Detailed Report on Management Accounting for Imda Tech

This report provides a comprehensive analysis of management accounting principles, specifically tailored for Imda Tech, a company specializing in chargers and gadgets. It begins with an introduction to management accounting, highlighting its importance in short-run decision-making and its role in preparing daily, weekly, and quarterly reports. The report then delves into the practical application of these principles, examining various methods such as cost accounting, lean accounting, throughput accounting, and transfer pricing. It also explores different management accounting reporting methods, including budget reports, accounts receivable aging reports, job cost reports, and inventory management. The report further analyzes cost calculation using both marginal and absorption costing approaches, presenting income statements and comparing their outcomes. Finally, it discusses planning tools for budgetary control and effective approaches to address financial problems, providing valuable insights for Imda Tech to enhance its financial performance and decision-making processes. The report concludes by emphasizing the significance of management accounting in achieving organizational success and offers recommendations for improvement.

MANAGEMENT
ACCOUNTING

Contents
INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
P1 Management accounting and its requirement.........................................................................................3
P2 Methods of management accounting reports......................................................................................4
TASK 2.......................................................................................................................................................5
P3 Calculation of cost with the help of marginal and absorption costing approaches..............................5
TASK 3.......................................................................................................................................................8
P4 Different type of planning tools for budgetary control.......................................................................8
TASK 4.....................................................................................................................................................10
P5 Effective approaches to deal with financial problems with the help of management accounting.....10
CONCLUSION.............................................................................................................................................11
REFERENCES..........................................................................................................................................12

INTRODUCTION
Management accounting helps an organization in its preparing their daily routine reports
through which they can take effective decisions which are beneficial for a firm. These are totally
based on short run and thus their outcomes are providing future benefit to an entity. Hence
management accounting is an effective approach which should adopt by managers while
preparing weekly, monthly and quarterly reports (Hammad, Jusoh and Ghozali, 2013). If managers
found any deviations in working then they can settle it down according to its nature and kind.
Thus this is a main benefit by management accounting for any business purpose. The present
report is based on Imda tech which is one of a company who generally made special type of
charger and gadgets. Their products are satisfactory in nature. In this assignment methods of
management accounting reports are also discuss with the cost efficiency techniques. Also
importance of budget is going to be discuss in this report and how firm is going to respond
different financial problems which occur during an entire year. All these things are going to be
discuss in this report in more detailed form so that an organization can take effective decision
which are concern with their business entity
TASK 1
P1 Management accounting and its requirement
Management accounting helps all the managers to prepare their short run reports of their
daily and weekly operations through which they can sort out all deviations in an appropriate
manner. It is also consider as the advice to an organization on which effective and suitable
decision can be taken out (Balakrishnan, Labro and Soderstrom, 2014). They use to drive out the
success of a firm in a systematic manner because they combine both the financial and non-
financial data to make a complete picture. These reports typically shows the cash statement, sales
and revenue generation etc. statements from which managers can easily find out that which is a
most essential component of working.
As per the information it get identify that managerial accounting of a firm aid an
organization to take beneficial decisions which are helpful for them for better future. It is
completely concern with the short term decision and evaluation of reports which are prepared on
daily/ routine basis. Hence it is consider as an essential requirement component because whole
operational judgments are related with this management accounting approach.
For this purpose several number of management accounting system are already in trend
which are utilizing by managers to identify the rate and range of profit which a firm can attain in
near future course of time. Managerial accounting is refer to such records and analysis of data
and information which are gather by managers in manual or computerized form. It is totally
belong to such situation when an entity track the cost of production which is related with their
manufacturing of goods and services which are offered by them to their target number of
customers. The different number of managerial accounting system are as follow:
1. Cost accounting: This approach is beneficial because it leads to analyze cost which is
incur at the time of job order processing or process costing. Job order costing method is

