Management Accounting Analysis for Connect Catering Services

This report provides a comprehensive overview of management accounting principles and their application. It begins with an in-depth explanation of strategic management and various managerial accounting methods, focusing on their impact on business decision-making. The report then examines different methodologies used in customer relationship management systems. Task 2 focuses on the computation of different types of expenditures, using absorption and marginal costing to prepare financial statements, and includes break-even analysis and variance analysis. Task 3 evaluates, analyzes, and examines various financial management strategies. The report utilizes Connect Catering Services as a case study, illustrating the practical application of these concepts. It also includes discussion on cash budgeting and other financial planning techniques. The report concludes with a summary of key findings and recommendations for effective financial management.

Management
accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
P1. Explanation of strategic management in depth, as well as the compelling content of many
types of managerial accountancy methods..................................................................................1
P2. An examination of the different methodologies used in customer relationship managerial
systems.........................................................................................................................................3
TASK 2............................................................................................................................................4
P3. Computation of various forms of expenditures utilizing correct processes, as well as
preparation of a financial statements using absorption and marginal financial metrics..............4
TASK 3............................................................................................................................................8
P4. Various management strategies utilized in financial management are evaluated, analyzed,
and examined...............................................................................................................................8
P5. Various groups and various approaches of dealing with economic challenges are compared
.....................................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Managerial accountancy is among the most significant and accurate statement as it assists
corporate companies in determining proper and essential judgments that will impact on the
business throughout the longer term, helping the operator to overcome so as to distinguish in the
market (Covaleski, Dirsmith and Samuel, 2017). The foremost aim of accountancy information
is efficient exploitation of existing assets and the actions taken in it are done based so the
business may accommodate the expectations, goals, and expectations of corporation and expand
and succeed in the market. Connect Catering Services firm is located in UK and is offering food
solutions for a prolonged duration. As a result it acquired greater proportion of the marketplace.
This study offers a full monitoring and evaluation of and their prerequisites for performance
management and related components of great value in today's environment. Furthermore, the
article describes different methodologies of the management accounting system, the
administrative costs which have to be calculated using appropriate methods, for example, a
marginal pricing and the absorption prices, for the benefits and disadvantages of diverse
economic management technologies and an assessment of various enterprises and their monetary
challenges.
TASK 1
P1. Explanation of strategic management in depth, as well as the compelling content of many
types of managerial accountancy methods
Financial management focuses mainly on the application of managerial elements to build
and formulate effective decisions that will help the business in the nations in which it operates, to
improve its performance. It detects, analyses, assesses, records and summarises important-value
information reliably and realistically to help the company operate in an early fashion so as to
work in an acceptable direction in the company and to increase its productivity in the long run. It
is a method that aids the corporation's growth and development in the present market
environment, which is both complex and innovative.
An accounting information system is an administrative economic model that an
organisation uses to keep track the success of its organization in order to undertake actions
to enhance productivity if it falls short of the expectations of top leadership. Whilst also
monetary performance is crucial with the planning of the corporation's financial situation

in order to apportion the corporation's existing assets in an effectively and efficiently in
order to assist the organisation enter the market the distinction between planning and
economic bookkeeping is detailed following table-
S. No. Basis of Comparison Management Accounting Financial Accounting
1 Content It is a broad notion that
encompasses all bits of
knowledge, both economic and
non-financial (Dahlan, 2019).
It is a limited idea that solely
covers the economic aspects of
a business.
2 Motive and Uses The fundamental goal of this
sort of accountancy is to make
technical manager's judgement
process easier so that all
actions are effective.
The purpose of this document's
compilation is to convey
financial data to various
investors who are engaged in
the company's operations.
3 Rules, Regulations
and laws to be
followed
It does not contain any rules
that must be obeyed, and it is
only produced for the purposes
of local operations.
There are several elements
which must be observed in it,
including all tax regulations, in
order for it to aid in the
efficient working of the
business.
There seem to be a variety of administration accountancy platforms to choose from, as
mentioned beneath-
 Cost Accounting System- It is a method that aids in the analysis and evaluation of all
expenses involved in the company so that wasteful spending can be minimised, resulting
in increased competitiveness and, in turn, enhanced efficiency and economic growth and
development. It is extremely advantageous because it aids in cost reduction and so
business sales.
 Inventory Management Accounting System- It is a framework that aids in the
management of a corporation’s supply chain which would be commonly referred to as
equities, and all attempts are underway in a consistent fashion in attempt to obtain a
summed up perspective of obtainable raw resources, completed products, and collaborate

