Cost Analysis, Performance Indicators, and Quality at Steam Yard

This report provides an analysis of management accounting principles applied to Steam Yard, focusing on cost report preparation, analysis, and the use of performance indicators to identify potential areas for improvement. It suggests strategies for cost reduction and quality enhancement, including cost analysis, feedback collection, and the implementation of quality improvement tools like check sheets. The report emphasizes the significance of costing in organizations and concludes that by considering financial statements and ratio analysis, Steam Yard can improve its operations and profitability. The study also highlights the importance of quality improvement tools for meeting customer needs effectively. References to relevant academic sources are included to support the analysis and recommendations.

LO 2
MANAGEMENT ACCOUNTING

INTRODUCTION
In order to operate efficiently in the market
it is necessary for every business to reduce
overall cost so that profit margin can be
enhanced easily.
Further, cost reports are prepared on
continuous basis through which business
can know the major areas where financial
resources are allocated.

Contd.
Apart from this, different performance
indicators are present through which
business can know whether its operations
are carried out efficiently or not.
For the present task Steam yard has been
undertaken as one of the coffee shop
operating in UK. Various tasks have been
covered in the study which includes quality
improvement tool etc.

2.1 How cost reports are prepared
and analyzed
Cost reports are prepared by business after
considering all the principles of cost
accounting. Further, main focus is on
segregating cost such as total direct,
prime , work, cost of production etc.
Moreover, it is well known fact that while
producing coffee steam yard has to incur
different type of cost due to which cost
reports are prepared on the basis of which
it is possible to know the overall cost
allocated in different activities

Contd.
. Through cost reports it is possible for business
to highlight the total cost along with cost per
unit of the commodities which are incurred in
producing coffee. It assists in determining the
selling price of the coffee on the basis of which
steam yard offers product to its target market.
In short cost reports are effective for the
business through which it is possible to know
the overall costs indulged in delivering
products to the customers and the ways
through which costs can be recovered easily.

Contd.
On the other hand for analyzing cost reports
different type of costs are considered which
business undertakes fort delivering products to the
target market. Further, analysis of cost reports
supports in knowing about the areas where
business is allocating high cost and this sometime
leads to decline in profitability level of the company.
Therefore, in this way the cost reports prepared are
significant for the business through which business
can easily focus on the key areas where its
performance lack and improvement is needed for
its growth and development.

2.2 Performance indicators to
identify potential improvement
Various performance indicators are present
which steam yard can adopt for assessing
its overall performance in the market.
Further, through this it is possible to work
on the areas where improvement is
needed.
Steam yard operates on smaller basis and
due to this reason it is not required for
business to prepare all the financial
statements

Contd.
Therefore, through statement such as profit
and loss account, balance sheet it is
possible for company to identify the areas
where improvement is possible and in turn
this acts as development tool for the entire
business.
Apart from this, financial statements
highlights whether all the resources of the
business are utilized efficiently or not and
on the basis of same it is possible to take
corrective actions

Contd.
Ratio analysis is also considered as one of
the most appropriate performance indicator
where steam yard can calculate different
type of ratios such as gross, net profit etc.
Through this it is possible for enterprise to
improve its market performance.
Customer satisfaction is also another type
of performance indicator where level of
satisfaction helps in knowing whether
target market is satisfied with the coffee
offered to them or not

Contd.
Moreover, knowing profitability level of the
business is also considered to be one of the
most appropriate performance indicators
where steam yard can compare its present
profitability with past year.
Through this, it will become easy to carry
out all the operations of the business in the
effective manner and can lead to
accomplishment of desired aims and
objectives.

2.3 Suggestions to reduce cost and
improve quality
Steam yard carries out its operations in the market
where competition level is high and due to this
reason it is necessary for business to reduce cost so
that profit margin can be enhanced easily. Cost
analysis is considered as one of the most effective
way through which business can identify the major
areas where costs can be reduced.
Further, in case if major expenses of the company
rises then in such case cost analysis is most
appropriate where management can take corrective
actions in order to reduce cost and through this
better value can be delivered to target market

Contd.
Apart from this, to enhance quality steam yard
can take feedback from customers with the
help of which it is possible to know whether the
quality maintained in existing products is
acceptable or not.
Moreover, check sheet is also considered as
one of the most significant method which can
assist Steam yard in knowing whether all the
operations are carried out as per plan or not. In
short, it ensures that business is working
efficiently and this can enhance market
performance easily