Management Accounting Systems and Reporting for Marshall Company

This report provides a comprehensive overview of management accounting practices, focusing on their application within Marshall Company. It delves into various management accounting systems, including cost accounting, inventory management, job order costing, and price optimization, outlining their benefits and applications. The report also explores different management accounting reporting methods, such as accounts receivable reports, performance reports, and cost managerial accounting reports. Furthermore, it examines the advantages and disadvantages of planning tools used in budgetary control, like zero-based budgeting, cash budgets, and operating budgets. The analysis extends to identifying financial problems faced by organizations, such as poor cash flow management and excessive debt, and proposes solutions using tools like KPIs and benchmarking. Finally, it provides a comparison between Marshall and another company (Bestwat Ltd), highlighting how management accounting tools can address financial challenges and contribute to sustainable success. This report is a valuable resource for students studying finance and accounting, offering practical insights into real-world business scenarios.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Management accounting and different type of management accounting system..................1
P2. Different methods of Management accounting reporting......................................................2
M1. Benefits and Application of different management accounting system...............................3
D1. Integration of management accounting reporting with Organisational process ..................3
TASK 2............................................................................................................................................4
P3. Covered in PPT .....................................................................................................................4
TASK 3............................................................................................................................................4
P4. Advantage and disadvantage of planning tool in budgetary control.....................................4
TASK 4 ...........................................................................................................................................5
P5 organisation is adopting different accounting system to solve financial problem..................5
M3. Analysation of management accounting tool in respond to financial problem for
organisation's sustainable success................................................................................................6
D3. Evaluation of planning tool to solve financial problem in organisation's success................7
CONCLUSION................................................................................................................................7
REFRENCES...................................................................................................................................8

INTRODUCTION
Management accounting include accounting information which is used by manager in
managerial decision making (Abernethy and Wallis, 2019). Marshall is one of leading company
in UK which is supplying superior natural stone and concrete landscaping products. It helps
company in improving performance and increase profitability. It helps manager in taking
business decisions and implement various changes. This report include management accounting
and requirement of different accounting system. It also include different managerial accounting
reporting, advantage and disadvantage of planning tool in budgetary control and comparison of
how organisation is adapting management accounting systems.
TASK 1
P1. Management accounting and different type of management accounting system
Management accounting refer to use of accounting information by manager in
management decision making (Alsharari and Youssef, 2017). Management accounting is
important of any organisation as it control business cash flow and increase efficiency. It also
helps in maximising business profit and helps in business decision making. Marshall is using
management accounting as it increase their business performance and financial position of
organisation. Management accounting include different management accounting system which
are as follows: Cost Accounting System: Cost accounting system refers to estimation of cost of overall
production including fixed cost as well as variable cost. In Marshall, manager are using
this system in estimating cost and decreasing cost of production. Essential requirement of
cost accounting system is in estimating cost, profit and helps in making business
decisions. Inventory Management System: Inventory management system refer to tracking of every
aspect of business from production to point of sales. Manager of Marshall is using this
system as it helps in tracing inventory and provide inventory on time. Essential
requirement of inventory management system is that it reducing wastage of inventory at
work place, decrease production of additional inventory and also decrease cost of
business.
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 Job Order costing system: Job order costing system include identify coast of producing
different products according to customer specification. In Marshall, manager is using this
system to assessing cost of separate job or product. Job order costing system is essential
to identify value of labour, material and overheads.
 Price Optimization System: Pricing is one of important decision for a business unit as it
affect profitability of business. It is a system that helps to analyse demand of product on
different price levels. In Marshall, manager is using this system as it helps in designing
pricing strategy for company. Essential requirement of this system is that it helps in
deciding price of product and improve profitability of organisation.
P2. Different methods of Management accounting reporting
Management accounting reports provide complete information about business operation
so manager can analyse the performance of business (Hiebl and Richter, 2018). It is important as
it provide information about business cash flow, funds flow which helps manager in decision
making, ensuring control in business and helps in selecting alternatives. In Marshall, managers
are using different management accounting report which are as follows: Account Receivable reports: Account receivable report is important as it provide
information related to how credit is extended by business to whom. This report show
payment collection system of company and helps in identifying defaulters. It helps in
taking decision related to change in payment collection policy. Manager of Marshall is
using account receivable report in order to know debtors of business and collecting
payment on time. Performance Report: Performance reports provide information related to performance of
organisation and its employees and also provide information of each department within
firm. It helps to analyse performance of employees so that firm can identify well
performing employees to provide them reward as well as it identify lazy workers in order
to improve their performance. Managers of Marshall are using performance report in
order to make proper control over performance of employees as well as organisation as a
whole.
