Management Accounting Report: Cost Analysis for Innocent Drinks

This management accounting report analyzes various aspects of financial management, using Innocent Drinks as a case study. It begins with an introduction to management accounting, emphasizing its role in decision-making and highlighting essential requirements for cost accounting, inventory management, job costing, and price optimization systems. The report then delves into different management accounting reporting methods, including budget reports, accounts receivables aging reports, cost accounting management reports, and performance reports. It further explores cost calculation techniques, comparing marginal costing and absorption costing, outlining their advantages and disadvantages. The report also examines the advantages and disadvantages of planning tools for budgetary control. Finally, it compares organizations based on their adoption of management accounting systems to solve financial problems. The report concludes with a summary of the key findings and recommendations for Innocent Drinks, emphasizing the importance of financial reporting and strategic objectives.

Management
Accounting.

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Task 1...............................................................................................................................................1
P1. Explain the concept of management accounting along with highlight essential requirement
of different types of management accounting system............................................................1
P2. Explain different methods used for management accounting reporting..........................3
Task 2...............................................................................................................................................4
P3. Calculation of costs by using appropriate techniques......................................................4
TASK 3............................................................................................................................................6
P4: Advantages and Disadvantages of planning tools for budgetary control.........................6
TASK 4............................................................................................................................................6
P5: Comparison of organizations on the basis of adoption of management accounting systems
to solve financial problems.....................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Management Accounting refers to use of various type of accounting provisions tools as well
as techniques in order to ensure that right decision is taken by top level management for
managers for or the purpose on which the overall efficiency and effectiveness with an
organisation issues can overcome (Abdusalomova., 2020). As the practice of management
accounting is very beneficial it helps to ensure for taking a right decision on behalf of company.
From this way accompany e make assure what whatever the strategies they applied must
generate some sort of positive outcome which helps to make there's such table growth in market.
In this following report the company has been selected innocent drinks which is small
medium Enterprise in UK. Innocent Drinks company manufacture soft drinks and smoothies to
sold in supermarket the product line up are coffee and various other outlets stop the company is
based on food and beverages industry and they usually sell more than 2 millions who is per week
(Akinbowale,, Klingelhöfer and Zerihun, 2020). The topic which covers in report about better
understanding of Management Accounting system post off apply different range of Management
Accounting techniques along with using of planning tools in Management Accounting. Compare
ways in which company can use Management Accounting techniques to respond their financial
problem. .
MAIN BODY
Task 1
P1. Explain the concept of management accounting along with highlight essential requirement of
different types of management accounting system.
The concept of management accounting is comprise about uses of different types of tools and
techniques which are related to accounting it helps to attain proper goals and objectives behalf of
organisation. Goals and objective which operation without issues and problem at the right
decisions can be taken through the top level of management.
There are different system which can utilise in Management Accounting are elaborates in
followings:
Cost accounting system- According to the system manager make sure that they are able to use
their right form of technique or strategies in order to control the overall cost and overhead
transactions in the organisation. In the perspective of innocent drinks company they can use this
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accounting system actively on the basis of making the right manner of decision to achieve their
goals and objectives.
Some of the essential requirements for this cost accounting system are followings:
 As cost accounting system should be able to reduce the overall cost organisation.
According to this way the practice of cost accounting system can help the manager of
innocent drinks company to maximize their level of profitability.
 To the cost accounting system also must ensure that overhead which company is bearing
are mitigate properly (Balstad and Berg., 2020). To constantly doing this practice has to
the top level management of innocent rings company to better optimisation of their
product or services cost.
Inventory Management System-. In this system, responsibility of manager as well as they need
to make sure that are they able to properly handle overall inventory and other operation work in
organisation measure the systematic manner or not (Chaudhry and Amir, 2020). Perspective of
innocent drink company manager their main role is to measure that every inventory or stock
must be optimised and manage as per the requirement of company context. Some essential
requirement for inventory management system are:
 Through inventory management system it must ensure that the Inventory of concern
organisation properly manage so that orders are tracked in a right manner. This tracking
system of managing of inventory master record to the anus and drink managers in a
compliance oriented process.
