Management Accounting Report: Jupiter PLC Financial Analysis

This report provides a comprehensive overview of management accounting, focusing on its application within the context of Jupiter PLC. It begins by defining management accounting and outlining the essential requirements of different management accounting systems, including cost accounting, inventory management, and job costing. The report then explores various management accounting reporting methods such as performance reports, financial reports, budget reports, sales reports, and balance scorecard reports. It evaluates the benefits of these systems, particularly within Jupiter PLC, emphasizing how they improve inventory management, cost control, and job costing efficiency. The report also critically examines the integration of these systems and reports within an organizational context, highlighting their role in strategic planning and financial decision-making. Task 2 includes practical calculations using absorption and marginal costing methods, along with profit and loss statements. The report concludes by discussing the advantages and disadvantages of planning tools used in budgetary control and analyzing their application in budget preparation and forecasting, ultimately emphasizing how these tools contribute to sustainable organizational success. The report also includes comparisons with other organizations about the use of accounting systems in resolving financial issues.

Management Accounting
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Table of Contents
Introduction....................................................................................................................................3
Task 1..............................................................................................................................................4
1. Explain what is meant by ‘Management Accounting’ and give the essential requirement of different
types of management accounting systems..............................................................................................4
Management Accounting........................................................................................................................4
2. Explain different methods used for management accounting reporting.............................................6
3. Evaluate the benefits of management accounting systems and their application within an
organizational context.............................................................................................................................7
4. Critically evaluate how management accounting systems and management accounting reporting is
integrated within organizational context................................................................................................8
Task 2..............................................................................................................................................9
1: Calculation by using various costing method.......................................................................................9
2: Preparation of profit and loss statement by using techniques..........................................................12
3: Preparation of final account after September...................................................................................16
Task 3(LO3):................................................................................................................................19
1. Explain the advantages and disadvantages of different types of planning tools used in budgetary
control...................................................................................................................................................19
2. Analyse the use of different planning tools their application for preparing and forecasting budgets.
...............................................................................................................................................................21
Task 4............................................................................................................................................22
1. Comparison with other organisation about use of accounting system in resolving financial issues..22
2. Analyse how, in responding to financial problems, management accounting can lead organisations
to sustainable success...........................................................................................................................24
3. Evaluate how planning tools for accounting respond appropriately to solving financial problems to
lead organisations to sustainable success?............................................................................................25
Conclusion....................................................................................................................................26
References.....................................................................................................................................27
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Introduction
The report here discusses the concept of management accounting with reference to Jupiter Plc
and the practical applicability of the management accounting system in the mentioned scenario.
The report analysis and evaluates the different systems of management accounting and
management accounting reports. The study will be made on the importance of a sound
accounting system. A practical calculation will be made on the marginal and absorption costing
and different outcomes will be analyzed on the basis of the calculation. The report further
discusses the role and importance of budgeting as a planning tool for the management and the
problem-solving aspects of the same in brief and how it will guide the company for the long-term
sustainable success of the organization. In this report there are different planning tools which are
used in budgetary control are discussed below in this report with advantages and disadvantages.
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Task 1
1. Explain what is meant by ‘Management Accounting’ and give the essential requirement
of different types of management accounting systems.
Management Accounting
Management accounting is essential part of the company which guides and support them in
various decision-making process and also preparation of various plans and policies for the
growth and development of the company. Management accounting is an accounting in which
business acumen is exercised for the sustainable growth of the organization. Management
accounting enables the management to take long term and short-term decisions by providing
accurate and timely financial and statistical information. In other words, it makes use of financial
and cost data and translates it into useful information so that apt decisions can be taken for
growth of the company (Bizfluent, 2018).
The essential requirement of different types of management accounting systems which are
summarized below:
1. Cost accounting system
The cost accounting system is a management tool to track and control the cost of the product. It
will help the managers to estimate the cost of the product which are they going to produce. Cost
accounting will be used for various purposes by the managers to manage and analyze
profitability of the product; valuation and strategy manage for different purposes. In the case of
Jupiter PLC cost accounting system helps in preparation of the upcoming projects on the basis of
which prices of the tickets will be determined. Cost accounting system keeps the track records of
the materials of the business (Novas, et. al., 2017).
Direct cost - The direct cost for the product will be the cost that can directly be assign in the
production of a specified unit. It will be used by managers to determine the per unit cost for the
product on which analysis will be made (Bizfluent, 2018).
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Standard costing - Standard costing will be used by the managers to ascertain the variations In
the cost where expected cost will be set for a product and change in actual cost will determine
the variation in the cost (Accounting tools, 2017).
2. Inventory management system
Inventory management system is mostly used in the manufacturing firms but in the case of
Jupiter Plc the inventory management system helps in recording and monitoring the inventory
level in the production and manufacturing process. The management accountant of the Jupiter
Plc can sue this system to avoid wastages and maintain the inventory level system in the
manufacturing process. Inventory management system will make systematic check on the inflow
and outflow of the units of inventory used in the conduct of entertainment events. It focuses on
the real time management of the inventory in the company and ensures proper record for future
purpose on which basis business plans will be developed (Accounting tools, 2017).
