Management Accounting Report: Capital Joinery Ltd. Analysis

This report provides a comprehensive analysis of management accounting, focusing on Capital Joinery Ltd. It explores various management accounting systems, including cost accounting, inventory management, job costing, and price optimization. The report delves into different management accounting reporting methods, such as performance reports, accounts receivable reports, cost managerial accounting reports, and budget reports. It also covers cost calculation methods like marginal costing and absorption costing. The report further examines planning tools for budgetary control, analyzes financial problems, and compares organizations' use of management accounting systems. Overall, the report provides valuable insights into management accounting principles and their practical application in a business context.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems..........................................................................................1
P2: Explanation of different methods that are used for management accounting reporting:.......3
M1: Benefits of management accounting systems.......................................................................4
D1: Critical evaluation of management accounting systems and management accounting
reports..........................................................................................................................................4
TASK 2............................................................................................................................................5
P3: Calculation of costs...............................................................................................................5
M2: Accurate application of management accounting techniques..............................................9
D2: Producing of financial reports for accurate application and interpretation of data...............9
TASK 3............................................................................................................................................9
P4: Planning tools for budgetary control.....................................................................................9
M3: Analysis of planning tools..................................................................................................11
TASK 4..........................................................................................................................................11
P5: Comparison of organizations...............................................................................................11
M4: Analysis of financial problems...........................................................................................13
D3: Evaluation of planning tools...............................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting is a process through which the managers of an organization are
able to analyse and interpret the given financial facts, figures and information appropriately for
ensuring that the attainment of the short-term, medium-term and long-term goals and objectives
can be made possible in the future without facing problems and issues. This will be helpful in
making sure that the overall level of efficiency as well as effectiveness can be enhanced. Its
usage can be helpful in helping the firms a lot in making a use of the financial information in a
proper manner. Decisions of various types can be taken by the managers by making its use as it
provides them with the necessary guidance for taking decisions. Capital Joinery Ltd. Has been
selected for the purpose of analysis in this report. This company specialises in the making of
joinery, made-to-measure doors as well as windows. This report will cover an understanding of
the different types of systems, calculation of various costs, explaining the use of planning tools.
Additionally, specific analysis on comparison of ways in which organizations make use of
management accounting systems for responding to financial problems will be covered as a part
of this assignment.
TASK 1
P1: Management accounting systems
Management accounting systems can be used for ensuring that the financial data, facts
and information can be managed in an appropriate manner. Explanation of the management
accounting systems can be done in the following manner-
Cost accounting system- This is a system which helps in ensuring the analysis of the
overall level of costs. This can help a lot in the attainment of the various types of goals as well as
objectives. For a company like Capital Joinery Ltd. It can help in ensuring that the overall
management of the costs can be carried out appropriately.
Essential requirements-
 Assessment of the overall costs can be made within the organizations in a highly effective
manner. Thus the overall level of needs and requirements can be managed in an
appropriate manner without problems and issues.
 This system must be quite helpful in ensuring that the management of the internal costing
needs and requirements can be done in a proper manner.
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Inventory management system- In this system, there should be an assessment of the
level of inventory within the organizations in a highly effective manner. This system must be
able to help the managers a lot in ensuring that their level of stock is managed properly. The
level of efficiency and effectiveness can be maintained in the companies like Capital Joinery Ltd.
So that the stock can be managed in a right manner.
Essential requirements-
 This system makes sure that a detailed assessment of the various stock items is carried
out in an appropriate manner. The level of efficiency and effectiveness within the
management of inventory items can be maintained by raising the overall level.
 This system must ensure that the costs of management of inventory can be identified and
thus the necessary actions can be taken so that these costs can be reduced in a highly
effective manner. The managers of Capital Joinery Ltd. Can make sure that the inventory
level is managed effectively and efficiently in this manner.
Job costing system- In this system, a detailed assessment of a wide variety of job costs
can be done which can be helpful in ensuring that the different types of job costs can be managed
in a proper manner without facing problems and issues. In Capital Joinery Ltd., an assessment of
the various job costs can be made and the ways of reducing these job costs can be applied
effectively and efficiently.
Essential requirements-
 The assessment of various job cost requirements can be made in a right manner in this
particular system. This ensures that the management of Capital Joinery Ltd. Are able to
identify the job costs and find ways of reducing them.
 This system should be helpful in ensuring that a wide range of job costs can be assessed
and the actions be taken for reducing them. For the managers of Capital Joinery Ltd. This
can be quite helpful in achievement of the goals and objectives.