 Inventory management system also must confirm that the level of of inventory within a
company is highly standard so they should not any issue or problem which place time of
supply goods and services. Therefore manager of innocent drinks must have concern for
this practice.
Job Costing system: The job costing system test primary used within organisation at the time of
manufacturing of goods and service in order. Situation of ordering goods and services innocent
drinks company managers can use this system to timely in completion their job costing.
Essential requirement;
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 On the basis of job costing system must ensure that the job order in organisation are
manager effectively and efficiently. Through this way the top level management or
supervisor of innocent drinks company can properly manage their job orders.
 Job costing system helps to tracking the completion of job orders on a particular time in
which manager of innocent drinks need to ensure that whatever the order are to be place
must accomplish on allotted period of time.
Price Optimization System- Price Optimization System has to be used by the organizations so
that they are able to set a right price for their products and services. In this way the management
of Innocent Drinks can make sure that they are able to earn higher level of profits.
Essential requirements-
 Price Optimization System is required in the organizations so that they can ensure that
they are able to set a right price for their products and services. The managers of Innocent
Drinks are required to ensure this.
 Price Optimization System is required in the companies so that they can ensure higher
level of profits. The management of Innocent Drinks has to ensure this.
P2. Explain different methods used for management accounting reporting.
Management Accounting reports are majorly utilize by company and their financial expert
that they are able to analyse and interpret about the relevant information systematically.
According to this process the innocent drinks company the financial expert can analyses and
measure the information to increase the overall efficiency buy mitigate problems and issues
which they are faces.
There are various types of Management Accounting Report as follows:
Budget Report- this report is usually prepared on the basis of different types of budget within
the company such as cash budget, production budget and master budget (Cugova and Cug.,
2020). Manager of innocent drinks company e can make sure that they rightly use all these
budgets which increase their level of efficiency as within compliance oriented manner.
Accounts Receivables Aging Report- according to this report are used to the companies so that
they can able to track their Accounting receivables within perspective of company. This report
wood used to track about record of debtor on which it can easily analyses and performed which
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will make sure to attain specific goal and objectives to mitigate the problem at the time of
receive payments from trade receivables.
Cost accounting managing reports- from these reports to be used by organization to mapping
the level of cost. As it is used for measure the increasing of overall cost. According to this
technique also can be used or implement to the management where they can reduce the cost for
properly calculate the level of profit maximization. In context of innocent Drink company
management team have to decide to choose right one from this report to investigate there are
excessive cost and taking the corrective actions as required all motive to attain higher goals and
objectives.
Performance reports- this report use by the company so that they can able to analyses overall
performance of organization as well as employees. They can be used to evaluate and compare the
performance about any deviation and variance are found and two rectifying action can be taken
so that performance can be improved. Therefore the manager of innocent drink company e to
make use of these reports for ensure the increase of performance without any problem issue his
leading to the strategic objective successfully.
Task 2.
P3. Calculation of costs by using appropriate techniques.
Marginal Cost: It is a process of technique in which the marginal cost is charged as per on unit
cost and the fixed cost which is written off against the contribution. Furthermore technique can
be utilised through managers of innocent ring company to make sure about the Deccan able to
calculate the profit.
Advantages:
 Marginal costing technique is very simple and flexible to understand about its advantages for an
Innocent drink it can easily applied in organisation process. Therefore this help to the company to
determine the level of profitability without enhancing any issues.
 Another advantage of marginal cost technique is it support to determine the profit in organisation
that offers an advantage for manager of innocent drink. However this help to organisation can
lead towards adaptation of right approach on focusing the profitability and accuracy to analyse as
well as integrated the performance on decision making.
Disadvantages:
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 As marginal cost techniques having one disadvantage that it relies on different types of
assumptions which somehow it not work on certain terms (Fleischman and McLean ,
2020) . Marginal cost technique and grey disadvantage for companies because it is not
able to treat overhead practice is the rightful manner.
 Marginal Costing Technique can create disadvantage for the companies because it is not
able to treat the overheads in the right manner.
Absorption Costing: It is technique which is used to the organisation so that they can able to
identify the full cost has been cured with the process of production. The managers of innocent
ring company can make sure that they are able to use effectively and efficiently on which profit
can be determined and proper treatment of overhead can ensured.
