Management Accounting Report: Putney Enterprise Analysis

This report examines management accounting principles, focusing on Putney Enterprise, a UK-based small-scale enterprise dealing in pet prescription drugs. The report is divided into four tasks. Task 1 explains the importance of management accounting systems, including cost accounting, job costing, price optimization, inventory management, and financial accounting. Task 2 explores management accounting reporting methods, such as budget reports, job cost reports, and inventory reports. Task 3 discusses the advantages and disadvantages of planning tools used for budgetary control. Task 4 compares methods used to respond to financial problems. The report analyzes financial statements, interprets reports, and applies various management accounting techniques, including marginal and absorption costing, to prepare income statements. The report highlights how effective management accounting systems are crucial for sustainable success and overcoming financial obstacles, with a conclusion summarizing the key findings and recommendations for Putney Enterprise.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explaining management accounting importance of management accounting systems... .1
P2 Explaining methods used in management accounting reporting.......................................4
M1 Benefits and implication of the management accounting systems..................................6
D1 Critically examining the integration of management accounting reports and systems....7
TASK 2............................................................................................................................................7
P3 Calculating cost to prepare income statements.................................................................7
M2 Applying management accounting techniques and financial reporting documents.........9
D2 Interpretation of accurately applicable financial report for Putney Enterprise................9
TASK 3..........................................................................................................................................10
P4 Explaining the advantages and disadvantages of planning tools used for budgetary control.
..............................................................................................................................................10
M3 use of various kinds of planning tools in producing adequate budgets for Putney
Enterprise..............................................................................................................................12
D3 Analysing Planning tools leads to the sustainable success.............................................12
TASK 4..........................................................................................................................................12
P5 Comparing methods adapted to respond to financial problems......................................12
M4 Evaluating the importance of management accounting systems in sustainable success and
overcoming financial obstacles............................................................................................13
CONCLUSIONS............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a process which help a company to identify, measure,
interpret and communicate the important information which will assist them in making
decision regarding long and short-term planning. This helps the management to formulate the
future plan by analysing the present performance and future growth of business. Management
accounting also aids the business to identify, monitor and then control all its functional area.
The present report will cover Putney which is a small-scale enterprise operating in UK and
dealing in generic prescription of drugs for pet and earning a revenue of about £19.2 million
with about 57 employees working. The report will be covering different methods used for
making management accounting reports and various cost techniques used to prepare the
income statements using marginal and absorption cost. It will further conclude the advantages
and disadvantage of all type of planning tools used in budgetary control.
TASK 1
P1 Explaining management accounting importance of management accounting systems.
Business Report.
From: Management Accounting Officer
To: General Manager
Putney Enterprise
Subject: Systems of management accounting
Date: 7th December 2017
Introduction
Management accounting is that type of report which is only used by the internal
stakeholders of the company like management, employees etc., In addition to this, it is that
type of reporting system which enable the business to work and operate on daily basis by
preparing income statements, taking out cost of all functional areas of business and the
ratios of the company. This is also important for Putney Enterprise to make out the profit
and loss of the firm. There are various kinds of management accounting system which are
used in the cited company.
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[Source: System of management accounting. 2017]
Cost accounting system
There are various types of cost which is incurred by the organisation at various levels of
their operations. Cost is the most essential element in the day to day working of Putney
Enterprise as with the help of this only, the enterprise set price of its various products and
services to make a good amount of profit. The accountant of the firm will make out what are
the total cost of the firm in producing and selling retail drugs for pets. This is a costing
system which is used to estimate cost of different types of product to take out profitability,
inventory valuation and control cost (Cadez and Guilding, 2012). In this type of accounting,
accountant need to record, classify, analyse, summarise, allocate and evaluate all actions and
control regarding cost of Putney Enterprise. The main purpose of cost accounting in the
system is to manage effectively and efficiently the cost of company over its products.