 Cost Managerial Accounting Reports: Cost reports identify cost of unit produced in an
organisation through measuring fixed as well as variable cost. It include cost of labour,
material and overhead. This report helps manager to identify cost and profit and helps
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deciding selling price of product and service. Manager of Marshall are using cost
managerial accounting reports in estimating cost and provide control to reduce cost of
product to increase profit of business.
M1. Benefits and Application of different management accounting system
Management accounting system Benefits and Application
Cost Accounting System Benefit of Cost accounting system in Marshall is that it
identify profitable and unprofitable activity in organisation.
It improve efficiency of organisation by reducing cost of
business activities.
In Marshall, cost accounting system is applied for
identifying cost of products and determine selling price.
Inventory management system Benefit of inventory management system in Marshall is that
it reduce wastage at work place and save cost of business.
In Marshall, inventory management system applied for
providing goods and service on time and to minimise
working capital.
Job order costing system Benefit of job order costing method in Marshall is that it
helps to identify cost of single job and decrease additional
cost associate with job.
In Marshall, job order costing system applied to identify cost
and profit of each job.
Price Optimisation system Benefit of price optimisation in Marshall is that it helps is
making pricing strategy for business.
In Marshall, price optimisation system is applied to know
demand of customer at different price levels.
D1. Integration of management accounting reporting with Organisational process
Management accounting reporting enhance credibility of accountant in Marshall as it
provide information of firm's investment and helps in selecting poor investment of firm. It
provide information of overall performance of organisation which helps in strategic planning of
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firm. It also provide information related to cash flow statement with which firm can utilise funds
properly.
TASK 2
P3. Covered in PPT
TASK 3
P4. Advantage and disadvantage of planning tool in budgetary control
Budget refers to financial plan which include estimation of expenses and profit in
advance. Budgetary control refers to the process of comparison of budget with actual
performance of business and taking corrective action if deviations are there (Järvinen, 2016).
Manager of Marshall are using different budgetary control tool which are as follows:
Zero Based Budgeting: Zero based budgeting as the name suggest starts from zero and is
not based on previous year budget (McLaren, Appleyard and Mitchell, 2016). Main objective of
this budgeting techniques is to reduce cost of organisation. It is prepared on the basis of new
requirement each time.
Advantage of Zero Based Budgeting: Advantage of this budget in Marshall is that it
providing cost benefit to company as it helps in eliminating extra cost ad increase return of
business. It also helps in effective resource allocation, increase optimization of business process
and increase strategic growth of organisation.
Disadvantage of Zero Based Budgeting: Disadvantage of this budget in Marshall is that
it is very complex and time consuming as firm need to prepare new budget and has to allocate
every activity in new period. It is beneficial only for short term and is expensive as it require
more time and efforts of manager.
Cash budget: Cash budget is a financial plan that estimate of cash inflow and outflow
from business for the period (Novas, Alves and Sousa, 2017). It helps business to know whether
entity have sufficient amount of funds to run business and its operation smoothly. It ensure
effective utilisation of cash as it provide information related to cash surplus or deficit in an
enterprise.
Advantage of Cash Budget: Advantage of this budget in Marshall is that it decrease
expenses and prevent overspending in an organisation. It helps to know financial positions of
company and track deficit through cash flow analysis.
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Disadvantage of Cash Budget: Disadvantage of this budget in Marshall is that it has
lack of flexibility as it difficult to make any changes in this budget. It is based on previous year
data and is not accurate.
Operating Budgeting: Operating budget include expenses related to day to day activity in
order to run business and its operation smoothly (Pelz, 2019). It include fixed cost, variable cost,
income and other expense related to business.
Advantage of Operating Budget: Advantage of operating budget in Marshall is that it
helps in planning of business. It allow manager of Marshall in proper evaluation of performance
and helps in planing of funding which is necessary to run business.
Disadvantage of Operating Budget: Disadvantage of operating budget in Marshall is
that it require proper time and efforts of manager. It expenses in budget does not match with
actual expenses.
TASK 4
P5 organisation is adopting different accounting system to solve financial problem
Financial problems refers to those problem which occur due to shortage of funds and are
money related problem in an organisation (Maas, Schaltegger and Crutzen, 2016). Marshall is
facing financial problem related to poor cash flow management and too much debt which are as
follows:
Bad cash flow management: Unorganized bookkeeping may lead to bad cash flow
management. It is important for manager of Marshall to review their cash flow regularly in order
to better control their funds. It will helps manager as it provide information of shortage of funds.
