Report: Company Board Management, Costing Methods, and Statements

This report provides a comprehensive overview of company board management, delving into the crucial roles of stakeholders in board meetings and the construction of financial statements to meet management needs. It examines the importance of shareholder engagement, the involvement of auditors, managers, and risk management teams, and the construction of financial statements, including the statement of financial position, income statements, and cash flow forecasts. The report also analyzes the advantages and disadvantages of marginal and absorption costing methods, highlighting their application in different business contexts. The report identifies activity-based costing as suitable for specialized service garages, construction companies, and marginal costing for car manufacturing industries. The report concludes by summarizing the key aspects of company board management, emphasizing stakeholder engagement, financial statement analysis, and costing methodologies.

REPORT ON
COMPANY’S
BOARD OF
MANAGEMENT

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Part A....................................................................................................................................................3
Part B.....................................................................................................................................................4
CONCLUSION.....................................................................................................................................5
REFERENCES......................................................................................................................................6

INTRODUCTION
Company board management is the function which plays an crucial role for any
enterprise. It is the situation of discussion where the chief members of organisation discuss
success of business operations. The report will outline involvement of stakeholders in board
meeting of firm and construction of financial statement. Also, it will identify advantages and
disadvantages of absorption and marginal costing and use of costing method in different
companies.
MAIN BODY
Part A
a) Relevant stakeholders as per conceptual framework
Shareholder engagement in board meeting is the most crucial part of meeting as it
helps the directors in determining interest of every individual with companies operations Like
in case of Tesco board meeting engagement of 7 members is must in meeting which
comprise, shareholders because these are the investors and the value of companies services
can directly impact their value of shares (Horngren, Bhimani and Horngren, 2012). Further,
involvement of auditor is mandatory because he or she is the person who helps the firm in
determining cost functions of enterprise. The manager is the person who has control over all
the financial information regarding business and its profits and losses. Apart from this, there
will be managerial head will share information regarding manpower requirement. In addition,
risk management team gets involve in meeting to share details about areas of business which
involves risk and can become threat. The board meeting also comprise of member from, bank
who analyse the firm ability to payoff liabilities and loans on time, creditors, and government
who seeks information about functioning of business environment as per interest of
environment and public
b) The construction of financial statement to meet needs of company board management
The construction of financial statement to meet the needs of board management require
documentation which comprise, statement of financial position (balance sheet), which determines
the balance of assets and liabilities of organisation. In addition it includes Statement of activities

which is income statement that holds details presentation of organisation incomes and expenses.
On the other hand, it includes Cash flow forecast, which helps the management in determining
cash flow management. Further, the financial statement helps in framing Actual results compared
to budget. It is the entry that helps the business in comparing and contrasting difference in
expenses as per planned budget. However, the statement also involves Operational figures such
as, cost per unit of services that have in calculating detailed information regarding products and
business operations (Nilsson and Stockenstrand, 2016). Thus, this financial information assists
board members in making decisions and setting appropriate direction for business activities. In
this the motive of the members is to reduce cost investment and to improve cost effectiveness of
organisational activities. Engagement of board members in planning requires trend analysis,
information about business and business environment as it is the factor which directly influences
financial projections and budget plan. Apart from this, it is important for the management to
included statement of change in equity because it comprise record of all equity shares, retained
earnings, performance shares and dividends which were paid and payble (Wu and Zhang, 2014).
Part B
a) Advantages and Disadvantages of marginal and absorption costing
Marginal Costing
Advantages Disadvantages
 The costing method is helpful in
differentiating between fixed and
variable cost.
 It is the accounting method which
helps in reporting profits and
recording cost functions.
 This method helps in treating variable
cost as product cost as it keeps on
fluctuating.
 It demonstrates relationship between
volume, price and cost.
 In this costing method focused cost is
recorded as period cost and therefore
recorded in account of profits and
 The major limitation of this method is
that it makes use of past data for
future event which can be uncertain in
many business situations.
 It eliminates consideration of fixed
cost which is helpful in making
production decision.
 The method oversimplifies fixed and
variable cost.
 It do not recognise long run operation
where sometimes fixed cost turns into
variable.

losses (Fan and Nixon, 2015).
Absorption Costing
 It clearly indicates necessity of
involving fixed production cost in
product cost.
 The pricing considered in this costing
method involves all possible cost
which helps in easy decision making.
 It helps in conforming matching and
accrual concepts which are required
to compare revenue and cost of
financial year.
 In this system the company avoids
separating variable and fixed cost.
 The method enables difficulty in
comparing cost which leads lack of
control on cost function.
 The method is not helpful in making
managerial decisions.
 The calculation of this method
involves fixed cost to which there is
no reason in accounting terms.
 This costing method cannot be
applied at the time of preparing
flexible budget.
b) Identification of costing method according to type of business.
i) Activity based costing method is used by garage specialist servicing vans, cars, and many
other vehicles because this method helps the business in tracing cost of servicing according to
product. This costing method recognize the affiliation between product, activities and costs,
that helps in determining indirect cost regardless of any other cost calculating method.
ii) Activity-Based Costing (ABC) systems is used by construction companies as it focuses on
allocation of overhead. Apart for this it is the costing method which assists the management
in determining cost of every function which makes evaluation easier (Javid, Hadian and
Salehi, 2016). Further, it also helps the firm in determining cost by categorizing and
segregating information regarding every business activities.
iii) Car manufacturing industry generally make use of marginal costing method as it is the
costing technique which allow the business in differentiating between fixed and variable cost
method. Moreover, it is the method that helps in managing variable cost as product cost as it
keeps on fluctuating.

CONCLUSION
The report summarized companies’ board management which involve stakeholder
engagement and appropriate construction of financial statement that comprise detailed
analysis of organisation sand its functions. Also, it outlined abut benefits and limits of
absorption and marginal costing method.

REFERENCES
Books and Journals
Wu, H. and Zhang, D.X., 2014. On the effect of corporate performance based on venture
capitalists entering the listed company's board of directors. In Management Science
& Engineering (ICMSE), 2014 International Conference on. (pp. 1164-1169).
Fan, Y. and Nixon, M.A., 2015. A new approach for joint venture stakeholder analysis: the
impact of a parent company’s organisational dimensions on its project risk profile.
International Journal of Project Organisation and Management. 7(1). pp.1-14.
Nilsson, F. and Stockenstrand, A.K., 2016. Financial Accounting and Management Control.
Springer International Publishing: Imprint: Springer.
Javid, M., Hadian, M. and Salehi, M., 2016. Application of the activity-based costing method
for unit-cost calculation in a hospital. Global journal of health science. 8(1). p.165.
Horngren, C.T., Bhimani, A. and Horngren, C.T., 2012. Management and cost accounting.
Harlow: Financial Times/Prentice Hall.