Job costing system
In this type of management accounting system, the cost of each and every job, department or
project is allocated in a different form. The total cost of production and the sale of those
goods are determined in a separate manner so that management can make the desired cost.
In this, all costs are of different types of project are assigned differently which will include
material, labour and overhead in manufacturing environment.
Price optimisation system
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With cost of the product, price is another factor which help the company to determine the
profit of firm for the current year (Drake, Roulstone and Thornock, 2016). Price is the only
factor which will help the company to find out future profit and revenue generation of firm.
This is a monetary factor in return to which company will be selling its product and service
to retail and wholesale customer with the objective of earning profits. This is setting of price
optimisation for all the products and services to take out profit and sale of retailer. This will
help Putney to determine what price will be best suited to generate the profits and earn
revenue of the firm.
Inventory- management
Inventory means the stock of goods or raw material which is to be sold or supplied by the
company and this is important to manage them. Inventory management is the very crucial
part of management accounting (Agrawal and Cooper, 2017). If there is higher inventory at
the end of year, then this will cause Putney to reduce its possibility of generating sale and
increase stock turnover ratio for the company.
Cost bookkeeping/administration: With watching the necessities of costs in addition to
capital close by will be have to screen the consumption prerequisites in the Putney
Enterprise. Along these lines, there will be differing useful divisions which include upgrade
by the talented in making of adequate necessities of the costs and back for Putney
Enterprise. Along these lines, there will be a blend of costing methods for instance action
based costing which demonstrate the expenses caused at what time delivering a segment of
fabricated products, for example, compensation, pay, rewards, tip over the specialists or
works and also pay for of material, exchanges among provider and so forth be the major
operational territories which imperative high estimating or examination.
Tax assessment: There have been a scope of working exercises in order to occur during the
time like benefits gathering and spending. Consequently, these are the obligations of the
Putney Enterprise in documenting the normal expense forms and additionally stay fully
informed regarding the changing arrangements and methodology in such conduct (Grabner
and Moers, 2013). As a result, for Putney Enterprise there will be exchanges associated with
a scope of items and administration in addition to in foundation with that they all contain
differing charge rates which are enacted by restricted or focal government in UK. In this
manner, it will be fundamental in help of the bookkeeping chiefs to detail investigation of all
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the impose charge has been compensated by them and additionally check such business.
Money related bookkeeping: Management bookkeeping is additionally the division of
budgetary bookkeeping frameworks. From now, it can be said with the expectation of if the
inward specialist of Putney Enterprise is enhanced and solid than the firm have the capacity
to meet the outside prerequisites. That is the reason, with the guide of administration
bookkeeping devices helpful will be increase in introduction and ability of Putney Enterprise
and it will help with showing signs of improvement the yield of business and appealing
representatives to make the valuable diligent work out of sight with accomplishing the
objectives.
Inward Audit: every now and again observing the organization exchange on the wellspring
of periodical review which must be prearranged twice or thrice in a year will assist Putney
Enterprise to make the improved examination over the income and uses of all. In this way,
there might be necessities of various administrators, examiner and accounting experts in
performing such assignments (Hiebl, 2014). It may be gathered such procedures will
encourage experts in settling on sufficient choices to carry-on any obligation or quit putting
resources into non productive business operations.
P2 Explaining methods used in management accounting reporting.
From: Management Accounting Officer
To: General Manager
Putney Enterprise
Subject: Systems of management accounting
Date: 7th December 2017
Introduction:
Sir,
Management accounting reports are prepared to make decision regarding the whole financial
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year and then to see performance of all management accounting systems (Henderson and
et.al., 2017). In the further year, this will help in formulating plan and this will help Putney
Enterprise in following ways:
1. Taking out the cost of product and service of firm.
2. Allocate or distribute the cost according to projects.
3. Assisting in the future planning of the company.
[Source: Types of Management accounting Reports. 2017]
The various kinds of management accounting reports are:
Budget report
This is being prepared to take out the budget of certain period mainly for one year. The
budget and statements of previous year are taken as the base to make the budget of present
year. Budget report also maintain out all possible source of fund and then analysing the
expenditure of the firm (Joshi and Li, 2016). All the different departments are allotted with
budget according to amount of expense which are incurred by them
Job cost report
Each and every project, product or department of the firm need to take out their own cost
which they will incur throughout the year. After analysing the job and cost related to the job
budgets are allocated to them afterwards.