Price optimization system- This system ensures there is a detailed assessment of a range
of prices to be set. This helps the managers of Capital Joinery Ltd. Are able to make sure that the
assessment of the prices to be set can be made and the different types of requirements related to
the pricing can be identified so that the decisions can be made.
Essential requirements-
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 The use of statistical and mathematical models and techniques can be made in this system
for appropriately setting up the various prices. This can help in ensuring that the goals
and objectives in the future can be attained.
 This system can be quite helpful in ensuring that the the prices be set for ensuring that the
level of profitability can be enhanced. Thus in this way it can be quite helpful in allowing
the managers to prepare strategies for the attainment of goals and objectives.
P2: Explanation of different methods that are used for management accounting reporting:
Management accounting report can be explained as an technique which is utilised for the
purpose of analysing financial data of a company. It evaluates current status of an organization
by displaying its financial status of a period of time. It compiles financial information from the
records of accounting and evaluates various information like fund transactions, profitability of
business, operational costing etc. It is prepared with the intention of providing information of
business financial position to manager of an enterprise for enhancing their decision making
which results in increment of productivity level of business. There are various methods of
managerial accounting reporting which are described below in a detailed manner:
 Performance report: It examines performance of working staff of an organization by
addressing outcome of various tasks assigned to employees. It is an essential tool that
outlines performance level of business which enables management team of an
organization to forecast its sustainability of Capital Joinery in upcoming period of time.
Preparation of performance reporting helps managers of an organization regarding
achievement of its long term as well as short term goals. It helps in recording and
analysis of performance level of employees of Capital Joinery. It improves
communication, enhances performance, and improves controlling and monitoring of
workforce.
 Accounts receivable report: It records unpaid invoice balances of an organization along
with time period for which it is outstanding. This recording activity of receivables of
business enables managers of Capital Joinery to evaluates debts of an entity. It avoids
hindrances in flow of cash in business and reduces the risk of bad debts as manager of an
enterprise and adequate analyse and overview amount of goods that is provided at credit
to the customers. Further, it helps in maintaining effective operations of business as
amount in received on time and complexities and risk factors are minimised.
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 Cost managerial accounting report: This report computes and records costs that is
incurred in business, such as, labour cost, material expenses, overhead expenditures etc.
hence, it can be stated that cost managerial accounting report summarizes costing
information of Capital Joinery. Preparation of cost management accounting repost
ensures estimation as well as monitoring of costs that are incurred in day to day activities
of an organization. This serves as a platform for analysis of business expenses so that
unnecessary costs can be eliminated and profitability of Capital Joinery can be enhanced
by improvement in profit margin.
 Budget report: It is prepared for the purpose of comparing actual result of an enterprise
with the pre-established or estimated outcome. It technique is utilised for maintenance of
control over financial results of Capital Joinery. It includes interpretation of information
related to finance which leads to improvisation inn managerial strategic formulation of
Capital Joinery Ltd. It indicates revenue generation as well as expenses of business that
leads to enhancement of productivity and efficiency of an entity.
M1: Benefits of management accounting systems
The determination of the level of costs can be done by making the use of Cost
Accounting System. Determination of the level of inventory and reduction in the overall
inventory costs can be done by making the use of Inventory Management System. Assessment of
the job costs and using appropriate methods and techniques for reducing these job costs can be
made in the Job costing system. Price optimization system can be very helpful in ensuring that
the setting up of prices can be done in a proper manner. Also this system can be useful in
determining the price level properly. Thus in this way this can create advantages for the
management of Capital Joinery Ltd.
D1: Critical evaluation of management accounting systems and management accounting reports
Management accounting systems and Management accounting reports can be integrated
in a proper manner within the organizational processes. For a company like Capital Joinery Ltd.
This can be highly helpful because it will help a lot in ensuring that the different types of
requirements can be managed in a proper way for ensuring the attainment of the goals and
objectives in the future.
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TASK 2
P3: Calculation of costs
Various ways can be used by the organizations so that a proper assessment of the costs
can be made in detail. The various methods for the determination of costs are explained as
follows-
Marginal costing- It is a method through which the assessment of the profitability level
in the organizations can be made and thus in this way it can be quite helpful in ensuring that the
Income statement can be made. Also with its use, the calculation of Break-Even Point can be
made properly. An organization does not earns profits and neither does it incurs loss when the
use of this particular method is made. In Capital Joinery Ltd., the use of this particular method
can be made.
