit 15625
(II) Marginal Costing methods
Marginal costing associated with all expenses costs such as manufacturing and particular
product and is required for generally accepted accounting principles. Moreover, marginal costing
helps company to make better target performance. It is the overall process of making work.
Income statement for marginal costing Tech (UK) Limited as on 1st September 2010
Particulars Amount
Sales 1500*35 52500
Less: COGS
Direct material 2000*8 16000
Direct Labor 2000*5 10000
Less Closing inventory 500*20 10000
Less: Variable overheads 2000*5 10000 6000
Contribution per unit 46500
Less: Fixed production overheads 2000*5 15000
Less: selling and administrative fixed over heads 10000
Less: selling and administrative variable overheads 7875 32875
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Profit 13625
On the basis of above calculation it has been seen that, along with that, it will be more
challenging and process making work. Overall, making process gives better performance level of
work. Along with that, it will be more enlarging and effective process. As per the calculation
Tech limited has been given better performance level. It will be enlarging the idea and according
to them it will be taking net profit of 15625.
TASK 3
P4 Explaining the use of budgets for planning and control purposes.
(a) Different kinds of budgets
Master budget: It is the combination of all different budgets in the company. It shows the
complete picture of actual activity or level of financial position of the organization. It includes
some factors like sales, operating expenses, assets and income streams to allow companies to
establish goals and evaluate their overall performance.
Advantage
 It helps Tech limited to check the overview of the company budget. At the end it shows
the actual earning and expenses of the company (Schaltegger and Burritt, 2017).
 It enables to evaluate the ability power of the firm for further planning tools. Master
budget includes which department having how much cost and effective management
skills.
Disadvantages
 It involves lack of Specificity.
 Difficult to read and update.
Operating Budget : Operating budget is helpful to forecast the expected income and
expenses. It gives better essential performance level of work which helps company to make
better decision making approach and power. It includes all operations and task oriented tools
such as sales, production, labor costs, materials costs, overhead, manufacturing costs, and
administrative expenses.
Advantage
 it helps to manage the current expenses
 Projecting future expenses
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 Enable to meet company budget essentials and requirements.
Disadvantage
 Operating budget are bureaucratic.
 Involves overall aping activities.
Cash flow budget: Cash flow Statement is the budget which helps to explain cash which goes
out and what comes in. it gives better opportunity and growth in order to meet the needs of
company by preparing the better opportunity and growth (Goddard and Simm, 2017). Cash flow
statements determines the better opportunity to provides better advancing performance growth.
Advantage
 Cash flow budget helps to inform company weather present cash is sufficient for the
company or not.
 It also helps to identify that where should company needs to collect the better
performance level and make better objective and task oriented performance.
Disadvantage
 This might be create distortions. This not equate to profit.
(b)Budgeting process
Update budget assumptions : it is the first process of budget under which company
undertake the all necessary activities which is essential for the organization. With the help of last
financial budget company makes further budget growth (Goddard and Simm, 2017).
Review bottlenecks: another process which measures the best technological growth.
This process helps company to generate better opportunity and growth.
Available funding: it is the another funding level of work. Under which company makes
better perform or collect funding for the organization (Cost Accounting Systems. 2013).
Step costing point : in this process step costing will be incurred during the likely ranges
of business activities.
Create budget costing: it creates best budgeting instructions for the manager to
implement the best performance level of work (Fullerton, Kennedy and Widener, 2014).
(c) Importance of budget as a tool for planning and control purposes.
Budget is the most crucial and essential point of the organization which helps to innovate
new advancing process making task and all over the process. Budget makes new opportunity and
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growth for arranging new services or growth. Besides, budget makes all process effective and
efficient process of making good task oriented process. Besides, it gives priority to the things
which is very essential in the organization functions. Along with that, it will be more challenging
and cost effective process to watching the better opportunity and growth. This helps to avoid the
unwanted techniques and growth (Chiwamit, Modell and Scapens, 2017). More apart, this will
be the best challenging task process for growing the better opportunity and growth. However,
budget is the process of taking good things and helps company to make better opportunity and
growth.
TASK 4
P5 Presenting management accounting approaches.
Balanced score Card: Balanced score card is the overall performance level scale which
makes better performance level of work. Besides, it will also very much helpfulness to evaluate
the better productive task (Cooper, Ezzamel and Qu, 2017). With the help of score card it makes
clear that, how much company perform better. It is extensively used by the all organization to
ensure their performance level of work.
Key Performance Indicator: it is the another process of making good things, this makes
better transforming goods and services. This is the most demonstrating working level of
performance to make sure the better opportunity and growth.
Bench marking: Bench marking is the set of standard target market growth. Which
makes the better transforming growth. It helps to make the better performance level of working.
This must provides company effective working performance. It belongs better opportunity and
growth.
Financial Governance: it is the set of code of conduct which makes very much required
and task oriented goods and making good performance level of working. It helps to ensure better
performance level of the company in order to meet the needs of the organization. Moreover, it
will be the great doing things which helps to make the best technological performance level.
Moreover, it will help company to make the best technological growth to Tech limited company
through they generate more profit revenue. Which helps to make the better opportunity task
oriented goods and services (Eldenburg, Krishnan and Krishnan, 2017).
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CONCLUSION
From the basis of above section it can be concluded that management accounting is the
foremost function of the organization which controls. Present study based on management
accounting of Tech UK limited, Where all different aspects of accounting has been discussed.
Besides, it will also discuss better opportunity and growth. Along with that, it also explained the
long term process of making goods task oriented goals.
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