Accounts receivable report
There dependably will be a selection of borrowers Putney Enterprise which are developing
the sum past due in the organization's money related records. Henceforth, this method help
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the firm in measuring the here and now and long haul sum extraordinary that be to be
observed by the expert and also build the viable arrangement which thusly helps in picking
up the instalments for such obligations. Subsequently, one might say that these reports
repayment Putney Enterprise in produce the adequate records of all the relevant receivables
for example merchants, provider and a grouping of working unit. This include long and
short-term debtors of firm from which firm need to take out their remaining debts. Account
receivable will make out the total amount which would be declared as doubtful debts and the
reason behind growing debts
Inventory and manufacturing report-
In this report, accounting experts require recording all the exchange which are relevant to
the fabricate and acquire of crude materials. Hence, it would be useful for Putney Enterprise
to do the genuine necessity of the assets in the working behaviour of Putney Enterprise. It
will be beneficial for supervision the capital and in addition dropping the wastage they need
to mention all inventory at the end of year as they are the main source of production for the
firm (Messner, 2016). Accountant also need to take out the total expenditure which firm will
incur in buying or supplying this inventory.
Conclusion
This is concluded that there are 4 types of management accounting reports which accountant
of Putney Enterprise need to prepare to see performance of the firm in regard to last year.
All for them having their own importance and purpose to be included in this report and to
make the future decision regarding profits, stock, sales and cost of the firm.
M1 Benefits and implication of the management accounting systems
Inside concurrence with the blend of compensation of the administration bookkeeping
frameworks which be prepared to help out in achieving the business Putney Enterprise goals.
In this way, promptly accessible know how to be an assortment of accommodation of such
exercises which assist element in meeting positive measure of income (Nuhu and et.al.,
2017). It generally encourages in improving the cash streams of Putney Enterprise for
instance checking the inflows and outpourings and in addition suggestive of administrator
underway gainful endeavours for to illuminate such related obstruction. It has a considerable
amount of favourable circumstances, for example,
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• Be of help with falling the costs and costs acquire in any assignments or hierarchical
operations.
• Advantageous in keeping up the cash stream of distinct and additionally increment the
profitability.
•Helps in adequate basic leadership well beyond answer for overcome and money related
issue.
• It helps firm in contain adequate sum or return which will be founded on the venture made
by Putney Enterprise.
D1 Critically examining the integration of management accounting reports and systems
In thought the administration bookkeeping frameworks nearby will be energy of
different apparatuses, for example, cash administration, stock administration notwithstanding
planned controls. Thusly, in the detailing strategy helpful has been impact of a scope of
revealing procedures which in a steady progression used to put in coordinate data of such
exercises which gathered in Putney Enterprise. Hence, it knows how to be gathered that
Putney Enterprise must concentration over measure the exchange and present data over the
same (Pemsel and Wiewiora, 2013). Thus, it will be worthwhile for experts to make the
required change in such execution and in addition it likewise enhances the work great
association of workforce towards accomplish Putney Enterprise.
TASK 2
P3 Calculating cost to prepare income statements.
Marginal costing: This method be of help with measuring the benefits and consumption
acquired more than the working exercises of business for the length of evaluations year.
Therefore, it considers the immediate cost, for example, material costs, work costs
notwithstanding overhead costs. As a result, the calculation for the Putney Enterprise salary
articulation planned the premise of Marginal Costing system, for example,
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Explanation: In assertion by methods for the over recorded table that reflect operational
exercises of the Putney Enterprise which is thusly among examination the different expenses
and picks up of Putney Enterprise. Consequently, the business income of the Putney
Enterprise was 2100 on the charge of 35 for every unit which grasp the cost of 9100 at the
rate of 13 for each units. From now, the completing stock of the Putney Enterprise which was
exceptional at the consummation of it is 100 units esteemed at the rate of 13 for every unit.