useful at the time of tracking the cost which get indulge on large business project and
they took some couple of years in its execution whereas on the other hand process costing
refer to as such situation when there is a continuous flow of production of goods and
services. Such operations are taking place on regular basis and take more cost as it cannot
get identify properly.
2. Lean accounting: This method is completely different from the traditional cost
accounting method because its boundaries are not limited to cost only. It is extent beyond
measuring the cost because it lead in eliminating all wasteful resources and promote in
making the success criteria of project more (Baldvinsdottir, Mitchell and Nørreklit, 2010). By
preparing reports any excessive cost get identify although managers by consulting this
technique can control such type of unnecessary wastage in an appropriate manner.
3. Throughput accounting: The main purpose behind using this approach is to identify the
requirement which is mandatory for a firm in making their production related activity
more successful. By conducting this technique managers can identify the insufficient
amount of material, labor etc. so that they can increase their production and provide
appropriate quality products (Breuer, Frumusanu and Manciu, 2013).
4. Transfer pricing: As per this method transfer pricing leads to increase the cost of a good
because in this scenario product pass on from different number of departments and they
all add some value in it.
Hence all these are some of the famous approaches which are using by some
organizational managers in identify that their cost are in control or not. Along with this
they can also minimize the chances of wasting of resources so that all task can get
execute in a proper manner.
Imda tech can use such management accounting system for calculating their cost
of production. They can control their cost and look over on reports on all such operations
which are taking place in a firm on their routine basis. Hence this approach is useful for
their managers if they consult.
P2 Methods of management accounting reports
Reports are prepared with the purpose to identify the circumstances and unfavorable
situations which might get arise in an organization. These reports are helpful in finding out such
deviations and managers tend to work on them as soon as they can. So these reports are helpful
and increase chances of success of any firm more than desire probabilities. So it’s a basic duty of
each and every departmental manager to prepare reports on daily and monthly basis as it lead in
making and working on operations in an appropriate manner. These reports are helpful in
analyze the performance of a business and lead to take effective decision on the basis of them.
Financial reports are providing the details which are related with long run purpose of
business and they are generally for the external stakeholders of business. On the other hand
managerial accounting reports have a significant purpose which is totally concern with internal
stakeholders of a firm and management have to take decisions on their basis. Also these reports
aid them to take suitable judgments by analyzing and interpret the data which are based on short

run business. In this scenario there are some important and modernly analyze approaches and
methods of management accounting reports which are discussed as below:
1. Budget report: Budgets are the essential element which is helpful in identify the expenses
and control their cost. It is one of a crucial reporting system because budget preparation
have a concern for saving organizational resources and utilize them in a proper manner. If
formulated budget get fully utilized with a proper saving then it should consider as one of
the effective using of budget (Burritt and et. al., 2011). With this concern company
performance also get judged. Managers and owners have to prepare a separate column in
budget for their employees. With the help of this thing they can provide incentive to their
workers so that they get motivated and work in an appropriate manner.
2. Accounts receivable aging reports: The main reason behind such type of report formation
is to identify the problems which are related with a business collection process. Managers
have to use such aging information to identify that what type of customers are failed in
paying their debts. After analyzing such important things an organization have to tighten
their policies of credit. Also collection department have to look over on old debts so that
they made appropriate policies for such type of collection.
3. Job cost reports: These are prepared for some special projects which can provide higher
return after their execution. Management have to consider such projects which provide
them more return and have to neglect such operations from which they can attain lower
profit margin. Also it leads in analyze expenses when a project is in process so that they
can get control and make new assignment successful.
4. Inventory and manufacturing: With the help of such reports an organizational managers
have to identify their inventory so that they can control their production (Bushee, Carter
and Gerakos, 2013). This help in control their cost and expenses so that all of their
resources get utilize in a proper manner.
All such reporting techniques are helpful for an organization to make their firm
successful for long term purpose. These reports are prepared on weekly, monthly and
quarterly basis as all these are helpful in eliminating some unusual cost and wastage of
resources.
Imda tech use this approach in a significant manner although managers have to
prepare such reports from which they can control their cost of production and operate
work in a significant manner. With the help of reports they can look upon each and every
acts so that whole work get done in a proper manner. With the help of budget preparation
approach they can control all of their expenses and eliminate such type of cost which
affect production and operations. Hence, reports system make work easy for life run.
TASK 2
P3 Calculation of cost with the help of marginal and absorption costing approaches
Income statement as per the absorption costing approach
Particulars