Advantages:
 Absorption costing technique having a positive factor where company because it makes
shot that they are able to identify full cost of production. In perspective innocent ring
managers are able to make so that they can calculate their cost of using this technique.
 Through absorption costing technique creates an advantage for organisation to ensuring
that proper treatment of overhead must be completed. Therefore the manager of an
ascending this creates a benefit to them where they have to ensure to calculate their profit
improper accuracy form.
Disadvantages:
 Creates a disadvantage for organisation is it not simple to apply like marginal cost
technique. The manager of innocent drink company my face problem here regarding the
application of technic used within organisation.
 Through better absorption costing technical is too much on different types of a function
which enhance not result in accurate form.
Evaluation:
From above application not the techniques of Management Accounting can be applied in
a right form of manner so that the goals and objectives can be achieved. The manager of an
Innocent drink company utilize all these techniques to properly and sure measure and create a
detailed plan for a growth in behalf of the concern organization. To produce financial report can
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be utilised in company process at the time of interpretation of data to evaluate effectively.
Therefore it is the way they can make sure that are there able to desire a proper goal objectives
without facing any issues or uncertainty. In context of innocent drink company it could become
quite important that that day manager are able to use financial report to represent in audit
practices and also improve their overall performance to achieve the strategic or hierarchy age of
the competitors.
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TASK 3
P4: Advantages and Disadvantages of planning tools for budgetary control
The description of Budgetary control is emphasis about to managing income and
expenditure within the practise which it derives regulatory comparing actual income or
expenditure to better planned action required:
Cash Budget: Cash budget is structure that prepared by companies for their financial
managers on which they can able to estimate their overall receipt and payment on a specific
period of time. It is mostly prepare on the basis of yearly process stop the manager of innocent
drinks can use this project making so that they can able to rectify their desired goal along with
their objective and also manage their liquidity e without any significant issue.
Advantages:
 Structure of cash budget can be used to company so they can measure their liquidity level
(Gunarathne, Lee and Hitigala Kaluarachchilage, 2021). The financial manager of penis
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and drink company can make their receipt and payment transactions through cash budget
properly.
 Through cash budget it can be used by Organization on which they can able to maintain
the desired level of efficiency as a less effective business operation.
Disadvantages:
 Cash budget does not provide effective letter to the organisation in their cash budget
statement which can create challenges for organisation like yours and drinks to maintain
the for the transactions.
 Preparation of cash budget is a time-consuming as well as costly process. Therefore not
every form can afford it which is also a disadvantage to innocent ring company stop
Production Budget
It is a form of budget used by the company e to forecast their various type of requirements in
product and services as well as regarding the level of production in future time period (Hadid and
Al-Sayed, 2021). In the perspective of innocent drink company manager can use this production
budget to forecast there better production practices on upcoming time period.
Advantages ;
 Through production budget can help the organisation for identify the various type of
requirements which they have regarding in in production of goods.
 Another advantage of project budget can help to companies in making sure that the
production happens on a particular time period according to their requirements.
Disadvantages;
 As the production budget depends on various assumption for the purpose of forecasting
the data in which they can comprise the result in unethical conclusion.
 Budget cannot be adjusted according to the Future changes as well as on demand and
supply situation. It is a dynamic business environment that lead to disadvantage to a
company.
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Master budget: On the basis of this budget structure of organisation it comprises the operation
and financial plan for the future outcomes that protect on a particular period of time. This budget
also summarise the form of budgeted financial statements that prepare on a financial year of
ending.
Advantages:
 Master budget can help the company so that they can able to prepare proper systematic
forecast statements on multiple departments.
 This helpful for organisation so that they can accomplish the desired goal along with
objectives without facing any issues.
Disadvantages:
 Master budget can create a disadvantage for the organization because sometime it does
not provide accurate form of result which company expected so this can be a
disadvantage to innocent drink company.
 It can generate issues towards organisation as it does not provide them flexibility where
this could be a disadvantage for a company like innocent drinks.