By and by, the gross net revenue/commitment of the firm are 13200 which incorporate finish
of Variable costs additionally all the creation costs beginning deals. Furthermore, the more
estimation for net benefit which demonstrate with the goal of variable overheads and settled
overheads must be abbreviated from such instalment and the last Net Profit edge was at 9300
has been figured.
Absorption Costing: This strategy enable the individual in figuring the adequate costs to
bring about for such process. Hence, the examination will be base over processing the full
fabricate costs which help in including the straight expenses and additionally adjusted of
make spending (Lock, 2014). In this way, the make expenses will be process over the
quantity of straightforwardness rates. Henceforth, promptly accessible will be wage
proclamation for Putney Enterprise which call attention to the limit with regards to net
benefit.
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Analysis: into concordance by methods for the table recorded over which call attention to the
figuring for Putney Enterprise location with the assistance of utilizing Absorption costing
procedures. Consequently, such procedures will be worthwhile for in having the bounty
measure of net benefit. Then again, the including up start from offer of 600 units at 35 trade
value which get the returns of the association frame 2100 and after that there will be
derivation of cost, extreme stock and settled fabricate overheads which pass on everything
instalment for 11500. After envelop such contribution per unit all the consumption will be
deductible on or after the remarkable sum which acquires the Net benefit for 9600 that
request.
M2 Applying management accounting techniques and financial reporting documents.
From: Management bookkeeping Officer
Putney Enterprise location
To: GM
Putney Enterprise location
Subject: Implementation of budgetary reports to cure with hindrances
Presentation:
Sir,
This therefore is to advise you that, in charge to incorporate the adequate money
related development of Putney Enterprise there is had to usage detailing strategies which
thusly help out Putney Enterprise in envelop enhanced execution over such undertakings
(Hopper and Bui, 2016). Thus, this can be conceivable with the utilization of a few
announcing systems, for example,
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• Sales spending plans
• Operating report
• Cash stream spending plans/report
• Purchase spending plans
D2 Interpretation of accurately applicable financial report for Putney Enterprise
The benefits' articulation of the Putney Enterprise has been considered by methods for
the assistance of two separation appraisal systems, for example, peripheral and assimilation.
Along these lines minimal ideas pass on the end balance for 9300 which was the deserted
over net benefit deducting all the charge on or after the deals and income. In the meantime as
processing the net benefit from assimilation systems the rest of the benefit can be got by the
operational administrator, for example, 9600. That’s why it can be suspected that as per
contain the adequate salary helpful is required to try the Absorption costing strategies.
TASK 3
P4 Explaining the advantages and disadvantages of planning tools used for budgetary control.
Incremental budgeting
In this kind of budgetary control method earlier year spending plan or real execution is taken
as base and after that incremental sums are included for the new spending year. In
incremental planning the asset designation depends on the earlier years (Henderson and et.al.,
2017). This assistance in rolling out little improvements in the current spending plans for
touching base at new spending plans by just adding to land at the new planned numbers. Past
year’s spending plan turns into the base for current year spending plan and current year’s
spending plan is taken as the base to get ready one year from now's financial plan and asset
are allotted likewise. The focal points and inconveniences of incremental planning are as per
the following:
Preferences
Straightforwardness as in this last year’s spending plan is taken as the base so this is
simple and easy to comprehend as the bookkeeper definitely thinks about the most recent
year's financial plan. So this financial plan is likewise simple to contrast with others and most
straightforward with put by and by.
Steady change- as a year ago's financial plan is taken as the base and into that some sum is
included so this is exceptionally steady spending plan from one period to other (Guinea,
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