Amount Sales (1500*35)
52500
Less: Cost of production Direct material (2000*5) 10000
Direct labor (2000*8) 16000
Variable production overheads (2000*2) 4000
Total variable cost of production 30000
Fixed production overheads (2000*5) 10000
Cost of production 40000
Less: Closing stock (40000/2000*500) 10000
Cost of goods sold 30000
Under/Over absorption (1000*5) 5000
Gross profit
17500
Less: Non production overheads
Less: Fixed selling, distribution and administration expense 10000
Variable selling, distribution and administrative expense (15% of 52500) 7875
Total non-production overheads 17875
Net profitability -375
From the above information it is clearly get identify that Imda tech is going to incur the
loss of 375. Which signifies that somewhere their working is not appropriate and thus their
organization is bearing such type of loss. For this purpose managers have to use some effective
managerial accounting approach through which their work get improved and they become able to
attain profit in a significant manner. Hence after consulting some appropriate techniques they can
convert their loss into profit which is not important thing for their survival.
Income statement as per marginal costing:
Particulars
Sales (1500*35)
52500
Less: Cost of production Direct material (2000*5) 10000
Direct labor (2000*8) 16000
Variable production overheads (2000*2) 4000

Total variable cost of production 30000
Cost of production
30000
Less: Closing stock (40000/2000*500)
7500
Cost of goods sold
22500
Less: Variable selling, distribution and administrative expense (15% of 52500)
7875
Contribution
22125
Less: actual fixed production overheads
15000
Less: Non production overheads
Less: Fixed selling, distribution and administration expense
10000
Net profit/loss
-2875
Apart from absorption costing marginal costing approach also showing the loss of -2875
which signifies that company really need some suitable techniques from which their work
become effective. After using some appropriate methods might they will find effective results
from which all of their working lead towards improvement.
Some major description about both the topics are as follow:
Absorption costing: Under this approach it get clearly identify that it includes all such
cost which are using for making and production of a good. That’s why it is termed as the full
costing method. It is useful when there is only one product. It is not applicable on more than one
products because if firm are using this concept in such a manner then it leads in incurring more
and more cost of a product which is not appropriate for long run survival of a firm (Garrison and
et. al., 2010).
Whereas an organization which is dealing with one product and sold only a single goods
then they have to include their fixed cost if they are not going to do so then their final cost
become too low which further leads in incur loss.
So absorption costing is beneficial for such type of rims who do not deal with multiple
number of products and generally deal with single number of products. Otherwise an entity will
lead to ascertain more and more loss and their customers also get disturb from such things
(Grafton, Lillis and Mahama, 2011).

Marginal costing: It is consider as the variable cost which signifies that such cost can get
changed at any time. It is a sum total of all such cost which are indulge on any product so as the
total volume and sales get rise the cost of product tend increases. It also plays an important role
in decision making procedure because the changes have to get determine in an appropriate
manner which are taken for any new business project. So managers and management can take
effective decision on such basis. That’s why it is consider as the principle costing technique.
It is calculated on multiple number of products because if a firm is engaging in multiple
number of operations then decision taking for an appropriate function can be determine.
TASK 3
P4 Different type of planning tools for budgetary control
Planning is an essential factor on which basis finances is get divided. This is one of the
most critical factor because with the aid of conducting right making plans technique it needs
enough quantity of price range in enforcing all the undertaking. The price range can be forecast
at the destiny basis through putting in place the goal and goals or also get prepared via
accomplishing beyond year budgets. So use of finances in different planning method are as
observe;
1. Strategic plan; it is formulated for the entire company by means of placing a venture. In
this undertaking all of the sports of each and each department are get into consideration. So
senior authority can prepare price range consistent with the challenge or projects which they
want to perform in a yr.
2. Tactical plan: they're the supporting plans of the strategic plans. They ought to get
completed in a proper time frame. So this manner is likewise beneficial for making ready
finances due to the fact they pass on the important records which are related with charges.
3. Operational plan: The budget for this stage of control get completed at the same time as
taking all of their activities under consideration. Operational plans include all of the day by day
ordinary features which are going on everyday foundation. Finances ought to formulate by using
including all the activities which can be taking area on each day basis.
In this consideration different type of budget get prepared through which an organization
can utilize all of its resources in an appropriate manner. All such are helpful in making and
creating effective planning and implement it in a proper manner. Thus from such things
prosperity of a firm get increase.
1. Master budget
2. Operating budget
3. Cash flow budget
4. Financial budget
5. Static budget

