HND Business Unit 5: Management Accounting Report - Semester 1

This report, prepared for Regent College's HND Business program, delves into various aspects of management accounting. It begins by examining different management accounting systems, including cost accounting, inventory management, price optimization, and batch costing, outlining their essential requirements. The report then explores the formation of various management accounting reports. A significant portion focuses on applying cost analysis techniques to prepare an income statement, using both marginal and absorption costing methods. Furthermore, the report discusses planning tools used in budgetary control, analyzing their advantages and disadvantages. Finally, it addresses how organizations can leverage management accounting to respond to financial problems. The report provides a comprehensive overview of management accounting principles and their practical applications within a business context.

PROJECT FRONT SHEET
UNIT: 5 – Management
Accounting (Core unit 5)
UNIT CODE: H/508/0489
Learning Hours: 60
Hours.
Self-learning hours: 90
hours.
Course: HND Business –
Level 4
TQT: 150
CREDIT VALUE: 15 CREDITS Term: 1
Unit Leader: Lecturer: Internal Verifier:
PROJECT TITLE:
Learners Name: Term: 1 C
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Intake: Sept
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Registration Number HE05766 C
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Hand out Date: Week
Commencing
11/09/2017
Submission Date:
15/12/2017
Final Submission
where turnitin will be
blocked: 11/05/2018
Learning Outcome Assessmen
t Criteria
In this
assessment
you will have
the
opportunity to
present
evidence that
shows you are
able to:
Task Number Evidence Page
number
LO 1: Demonstrate an understanding of
management accounting systems
P1 P1 Explain
management
accounting and
give the
essential
requirements of
different types
of management
accounting
systems
P2 P2 Explain
different

methods used
for
management
accounting
reporting.
LO 2: Apply a range of management
accounting techniques
P3 P3: Calculate
costs using
appropriate
techniques of
cost analysis to
prepare an
income
statement
using marginal
and absorption
costs.
LO3: Explain the use of planning tools
used in management accounting
P4 P4: Explain
the advantages
and
disadvantages
of different
types of
planning tools
used for
budgetary
control.
LO4: Compare ways in which
organisations could use management
accounting to respond to financial
problems
P5 P5: Compare
how
organisations
are adapting
management
accounting
systems to

respond to
financial
problems.
Please see that you include the Turn-
it-in report. This work will not be
accepted without the Turn it in
report.
Report attached: Yes
No
If
n
o
R
e
a
s
o
n:
% of the turn it in
report.
Learners Declaration:
I certify that the work
submitted for this
unit is my own and
the research sources
are fully
acknowledged.
Learners Signature:
Ema Baciu
Date:14.12.2017
Plagiarism:
Any act of plagiarism will
be seriously dealt with
according to the colleges
and awarding bodies’
regulations. In this context
the definition and scope of
plagiarism are presented
below:
Plagiarism is presenting
someone’s work as your
won. It includes copying

information directly from
the web or books without
referencing the material;
submitting joint
coursework as an
individual effort; copying
another student’s
coursework; stealing
coursework form another
student and submitting it
as your own work.
Suspected plagiarism will
be investigated and if
found to have occurred
will be dealt with
according to the college
procedure. (For further
details please refer to the
plagiarism policy and the
student code of conduct.)

Table of Contents
INTRODUCTION...........................................................................................................................7
TASK 1............................................................................................................................................8
P1 various management accounting systems and their essential requirements......................8
P2 Formation of various type of reports in management accounting...................................10
TASK 2..........................................................................................................................................11
P3 Use appropriate method to determine net profit and make income statement................11
TASK 3..........................................................................................................................................16
P4 Tools in budgetary control and their advantages and disadvantages..............................16
TASK 4..........................................................................................................................................18
P5 Adopt management accounting system to respond financial problems..........................18
CONCLUSION..............................................................................................................................19
REFERENCES .............................................................................................................................21