Advantages-
 For the assessment of Break-even point the use of this particular method can be made. It
is a point where neither profits are earned by the organization and nor does it incurs
losses.
 Using this method is very easy. Thus in this way the assessment of the wide variety of
needs and requirements can be made in a proper manner.
Disadvantages-
 In this method, the assessment of wide variety of techniques of absorption of overheads
cannot be made. This can create an impact on the different types of organizations.
 This technique can affect the organizations as it may not be fully accurate to apply within
the processes. Thus in this way it can affect the different types of firms.
Absorption costing- It is a technique through which the assessment of the various types
of overheads as well as costs can be made in a proper manner. Segregation and Absorption of the
overheads can be done by using this particular method in Capital Joinery Ltd. which can thus
create a lot of advantages for the different types of organizations.
Advantages-
 In this method, a detailed assessment of a wide variety of overheads can be made. In this
way the required help can be provided to the management.
 This method can be helpful in determining accurate results. This will be quite helpful in
the determination of the results in a proper manner.
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Disadvantages-
 This technique can create a disadvantage if the accuracy level of the costs which have
been segregated is low.
 This method is not as easy to understand and apply in the different types of processes. In
this way an impact can be created on the different types of firms.
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M2: Accurate application of management accounting techniques
The use of techniques like Marginal and Absorption Costing can be made in the
organizations so that the assessment of the income and profitability level can be made in detail.
This therefore helps the management of a company like Capital Joinery Ltd. To be able to attain
the financial goals and objectives in the future.
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D2: Producing of financial reports for accurate application and interpretation of data
Financial reports can be highly helpful for the managers because they can help them a lot
in ensuring that they are able to summarise the key facts, data and information properly.
Therefore it is quite essential for the management of Capital Joinery Ltd. To focus on the
preparation of these reports which will ensure that the data analysis and interpretation can be
carried out appropriately.
TASK 3
P4: Planning tools for budgetary control
Preparation of a wide variety of the budgets can be done so that they can create a benefit
for a particular organization in the future. The explanation of the use of budgets can be done in a
company like Capital Joinery Ltd. It can use the following types of budgets-
Cash budget-
It is a budget in which an assessment of the inflows as well as outflows of the cash
receipts and payments can be made in a proper manner. In Capital Joinery Ltd. It can be helpful
for maintaining the overall liquidity position and ensuring that the availability of the cash
resources remains on a higher side within the company.
Advantages-
 In the organizations, the preparation of this budget can be done easily. Thus in this way
this offers Capital Joinery Ltd. a specific advantage.
 The use of this budget is quite helpful for the companies to be able to assess the overall
cash and liquidity level. For the management of Capital Joinery Ltd., this can create a
specific advantage.
Disadvantages-
 In this budget, the level of flexibility of the organizations is affected. This is so because a
particular limit is set for the cash expenses. In Capital Joinery Ltd., this can lead towards
a disadvantage.
Production budget-
In this budget, the different types of production requirements of a wide variety of the
organizations can be determined. Thus in this way the managers of Capital Joinery Ltd. Can
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make sure that they are able to ensure that the production is carried out in a right manner without
facing problems and issues.
Advantages-
 In this budget, the assessment of a wide variety of the production requirements can be
made properly. The management of Capital Joinery Ltd. Have an advantage here.
 In this budget, the production costs of the firms can be identified and the actions can be
taken for reducing them. In the context of Capital Joinery Ltd. An advantage can be
created here.
Disadvantages-
 Preparation of this budget can be costly in the different types of organizations. The
managers of Capital Joinery Ltd. faces a disadvantage here.
 It is quite time-consuming for the organizations to prepare this budget. Thus in this
manner a disadvantage can be created for the management of Capital Joinery Ltd.
Master Budget-
In this budget, the assessment of a wide range of requirements which are related with the
organizations can be made. Thus in this way it can make sure that the managers of Capital
Joinery Ltd. Are able to make its use for achieving a higher-level of efficiency as well as
effectiveness in their budget preparation.
Advantages-
 The working pattern of the various types of organizations can be assessed easily by using
this particular budget. In Capital Joinery Ltd. This can lead towards creation of an
advantage.
 This budget can be quite helpful for the firms to make sure that they are able to achieve a
higher-level of efficiency and effectiveness in the budget preparation. This can be helpful
in the providing of desired help for the management of Capital Joinery Ltd.
Disadvantages-
 The preparation of this type of budget can create difficulties for the organizations because
its preparation requires the application of higher-level of skills. If the employees of
Capital Joinery Ltd. Do not have this skill then this can create a problem for the
company.