throughout advancement such that required orders of stockpiles could be provided well
inside moment, reducing the likelihood of any sort of shortfall in the firm. Its main
advantage is that it aids in order processing, allowing the commercial organization to run
smoothly.
 Job Costing Accounting System- It is a technique wherein expenditures are assigned
based on the work that remains to be improved in order to reduce excessive spending and
improve productivity. This technique also aids in the detailed evaluation within each
current job gains or losses so the one which requires far more concentration is given
preferential treatment. The advantage of this method of pricing is that it aids in the
assignment of relevant activities based on their characteristics (Jarwal, 2018).
 Price Optimisation Accounting System- It is a methodology that is used to calculate the
pricing of a given product such that a permanent pricing can be established that will
provide the business a massive concentration of profitability of the corporation. Its
advantage is that it aids in the reduction of unnecessary expenses, hence improving
current effectiveness.
P2. An examination of the different methodologies used in customer relationship managerial
systems
Monitoring is highly important in any institution since it aids in assessing a reasonable and
accurate image of the financial success so that reasonable steps could be done after viewing the
research to enable the marketplace enhance its position in the market. Such statements should be
reliable and comprehensive in order for a business to depend on them, and the various types of
data utilized by multiple companies are described following table-
Budget Report- In this sort of study, a benchmark is established, and the result is evaluated to
the criteria that were established beforehand. The major goal of this budgeting is to determine
whether there is any divergence in productivity such that the causes for it can even be determined
and necessary correction measures can be implemented.
Job Cost Report- It is a document that assists in assessing the final cost of a project or
assignment so that it could be decreased if it is higher than anticipated.
Inventory and Manufacturing Report- This is a statement that is essentially a summary of all
the commodities owned by the firm in addition to enhancing output by purchasing the proper
level of goods at the proper moment.

Order Information Report- It is a record that aids administration because it contains all of the
corporation's orders, allowing it much simpler for managers to determine the success of the
business.
Accounts Receivable Aging Report- This analysis is about the corporation's consumers and the
length of duration it takes individuals to pay their bills, and it's highly helpful in determining the
corporation's brand reputation.
Performance Report- It is a study that deals with both the corporation's current ability. It
provides a real and objective picture of the success of the corporation and aids in deciding
whether the organization is performing effectively or otherwise.
TASK 2
P3. Computation of various forms of expenditures utilizing correct processes, as well as
preparation of a financial statements using absorption and marginal financial metrics
1. Preparation of income statements:
Cost per unit under absorption costing-
Activity April (£) May (£)
Variable Manufacturing cost per unit 4 4
Fixed Manufacturing Overhead per unit 6 5
Total 10 9
Income statement under absorption costing-
Particulars April (£) May (£)
Sales 16000 16000
Less: Cost of sales 20000 23000
Fixed Manufacturing Overhead 15000 15000
Variable Manufacturing cost 10000 12000
Closing stock 5000 9000
Opening stock 0 5000
Gross loss -4000 -7000
Less: Fixed Non Manufacturing Cost -4000 -4000
Net Loss -8000 -11000

Cost per unit under absorption costing-
Activity April (£) May (£)
Variable Manufacturing cost per unit 4 4
Particulars April (£) May (£)
Sales 16000 16000
Less: Marginal cost of sales 8000 10000
Variable Manufacturing cost 10000 12000
Closing stock 2000 4000
Opening stock 0 2000
Contribution 8000 6000
Less: Fixed Manufacturing Overhead 15000 15000
Less: Fixed Non Manufacturing Cost 4000 4000
Net Loss -11000 -13000
Reconciliation Statement:
Particulars April (£) May (£)
Net loss under absorption costing -8000 -11000
Less: Closing stock -3000 -2000
Net loss under marginal costing -11000 -13000
2 a.
1. Identify which costs are fixed and which costs are variable.
Fixed costs:
Activity Amount (£)
Manager’s Salary 5000
Rent 5000
Insurance 500
Utilities 500
Advertising cost 1000
£ 12000
Variable cost:

Activity Amount (£)
Direct material costs per Pizza 3.50
Direct labour costs per Pizza 1.50
Direct overhead costs per Pizza 0.50
£ 5.50
2. Show the Break-even point using a Break-even graph.
BEP (In units): Fixed cost / contribution per unit
Contribution per unit: Selling Price - Variable cost per unit
= 9.50 - 5.50
= 4.00
BEP: 12000 / 4
= 3000 Units
BEP (In revenues): Fixed cost / PV ratio
PV ratio: Contribution / selling price* 100
= 4/ 9.50*100
= 42.10 %
BEP (In revenues) = 12000 / 42.10 %
= £ 28503
3. What would be the Margin of Safety if the organization managed to sell 2500 Pizzas?
Margin of safety = Sales units - BEP in Units
= 2500 - 3000
= - 500 Units
4. If the manager’s salary is increased to £6,000, how will this affect the BEP in units and in
sales value?
If manager’s salary will increase than it will affect to fixed cost and revised fixed cost will be of
£13000.
New BEP (In units): 13000 / 4
= 3250 Units
New BEP (In revenues): 13000 / 42.10 %