INTRODUCTION
Each and every sort of company has to attain desired goals and objectives which is
decided by them. For above stated purpose, they need to follow some procedures and
management accounting is one of them (Ax and Greve2017). It is necessary to choose
appropriate data and information; therefore, it can be utilized to do an adequate interpretation. If
manager wants to acquire growth as well as success then, they have to take decisions quickly and
effectively. In this, proper data has to be gathered. Present report is based on Taj Stores which is
much famous firm in UK.
This PROJECT is going to describe many type of management accounting systems.
Along with this, there are various tools which are utilized by employer to find out cost in an
effective way. They can prepare budget for firm as it assists to control cost of operations. This
will help company to resolve financial issues as quickly as possible.
In this assignment, there is description about various management accounting systems
and their essential requirements. Some reports will be developed by manager in management
accounting. Company will use various methods to analyse net profits so that they will be able to
create income statement in a proper way. There are various budgetary tools are going to describe
into this report along with their advantages and disadvantages. Manager of an enterprise will use
many planning techniques. To reduce financial issues, organisation will utilize some system of
management accounting.
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TASK 1
P1 various management accounting systems and their essential requirements
In an association, it is essential to follow accounting systems in an adequate manner
because this aids to attain desired goals as well as objectives within limited period of time. Along
with this, superior can easily take judgements without any delay. For above stated purpose,
employer has to gather required data and information; hence, they can use it appropriately. Data
which is collected by superiors, will help them to manager their intrinsic management adequately
(Lapsley and Rekers2017). This will never give by them to the extrinsic party or outsiders. There
are some important field in which this can be utilized, such as strategic and risk management and
in addition measurement of performance. Hence, it will be executed with assistance of many
systems which are mentioned as following. Cost accounting system, According to Gibassier
(2017), Data and information which is gathered by manager needs to be record appropriately and
for this they can utilize perpetual accounting. As per this methodology, entire procedure is
classified into many aspects which is fundamental to fulfill by Taj Stores. Primarily, it is
required for superior to examine inputs which can be used in production procedure. After that, its
value need to be determined; thus, employer can easily find out cost which can be occurred in
this relation. Manager can made some assumptions and then abilities which are connected with
entire process can be recorded. Therefore, it is necessary for manager to manage all things in an
effective way.
As indicated by Job Costing system method, to attain coveted targets within limited
period of time, it is fundamental for staff members to perform their job in an appropriate way. As
they are producing goods for people; so that, cost will be occurred in this context. Hence, it is
must for to find out entire expenditures and record them so that unwanted expenses can be
reduced (Wanderley and et. al., 2017). Along with this, employer will find out that what amount
they can spend into their procedure of production. They cannot identify it in a specific way; thus,
it has to be determined in respect of overall units. Inventory management system, According to
Gibassier (2017), it is needed for an organisation to manage their stock in a proper manner. They
have to utilize best quality of product; hence, they can attract many people towards them. It is
must for an employer to find out that how much inventory they can be retained into their
warehouse. If it is over stocked then, this will incur high cost of carrying. Apart from this, if it is
under stocked then they will not be able to accomplish requirement of their customers within a
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specific time span. Therefore, it is necessary for management to do proper stock evaluation; as a
result, they can fulfil need of clients. Because if there is shortage of inventory them this can
provide impact on their profits as well as reputation.
Price optimisation system, Each and every kind of association wants to gain maximum
revenues and it is possible when people are willing to pay that amount which is settled by
employer of their goods and services. For above stated purpose, it is necessary for them to
consider many elements as this can influence judgement of firm which can provide impact to
demand of people. If prices of products are much high, then customers will not be able to
purchase that item. Therefore, it is must for employer to set value of goods which is affordable
for users and not affecting their revenues. Because if value of merchandise is high then this will
decrease demand of persons; as a result, this will develop losses (Soderstrom, Soderstrom and
Stewart, 2017). Batch costing, manager can start their production is batch. It portrays that, they
are going to produce items in group; thus, this can reduce their unwanted cost. But it is not
possible to find out cost of a single item. This technique is only utilized in those firm in which
they are producing only same kind of products. Hence, they can decrease cost of their production
process and improve their revenues. Along with this, there is no requirement to cater training to
employees as they are engaged in similar type of operation.
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Management Accounting System
Cost Accounting System
Job Costing System
Inventory Management
System
Batch Costing
Price Optimisation
System

