Management Accounting Report and Financial Analysis for Creams Limited

This report provides a comprehensive analysis of management accounting practices employed by Creams Limited, a UK-based medium-sized enterprise in the food and beverage sector. The report defines management accounting, exploring its role in providing financial data and advice for business decision-making and future development. It delves into the application of various management accounting systems, including job costing, price optimization, inventory management, and cost management, highlighting their benefits for Creams Limited. The report examines different types of management accounting reports such as budgeting, accounts receivable, inventory, and performance reports. It further investigates the application of techniques like absorption costing and marginal costing in income statement preparation. The report also discusses planning and control tools, including budgetary control, zero-based budgeting, activity-based budgeting, and rolling budgeting, along with pricing strategies. Finally, the report analyzes the use of management accounting tools in addressing financial problems, emphasizing how these tools can lead organizations to sustainable success. The document, contributed by a student, is available on Desklib, a platform providing AI-based study tools for students.

Management
Accounting
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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1 Definition of management accounting and interpretation of their relevant system...............3
P2 Reporting system of managerial accounting:.........................................................................4
M1 Evolution of advantages of managerial accounting system..................................................5
D1 Integration of accouting systems of management and their report.......................................6
TASK2.............................................................................................................................................6
P3Statment of income by managerial accounting techniques.....................................................6
M2 Uses of management accosting reports for financing report:..............................................11
D2 Interpretation of financial activites through report..............................................................11
Task 3.............................................................................................................................................11
P4 Description of various planning control tools....................................................................11
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M3 Uses of budgetary planning tools for forecasting business activities.................................13
TASK 4..........................................................................................................................................14
P5 Needs of managerial accounting tools for financial problem...............................................14
M4 Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success:.........................................................................................16
D3 Evaluating manner in planning tools for accounting respond to solve financial
problems/issues to lead entity to sustainable successes:............................................................16
CONCLUSION..............................................................................................................................17
REFRENCES.................................................................................................................................18
INTRODUCTION
The term accounting of management is provision of accounting data and suggestion or advice for
enterprises to use it for business enterprises and future development of the business. In other
words, it is a process of systematically use financial information collects from analysing
(Cooper, Ezzamel and Qu, 2017), recording, accounting information. In order to understand this
concept Creams limited has been selected. This organization runs their business activites from
United Kingdom. It is medium size enterprises which provides ice cream, doughnuts, waffles and
other foods and drinks product at small level of market environment of UK. In this report
meaning of the term management accounting has been defined and various system implement by
mangers for taking essential decision clearly mention. This report also included the uses of
various managerial accounting technique for analysis causes of financial problem and solving
issues related to these problems. Business organization use management accounting to increase
their rate of profitability and efficiency this report describes it in a detailed manner.
TASK1
P1 Definition of management accounting and interpretation of their relevant system
Management accounting technique used to formulate policies and help in decision making
procedure following are the systems have been used in the management accounting policy. To
provides benefits to the Creams limited:
Job Costing system: This system has been developed for identifying cost of each product
manufacturing in organization. It will help in identifying the whole procedure and expenses
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incurred in each step of production making. Manager of Creams limited will be used this system
of management accounting in order to analysis their cost value of each procedure (Jamil and
et.al., 2015).
Price Optimisation system: It is the most useful framework for business organizations. By using
price management system, managers can identify which pricing strategies is beneficial for their
organization. It includes various types of pricing strategies; thus system also help in gearing
profits by maximize value of selling price.
Inventory management system: This system has been developed to verify and check stock
storage of the organization. It includes various types of inventory mechanism technique through
which managers can check, evaluate their inventory level and formulated polices to control and
manage their raw material, finished goods inventories. Manager of Cream limited will uses EOQ,
ABC analysis, JIT technique to control their inventory through within they can control extra cost
of managing the stock.
Cost managerial system: Management accounting system includes various techniques to
controlling of cost. Job costing, process, standard and marginal costing is part of this system. All
these systems help in evaluation of cost of organization. Manager of the Creams limited will
used this technique in order identify their cost, it will help in decision making and profit
increasing (Lisi, 2015).
P2 Reporting system of managerial accounting:
Report is formulated to define detailed summery of an event activites. Normally reports are
prepared for writing all the essential steps and advises suggestion and decision taken in meeting.
Management accounting reporting are prepressing for taken as proof of the business activites
following are the types of management accounting reports business organization uses:
Budgeting report: These are the detailed summery of all the activites of business organization.
It is prepared on the basis of data collected from various budgets of the company. Budget report
is providing all the essential information regarding cash flow, sales, expenses production,
marketing etc. With the uses of this budgeting report mangers can identify their future revenues.
Manager of Crèmes limited used to implement this report for verifying their budget and to
analysing their future income of the enterprises.