= £ 30878
2 b. Preparation of graph:
Activity Amount (£)
Total Costs (12000+55000) 67000
Revenues per Unit (95000-67000)/10000 2.8 Per unit
Total Fixed Cost 12000
BEP point 28503
3. Variance Analysis Report:
Actual units sold = 12000
Budgeted units sold = 10000
Budgeted price per unit = 9.50
Sales volume variance = (Actual units sold - Budgeted units sold) x Budgeted price per unit
= (12000 - 10000) * 9.50
= 2000 * 9.50
= 19000 Favourable
Flexible budget
Items Actual (£) Budgeted (£) Variance (£)
Sales price 10 9.50 0.50 Fav.
Sales units 12000 10000 2000 Fav.
Revenues 120000 95000 25000 Fav.

Fixed cost 15000 12000 3000 Adv.
Variable cost 5 5.50 0.50 Fav.
TASK 3
P4. Various management strategies utilized in financial management are evaluated, analyzed,
and examined
Preparation is vital as it is the 1st component and other such actions and operations are
dependent on it because it permeates the difference between the existing circumstance, which
would be the organization's corporate placement, as well as the economic opportunities at which
employer needs to have been in the coming years. There seem to be a variety of testing
techniques in use in transfer money because they assist in assessing employees against defined
requirements, and preparing achieves the very same way. Distinct budgets are discussed below in
context with the above mentioned firm.
Cash Budget- It is one of the most significant budget kinds as it deals with financial
income, expenses and inflows and external finances. This budget supports the allocation of funds
in order to be precisely spent without any margin of doubt, which is of significant value to the
company (Masztalerz, 2016). Some of the advantages and disadvantages of the following- Advantages- The manufacturing process is easy and helps reduce extra spending, which
results in higher financial performance.
 Disadvantage- It is quite restrictive and thus there is no creativity or expenditure in
newer markets which may yield significant results in the nearest term. Furthermore, if the
information falls under the incorrect hands could be used versus the corporation.
Sales Budget- It is a technique which helps to achieve a fair distribution of financial
facilities to provide the organisation long-term benefits. The amount required to maintain the
company operating efficiently and without disturbances must also be indicated. Its advantages
and disadvantages are highlighted- Advantages- It would help to attain the strategic objectives in an economical and
productive manner, but in a short period of time, as the major benefit of this budgeting is.
 Disadvantage- This form of budgeting is very intricate and sometimes involves a lot of
concealed expenditures, thus it is not possible for firm to use it frequently owing to the
many prices associated.

Capital Budget- This is a kind of budgeting which deals with capital issues, such as cash
receipts and payments. It helps the organisation to analyse and evaluate the possible costs of
buying a financial instrument so that it might be worthwhile in the longer run. It also helps to
inventory each issue to take sensitive decisions. At the end of each issue.
Its benefits and drawbacks are mentioned in detail below- Advantages- Its benefit is that it assists in making important decisions which is very vital
as it is connected to investment goods items that cost more money for a corporation. It
also aids in finding the right equilibrium in investing, ensuring that neither too much nor
too little is invested (Prihastuti, Wahyuni and Ramadhani, 2018).
 Disadvantage- It is expenditure that is imprecise, so as to know the actual worth of a
substantial character item is impossible, making it complicated to examine the
investment's tremendous value. Owing to the inaccuracies in which it carries, the
availability of capital it really remains crucial.
TASK 4
P5. Various groups and various approaches of dealing with economic challenges are compared
Economic issues arise whenever a corporation doesn't really have a priority on controlling its
resources thus it results in a block to the corporate growth. Thus employing variety of ways to
address money difficulties and thus they are listed below-
 Benchmarking
 Financial Governance
 Key Performance Indicators (KPI)
Basis of Difference Connect Catering Service Salsa Catering Service
Financial Issues The biggest issue with
Connect Catering Services
would be that the corporation’s
earnings are inconsistent and
fluctuate from period to
period, resulting in a lower
degree of revenue (Schoute,
2019).
Salsa Catering Companies is
extending its business by
establishing in new locations,
but revenues are not increasing
at the same rate, making it
easier for the organization to
work in the industry.