(Source: Management Accounting System, 2018)
P2 Formation of various type of reports in management accounting
In management accounting procedure, manager has to formulate distinctive type of
reports; thus, they can record entire data as well as information which is gathered by them. This
will be utilized by them in upcoming future (Christ and Burritt, 2017). There are some kind of
reports which are stated as beneath:
Performance report is fundamental for an employer to evaluate performance of staff
members properly; therefore, this can be identified that they are doing their task in an adequate
way or not. As a result, if there is any issue then this can be eliminated within limited period of
time. Along with this, it will help them to enhance their total work performance effectively and
efficiently. To determine deviations, employer can compare actual performance with standard.
Reasons which are restraining growth of company has to be removed within limited time
duration; hence, coveted targets will be attained timely. Variable analysis report is a kind of
element can provide impact to revenues either directly or indirectly. This amount will fluctuate
according to the number of units which are manufactured. Therefore, it is necessary to control
this kind of component. It is directly connected with the profits of company. If it is high, then
profits of organisation will be less. Inventory control report is necessary for an organisation to
manage their stock in an appropriate manner (Lachmann, Trapp and Trapp, 2017). For above
stated purpose, they can utilize some methods such as Economic order quantity. This will help
employer to find out exact number of items which can be stored by them at warehouse. With aid
of this report, firm can easily determine their mistakes which are connected with under as well as
over stock. This trouble can influence supply chain of company in an adverse manner. Like if,
there is an issue of over stocking then this will incur carrying cost; as a result, profits get
declined. But if they do not have adequate inventory then, this will affect their reputation as they
are not fulfilling requirement of customers timely. Hence, this report will assist manager of Taj
Stores to maintain their inventory in a proper manner. Budget reporting: is like an estimation of
entire expenses as well as incomes of firm. It can be formulated by employer for a year or this
can be depending on policies of organisation. This sort of report aid superior to determine
distinguish amongst actual and in addition estimated performance. Management department will
provide proper budget to every division as this will help them to decrease unnecessary cost and
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they will complete their task within provided budget plan. This needs to be prepare by top level
authority and for this they can consider past year data.
Account receivable report, Creditors are an essential part which comes under
stakeholders of company (Jack, 2017). It is required for firm to cater credit administration to
their regular users but if they are not doing this then, this will affect their success as well as
improvement. In this report, there is description about all the creditors who are debts of firm. It
can have prepared on weekly or monthly basis by the employer. This will can depend on policy
as well as size of affiliation. With assistance of this report, superior can decrease their debts,
which helps them to keep up their goodwill at marketplace. Job cost report, to gain maximum
profits, an association has to execute many activities. There are various activities which is
perform by staff members. Some are profitable for them, but many occur extra cost. With aid of
this report, an employer can find out that which activity is much beneficial for them. It is must
for superior to solve issues within limited period of time; hence, they can complete their work
timely. Along with this, they can decrease their expenditures. Management accounting system
will cater many sorts of benefits to firm. It is necessary for manager to use cash in an adequate
way; so that, all task will be done effectively. Many exercises which are not must to perform has
to be removed from the process of production. As a result, cost will be diminished, and this will
enhance revenues (Matter and et. al., 2017). Along with this, to make proper planning manager
can utilize some data as well as information. This will assist them to take appropriate judgement.
It is necessary for an employer to give some responsibilities to labours; therefore, they can
execute their performance properly. In order to develop or prepare adequate report, it is required
for a manager to gather data. For above stated purpose, they can take assistance of many system
of management accounting because this help them to collect adequate data. Fundamental reason
behind it to take judgement effectively, which will cater long term success to enterprise. Along
with this, employer can examine performance and those issues which are hampering their
growth. By doing this, they can easily attain desired goals and targets within limited time
duration (Novas and et. al., 2017).
TASK 2
P3 Use appropriate method to determine net profit and make income statement
It is needed for an organisation to calculate cost of their production process and it must be
undertaken by them appropriately. For above stated aim some methods can be used by them.
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