Account receivable report: It is a framework which is used to analysis the present situation of
business organizations debtor account. Main reason this report is to identify causes of problem
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and issues related to debtor policy which is reason of shortage of cash inflow within the
organization. Creams limited formulated this report for verify their debtor’s position and
implement policy through which they can identified ways to manage their debtor policy by
providing them satisfaction (Hajnal and Riordan, 2020).
Inventory report: Managers formulated this report in order to analysis their stock level. This
report provides brief summer of maximum level, minimum level of stock time taken of covering
operating cycle, cost incurred on managing stock, etc. Inventory report also describe the polices
uses by business organization to manage all the functions and software of inventory. Manger of
Cream limited uses it for taking essential knowledge regarding inventory.
Performance report: This report plays essential role for every business entity. Every business
entity formulated performance report to analysis result of their department outcomes it is a the
summery of all reports manger prepares it by collection data from each department of the
company. This will help identify the actual result and budget and standard results of the company
it is use as proof for auditing process. Manager of Creams limited use performance report in
order to analysing their workforce performance level (Watkiss, Hunt, Blyth and Dyszynski,
2015).
M1 Evolution of advantages of managerial accounting system
Management accounting systems provides various benefits to business organizations.
Creams limited is medium size organization and they have lack of resources thus their manger
use cost accounting system to determine costs and uses inventory cost techniques through which
they effectively use their scarce resources for manufacturing and selling process. Pricing system
help them to increase their sales revenue by determine effective price policies for their products
which satisfy customer and also useful for generates profits by selling various food products
(Jakhar, 2015). Here are several key advantages in context of respective corporation of described
MA systems, as follows:
System Benefits
Job Costing system: This method in Creams Limited is useful for
making polices related to control wastage and
additional activities during the manufacturing
process.
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Price Optimizations System For manager of Cream limited this mechanism
is advantageous to identify pricing policies of
their organization which can overcome cost of
product and help in gain profit (Silvius,
Kampinga, Paniagua and Mooi, 2017).
Inventory management system This could be benficial for Cream Ltd to
control risks related to inventories loss and
minimising inventories costs.
Cost management system This is beneficial for respective entity to
ascertain main cause of any increasing costs
and in optimising costs.
D1 Integration of accounting systems of management and their report
Manager of Cream limited use managerial accounting system and various repost for taken
as proof for their future audit process and implement useful polices for their business
organization. Both will use for providing essential accounting information which help in taking
decision and plans and policies for future use of their medium size organization. With the use of
these they can control extra cost of managing ice-cream and waffle food item and maintain
(Melitski and Manoharan, 2014).
TASK2
P3Statment of income by managerial accounting techniques
Business organization implements various methods of management accounting to calculate
cost and profit earned during specific period. Following are the technique use by Creams limited
to identify profit and cost value
Absorption costing: It is the technique of calculating cost of particular product by taking all
material together directs as well as indirect material or labour cost.
Marginal cost: It is also known as variable cost. This method includes only variable cost. It is
use to analysis effect of additional units on manufacturing cost and profit of the company
(Michalski, 2012).
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M2 Uses of management accosting reports for financing report:
Management accounting techniques uses for framing financial report with the use of information
collected by applying all those technique, manger could make their finance report and they also
can use it to identify tax amount. Manager of Creams limited use absorption costing system to
identify their cost and they also use standard costing to determine gap of their actual cost or
standard cost. With the uses of theses technique, they can formulate effective financial report
(Muller, 2019).
D2 Interpretation of financial activities through report
Financial report use for providing necessary information to relative stockholders of the Cream
Limited. Manager of this enterprises prepares fiancé repost in each year to determine their cash
flow activities and analysis liquidity position of the business organization. They use it to
effectively maintain their cash position within the organizations day to day transaction can easily
run without any. Here as shown above net profits absorption costing approach for month of Jan
and Feb are 50000 and -25000 respectively while such figure in applying marginal costing
approach are 50000 and -5000 respectively. Here difference in net profit figures are due to under
or over absorption of fixed overhead costs (Nartey, 2018).
Task 3
P4 Description of various planning control tools.
Planning tools are implemented by business organizations for planning and controlling purpose.
Following are the tools of planning uses for budgetary control:
Budgetary Control: It is a process of controlling budgetary activites of business organization
for implementing budget activites at predetermine time period.
Zero Based Budgeting: This method of budgeting is useful properly for newly establish
organizations or ventures. In this process budgets are prepared on the basis of collection of initial
level information. All the data collected from primary sources of information thus it is known as
This budget has been provided accurate information regarding future It is use for decentralization
process. Preparation of budget from this method is very complex. It requires high amount of
capital investment for researching and formulating of budget (Otley, 2016).
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