Evaluation
The planning tools of budgetary control can used by the organization like Innocent drinks
company effectively (Namazi and Karamshahi., 2021). They can able to accomplish their desired
level of productivity in the market along with leads towards achievement of systematic way of
productivity to scrutinize and measure their cash related transition to evaluate expectancy profits
on the basis of financial planning.
TASK 4
P5: Comparison of organizations on the basis of adoption of management accounting systems to
solve financial problems
Financial problem: This encompasses on the basis of situation in which organisation faces
constraints and not able to accomplish the desired level of goals and objectives. The financial
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problem can be economic crisis, inflation, recession, unemployment and so on. In perspective of
innocent drinks company can faces financial problem from above factors for excessive caused
because of improper treatment of the overhead (Johnstone., 2020). Therefore it can directly
impact on companies productivity as well as profitability.
Techniques to solve financial problem:
 KPIs- it defines to key performance indicator and their role in financial as non financial
nature. This can be utilised by the organisation so they can able to estimate the overall
performance and identify the deviation and variance which are actually presentable. The
role of innocent drink company managers can make use of key performance indicator to
use to solve the financial problem of excess cost in terms of overcome from their
financial losses and productive employees performance to systematic manner.
 Benchmarking: It is a form of technique in which the national standards are not within
an organisation show the goal objective can be accomplished in further time of period. As
per the manager role of innocent ring company can use of this technique so that they can
able to solve their financial issue by setting the right standard Two specific problem
which they are facing and it will ensure that a goal or objective must achieve within
proper manner.
Financial Governance: Through this practise it comprise about various types of governance to
better measure to undertaken by the organisation on which they can make sure about better
maintain proper discipline manner. Therefore using of techniques, the management of Innocent
Drinks company can ensure that they can to better solve problem of excessive cost easily.
Differentiate of organisation:
Basis Tesco Asda Stores
Financial Problem As Tesco company seek for
financial problem which is
related to management of its
inventory.
Asda is facing a financial
problem of mismanagement of
job orders.
Management Accounting
System Used
Tesco company can make use
of high level of inventory
management system.
Asda tend to utilise
management accounting
system of job costing system
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towards solving their financial
problem (Kim, 2020) .
Application of the system Inventory management system
can be ordered that used to
gain by organisation on which
it able to overcome from
mismanagement through
better inventory management
record of outlaws and inflows
of stock will ensure efficiency
and effectiveness (Knauer,
Nikiforow and Wagener ,
2020) .
As per Asda company can
make their ensuring about
management job orders to be
done within proper manner
effectively and efficiently to
better gain outcomes.
On the basis of above comparison about two company like Tesco and Asda Stores on which
the management of Innocent Drinks would better generates outcomes by using of management
accounting. As the system cost accounting that made to solving problem within related to the
cost and use of inventory management which helps to made better solving problem related to
with inventory (Nakhayee, Yazdifar and Mehdi, 2021) . It is important to track and detect
financial problem for using systematic way for resolving it. The companies can ensure that they
are able to effectively and efficiently achieve their various types of goals as well as targets. In
this manner, the organizations can make sure that they can obtain a strategic edge. Thus the
managers of Innocent Drinks have to focus on detection of problems as well as finding a solution
to them.
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CONCLUSION
It is inferred from above report of Management Accounting is summarised at the management
accounting is helpful for company is it support to managers for undertaking valuable decisions
on behalf of their company productive growth. It is also understand that if the decision are
undertaken a rightful manner that ensure the achievement of higher level of efficiency as well as
effectiveness can be e optimise and it quite helpful for manager to achieve their goals and
objectives on a certain specific period of time. Different technique of Management Accounting
such as marginal costing absorption costing along with their advantage and disadvantage.
Introspective of manager of any organisation they must have to answer about their appropriate
technique what they want to use behalf of increasing their productivity standard or profitability.
As there are very service in which it is useful for management different types of method can be
utilised in the purpose of Management counting report forming install cost can be evaluated by
utilising the right technique and method to reduce expenses and increase the profit outcome.
There are certain advantage as well as disadvantage of planning tools budgetary control. In
situation of organisation they can adopt the system of accounting respond to their financial
problem and national statement helps to mitigate the risk and uncertainty Rises at the time of
financial year ending.
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