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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