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 Budget preparation process is not only time-consuming but is also costly in nature.
Therefore, this can be helpful for the managers of Capital Joinery Ltd. To be able to
achieve the desired goals and objectives.
M3: Analysis of planning tools
Plans like short-term plans, medium-term plans and long-term plans can be used when
the use of planning tools is made within the companies. Thus it is quite important for the
managers of the company that they are able to ensure that the analysis and interpretation can be
made in a proper manner by using these tools.
TASK 4
P5: Comparison of organizations
Financial problem- It refers to a situation within a company where various problems and
issues can be faced by the organizations. Capital Joinery Ltd. Faces certain problems like the
other organizations. Some of these problems are explained in the following manner-
 Excessive costs in the Production department- In Production department there are
excessive costs. Thus in this way the management of Capital Joinery Ltd. can face a wide
variety of problems and issues. This can increase the overall level of costs and thus can
create an overall impact on the level of operations.
 Low profits due to setting up of wrong price- Capital Joinery Ltd. Has been reporting
low profits from the last few years because a wrong price has been selected by the
company for the purpose of aiming to achieve higher-level of goals and objectives. Thus
in this way this can create an overall impact on the level of operations in the organization.
Techniques to be applied-
 Balanced scorecard- The overall assessment of the level of performance within the
organizations can be made by making the use of this particular technique. In an
organization like Capital Joinery Ltd. The use of this particular method can be made so
that the company is able to solve the financial problem of Excessive costs in Production
department because by assessing the level of costs in this department the different sorts of
methods can be used so that the excessive costs are controlled.
 Financial Governance- Through the use of this particular method the managers of a
company can ensure that the identification, organizing and the management of the
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financial transactions can be done in a proper manner. Through this technique, the
financial problem of low profits due to setting up of wrong price can be solved because
by using it the governance of the organizations can be managed appropriately without
facing problems and issues and thus the price-setting area can be looked upon and the
desired improvements can be made properly.
Comparison of organizations
Basis Asda Aldi
Financial problem Asda is facing a financial
problem of mismanagement of
stock items which is impacting
their overall level of
operations.
Aldi is facing a financial
problem of excessive level of
job costs which is creating an
overall impact on the level of
performance of the company.
Use of Management
accounting system
Asda is making the use of
Management accounting
system of Inventory
management system.
Aldi is making the use of
Management accounting
system of Job costing system.
Application of the system In Asda the application of this
system can be done by
ensuring that the management
of the stock items is done by
tracking the flow of different
types of inventory items.
In Aldi the application of this
particular system can be done
by ensuring that the job orders
are managed in an appropriate
manner effectively and
efficiently.
The above discussion states that the use of management accounting systems is helpful for
the organizations so that they are able to respond in an effective way to the various financial
problems. Thus it can be said that the management of Capital Joinery Ltd. Can learn from the
managers of both Asda and Aldi and can make sure that the overall goals and objectives can be
attained. The Cost Accounting System can help in solving the problem related with Production
and the use of Price Optimization System can be made so that the problem related with Prices
can be solved.
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M4: Analysis of financial problems
With the use of appropriate methods and techniques, the different types of organizations
are making sure that they can solve the financial problems in the right manner. Capital Joinery
Ltd.'s managers can make sure that appropriate methods and techniques can be used for solving
them in the right manner. Thus in this way the company will be able to ensure that it can achieve
its different types of goals as well as objectives in the future.
D3: Evaluation of planning tools
Organizations can make the use of planning tools in the right manner for creating plans to
be used in the future. Therefore it can be said that for a company like Capital Joinery Ltd. It is
quite important that it is able to solve its financial problems in the right manner. This will be
quite helpful for the company to be able to attain the sustainable success.
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CONCLUSION
The above report can be concluded by stating that Management accounting is a process
which can help a lot in ensuring that the given financial facts, figures and information can be
used so that the decisions can be taken in the future. Thus in this way the different types of short-
term, medium-term and long-term decisions can be taken. Management accounting systems are
helpful for the firms and have different sorts of essential requirements. Its reports can be helpful
for analysing and interpreting the financial details appropriately. The assessment of the level of
costs can be made for ensuring that the profitability level can be determined. Use of planning
tools for budgetary control can be made for ensuring that the use of appropriate plans can be
made. A comparison of different types of organizations can be carried out which will be helpful
in the assessment of financial problems and solving them.
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