Jupiter Plc can use following method of inventory management system which are listed
below:
 LIFO (Last in First Out)
 FIFO (First in First Out)
 JIT (Just in Time)
 Weighted average method
3. Job costing system
Job costing system is sued by the managers to ascertain the cost to an individual unit of product.
Jupiter Plc uses job costing system to determine the cost of the individual project in which they
are investing, in the case of events it will be used by the mangers to detect the individual costs in
the overall project, on the basis of which it will pay to the labors in batches. A predetermined
budget will be prepared where the company tracks individual costs for future projects and same
will be used by the managers to detect the cost of the overall project (Accounting tools, 2017).
A job costing system needs to gather the following three types of information which are
listed below:
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 Direct materials
 Direct labor
 Overhead and other cost
2. Explain different methods used for management accounting reporting.
Different types of management accounting reports
 Performance report: The performance report will be prepared by the managers to
evaluate and track the performance of its individual employee and different departments.
It will be used in determining the best performing unit in the company and improvising
productivity. Jupiter Plc use this report to note down the performance level of the
company in each financial year and compare recent performance with past performance
(Cooper, et. al., 2017).
 Financial reports: Financial reports are used by the managers to evaluate and analyze
the financial records of the company. It will be used in financial management and the
management of overall finances of the organization. Financial reports consist of balance
sheet, profit and loss account statement which shows overall performance of the company
in the financial year. With the help of this report, the Jupiter Plc can show their financial
performance to its investors and other stakeholders (Leuz and Wysocki, 2016).
 Budget reports: Budget reports are used in the preparation of the budgets of the
company, and it will be used for analysis purpose of past budgets where new budgets will
be prepared on such basis. Budgets report contains all data or information about the past
budget in a well-defined manner. Jupiter Plc uses this report to record the past budget and
use this past budget in future budget also (Accounting tools, 2017).
 Sales report: Sales report is use to keep a track of the overall sales for a specified period
of time and the future sales will be forecasted on the basis of the past sales report. Jupiter
Plc use sales report to record sales performance done by the company in the past year and
also in recent year (Erkens, et. al., 2012).
 Balance scorecard report: Balance scorecard report is used by the company as strategic
management tool to keep the update of the departments for a specified duration. Jupiter
Plc use balance scorecard report to identify and improve various internal functions of a
company and their resulting external outcomes (Leuz and Wysocki, 2016).
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3. Evaluate the benefits of management accounting systems and their application within an
organizational context.
In the context of Jupiter Plc, the management accounting systems and their applications benefits
to the organization are listed below:
Inventory management system: Jupiter Plc use this system to enhance and improve the
inventory level and its business operations also improve. With the help of this system it
minimizes the costs or expenses and also saves money for the organisation. The management
accountant of the Jupiter Plc uses this system to manage and monitor entire supply chain of
inventory in an effective and efficient manner.
Cost accounting system: With the help of this system the Jupiter Plc can measure the costs and
expenses incurred in the manufacturing system and also change accordingly with the change in
market. The management accountant of Jupiter Plc uses this system to fix and reduces the prices
for the different products and services.
Job costing system: Job costing system helps the Jupiter Plc in the valuation of overall cost
during the production process in the business operations. This system helps to the management
accountant to avoids continuation of efforts in the same job and also maintain the job quality in
an appropriate manner. The management accountant uses different methods and techniques of
job costing system to prepare job sheet for the particular products and services.
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4. Critically evaluate how management accounting systems and management accounting
reporting is integrated within organizational context.
The integration of management accounting systems and management accounting reports helps to
the management accountant of Jupiter Plc in the preparation of various reports which assists to
the management in the taking various decisions for the organisation in an effective and efficient
manner. With the assistance of this the management can improve and enhance the entire system
and also helps them to make the genuine reports for the organisation on the yearly basis
(Weygandt, et. al., 2015).
Following are the benefits provided by the management accounting system and reports to the
organisation which are listed below:
 It helps the management accountant in preparing the business strategies for their business
activities.
 It helps the management accountant in the preparation of financial reports for their
external and internal stakeholders.
 It also helps the management accountant to keep away from the error or omission in the
financial accounting.
 It also helps to the manager in the preparation of planning for their future growth and
development.
 With the help of the management accounting reports and systems the auditor can easily
evaluate the performance and records of the organisation in an appropriate manner.
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Task 2
1: Calculation by using various costing method
Production cost per unit Amount Details
DM 10
DL 20
VOH 5
Total fixed production overhead cost = £100000
Use standard volume of 20000 units to absorb
the fixed production overhead cost
Selling price = £50
Absorption cost = £40
Absorption Costing = £40/unit {10+20+5+100000/20000=40}
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Total production cost:
Budget: Absorption Costing technique Sep 2018
Production Cost
Per Unit Total
£ £
DM 10 18000x10 180000
DL 20 18000x20 360000
VOH 5 18000x5 90000
FOH 5 90000
40 18000x40 720000
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Cost of sales:
BUDGETED COST OF SALES: SEP 2018 Amount
£
Cost of production w1 720000
Opening Inventory 0
Closing inventory -80000
COST OF SALES 640000
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