Too much debt: Organisation is usually facing problems related to shortage of funds and
to solve this problem they borrow money from different sources. It will decrease their
creditworthiness and also arm image of company in market. Marshall is taking debt to complete
their requirement related to funds.
To solve these financial problem, manager of Marshall can adopt KPI and benchmarking
techniques which are as follows:
` KPI: KPI stands for key performance indicators and it measure company's overall
performance to know whether organisation is able to meet its objectives or not (Phan, Baird and
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Su, 2017). By using this tool manager of Marshall is able to manage cash flow effectively which
provide information related to cash surplus of cash deficit.
Benchmarking: Benchmarking is a tools that helps in comparing performance of two
companies working in same industry (Samuel, 2018). By using this tool manager of Marshall is
able to know strategy of their competitor related to extending credit. This will helps entity to
improve their debt position in market and also improve their image in minds of customer and
investors.
Comparison between two organisation:
Basis Marshall Bestway Ltd
Financial
Problem
Marshall is facing problem related to
bad cash flow management as
manager of company is not regularly
monitor cash flows
Bestwat Ltd is facing problem related
to too much debt as company's credit
policy as this policy create burden of
debt on company.
Techniques By using KPI technique, manager
will measure performance of
organisation and review cash flow
statement of company on daily basis.
By using benchmarking technique,
manager will be able to compare
performance of company with another
organisation and improve their
performance accordingly.
Systems With the helps of job order costing
system, firm can identify problem in
cash flow management system as
entity is not managing jobs properly.
With cost accounting system manager
of firm will find out that they are
borrowing too much money from
market and are fail to manage credit
for organisation.
M3. Analysation of management accounting tool in respond to financial problem for
organisation's sustainable success
Management accounting tool helps in identifying financial and non financial factors
arises in firm which helps manager to solve accounting problem (Solovida and Latan, 2017).
Accounting tool that helps firm to solve financial problem include KPI and benchmarking. KPI
helps by analysing enterprise performance whereas benchmarking helps by comparing firms
performance with competitor firm in same industry.
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D3. Evaluation of planning tool to solve financial problem in organisation's success
Planning tools include different budgets which helps firm in forecasting its performance
(Tucker and Schaltegger, 2016). It also helps manager of firm in making different strategy to
face uncertain situation of firm. These planning tools also helps in decreasing cost and increasing
profit of firm. Marshall select zero based budgeting and cash budget which helps them to ensure
better control over business activities.
CONCLUSION
From above mentioned project report this can be concluded that management accounting
is important for every organisation as it helps manager in taking decision on various issues in
business. There are various management accounting system which a firm use like cost
accounting system, inventory accounting system, job order costing system and price optimization
system etc. These system helps manager to ensure control over various activity in an enterprise.
Management accounting reports provide information about financial position and performance of
company. Company use different financial reports like account receivable report, performance
report and cost accounting report. Enterprise use budget to estimate income and expense of
business and control cost of business. Sometimes company cannot match actual expense with
estimated budget than they adopt different budgetary control to improve performance.
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REFRENCES
Books and Journal
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research. Journal of Management Accounting Research. 30(2). pp.59-79.
Järvinen, J. T., 2016. Role of management accounting in applying new institutional
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Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production. 136.
pp.237-248.
McLaren, J., Appleyard, T. and Mitchell, F., 2016. The rise and fall of management accounting
systems: A case study investigation of EVA™. The British Accounting Review. 48(3).
pp.341-358.
Novas, J. C., Alves, M. D. C. G. and Sousa, A., 2017. The role of management accounting
systems in the development of intellectual capital. Journal of Intellectual Capital.
Pelz, M., 2019. Can management accounting Be helpful for young and small companies?
Systematic review of a paradox. International Journal of Management Reviews. 21(2).
pp.256-274.
Phan, T. N., Baird, K. and Su, S., 2017. The use and effectiveness of environmental management
accounting. Australasian Journal of Environmental Management. 24(4). pp.355-374.
Samuel, S., 2018. A conceptual framework for teaching management accounting. Journal of
Accounting Education. 44. pp.25-34.
Solovida, G. T. and Latan, H., 2017. Linking environmental strategy to environmental
performance: Mediation role of environmental management accounting. Sustainability
Accounting, Management and Policy Journal.
Tucker, B. P. and Schaltegger, S., 2016. Comparing the research-practice gap in management
accounting. Accounting, Auditing & Accountability Journal.
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