Analyzing Cost Reports and Improving Performance at Bitter Ltd.

This report provides a comprehensive analysis of cost reports and key performance indicators (KPIs) and suggests measures to improve performance within a business context. It discusses how cost sheets are prepared and analyzed for controlling inventory, checking efficiency, and preparing incentive plans. The report differentiates between quantitative and qualitative indicators, input and process indicators, and emphasizes the use of SMART goals. Specific measures for improving performance include cost control through assigning responsibilities and eradicating unwanted expenses, enhancing product quality with additional features and quality standards, and increasing business value by maintaining a competitive edge and improving financial conditions. The role of a management accountant in maximizing shareholder wealth by increasing business value, reducing costs, and enhancing firm capabilities is also highlighted. The report references academic sources to support its arguments.

TASK 2

2.1 How cost reports are prepared and
Analysed?
 Cost sheet or cost statements are used for various purposes for top
authorities which includes controlling the inventory in an organisation,
checking efficiency and preparing of incentive plans.
 These reports are very helpful for purpose of analysing the actual costs
that takes place in enterprise to meet short term liabilities.
 Financial accounting will helps in posting journal accounting entries that
are needed to update the ledger accounts for inventory cost allocations.

Cont.………..
 In costing terminology accounting reports that reflects cost of products
are known as cost sheets which are prepared in different formats such
as absorption and marginal cost sheets that help to reconcile the
amount of profits generated by a corporation.
 It plays vital role in organisation in ascertaining different way to learn
about the areas of a business that are the most profitable and also
those, that require more cost to spent.
 It is created before the start up of a project as the costing reports
provide better estimation about the estimation to which a project will
cost and allowing a venture to plan for enhancing the profit margin.

2.2 Various Performance Key indicators
Key performance indicators refer to a set of values which help to
measure the performance of business in this competitive market.
Quantitative indicators- The financial performance of an organisation is
measured by increasing numbers from past to the future figures.
Qualitative indicators- This will reveal the efficiency, quality and value of
business, attributes and different features which can't be expressed in
numerical forms.

2.2 Various Performance Key indicators
Input indicators- It will reveal the kind of resources that business can use
in order to generate higher output.
Process indicators- This will depict the overall business process which an
enterprise can use to generate higher returns

Cont.…….
There are various performance indicators that will drive the business from present to the future
by achieving all its aim and targets. Some of them are given as below:
Pre-determined businesses processes
Defining all guidelines and requirements of business with that of existing business
process

Cont.…….
Bitter Ltd. can choose the process that will generate higher returns such as quantitative
and qualitative.
Commonly used KPI in the business is using SMART goals which is specifically
enhancing the business value by eliminating all the malpractices in the enterprise.

2.3 Measures to improve performance
Being the management accountant of Bitter ltd, their main responsibility
is to maximise the overall wealth of shareholders by increasing the
value of business, reducing cost and increasing the capability of the firm
by enhancing their strengths.

2.3 Measures to improve performance
Cost
It is that factor which is centre of attraction of every business enterprise as
every one wants to eliminate their costs. Management accountant can
impose control on the expenses by assigning separate roles and
responsibilities to the controller who will make sure that only those
expenses will be sanctioned which are directly involved with the
production and all unwanted indirect expenses are eradicated.

Cont.…….
Quality- Including additional and attractive features in the product or services helps
business in order to attract large number of audiences. The quality of business in directly
related with the product they are delivering to all customers. Different quality standards
like ISO, TQM and six sigma are used in the business to automate the functioning of
business.
Value- Existing brand image of the business can be maintained by staying ahead in
terms of competition and using innovative technologies which helps business in
creating loyal customers. Value can be increased by improving the financial condition
of company to stay on the top position and by beating all their competitors.

REFERENCES
 Bagliani, M. and Martini, F., 2012. A joint implementation of ecological footprint
methodology and cost accounting techniques for measuring environmental
pressures at the company level. Ecological Indicators. 16. pp.148-156.
 Ball, R., 2013. Accounting informs investors and earnings management is rife: Two
questionable beliefs. Accounting Horizons. 27(4). pp.847-853.
 Bebbington, J., Unerman, J. and O'Dwyer, B., 2014. Sustainability accounting and
accountability. Rout ledge.
 Bovens, M., Goodin, R. E. and Schillemans, T. eds., 2014. The Oxford handbook of
public accountability. OUP Oxford.
 Bozkurt, O., Dokur, Ş. and Yildirim, A., 2014. The Importance of Cost Calculation
Method in the Accounting and Management of Turkish Operating Costs. A
Research within the Scope of TAS-2. International Journal of Academic Research in
Accounting, Finance and Management Sciences. 4(2). pp.38-46.

Thank You