All these are the types of budget which business entities should have to consult. After
using all such things working become effective in nature. The basic brief description of
all such are as follow:
Master budget: This budget is prepared for the entire accounting year. It consists of all
such prices which an organization have to undergo all through an accounting yr. on the
way to discover suitable path from wherein they can arrange their fund. So the simple
reason of this sort of finances education is just to set the targets and objectives which an
enterprise want to achieve.
Running finances: It allows in estimating day to day operational charges of a enterprise
so a separate price range is ready for that. It facilitates them in making the clear expertise
approximately the routine operations in order that firm effectiveness can increase and
normal sports get controlled thus. It leads in reduce the uncertainty which affect the
enterprise maximum. So for this difficulty operating finances is ready.
Monetary finances: This price range format is consulting because it facilitates in
imparting a really perfect assessment of every and every factor. It has separate column
and rows of each small to huge matters which ought to taken into account. Its miles one
of the convenient approach for budget components.
Coins drift budget: Its miles an estimate for all of the coins influx throughout a certified
time frame to all the cash expenditure which can be taking place at some point of a route
of time. Estimates may be organized whilst taking all of the month-to-month, bimonthly
or quarterly basis (Macintosh and Quattrone2010). This is one of the most suitable
approach in step with management accounting system because it could be prepared on the
idea of month-to-month and quarterly basis.
All these things are some of the essential factor for making and preparing budget.
With the help of effective planning tools and organization can attain all of its goals and
objectives which they should want to achieve. Hence, this factor contributes more in
Imda tech because they are suffering heavy loss and once they utilize all such planning
tools of budgetary then it directly aid them in their survival and long term sustainability
in a firm. So such techniques are helpful for them.

TASK 4
P5 Effective approaches to deal with financial problems with the help of management accounting
After analyzing all such things by the Imda tech they found that they are suffering from
heavy financial crises. Thus this lead in affect their business and their productivity also. In this
concern they have to use some approaches from which all of their working become appropriate.
First of all they have to find out the problems which are the main reason behind such type of
failures and problems. Once they identify such things then they have to work on them which
further help them in making solutions of them.
Managers can use managerial accounting approach from which they can find out
deviations with the help of reports on weekly, monthly and quarterly basis. Once all such things
get done they have to use appropriate financial governance strategy which aid them in using all
of their fund in a proper and systematic manner (Simons,2013). Hence this help them in getting
overcome from this crises also.
Also they have to formulate some strategies and financial tools from which they can
overcome from all financial issues. Financial equipment are get utilize through an enterprise to
kind out all of the financial issues which are taking place. Those making plans equipment are
beneficial for formulating design and assignment must get done according to the actions in which
they formulate. So it decrease the range of probabilities of economic problems. Once the
projects get carried out in step with the plan there's very little bit probabilities of monetary crises.
So planning tools are useful in overcoming from monetary troubles.
The strategies have to be in favor of an entity from which all issues get sorted out. It is
the duty of management to hire a managerial accountant which help them in measuring their
reports on daily and weekly basis. It is quite costly for them but not more than the cost of firm
survival (Ward, 2012). Thus they have to work in this concern because this is the only point from
which their working become effective and they can overcome from any financial problems
which create barrier in their success and survival.
Managerial accountant have to present its report in front of board of directors on time and
thus management have to formulate some approaches and techniques from which all of their
project execution lead towards positive direction. So they have to work in an appropriate manner.
Also managers have to work in this concern because they better know about the reasons behind
differences. Such differences and deviation get sorted out with the help of managerial accountant
and its accounting system and they also have to prepare budget so that all of their resources get
utilize in a proper manner and thus their cost get in control.
Hence from all such discussion it is clearly get identify that strategies are the main reason
behind success and failure of any business. If they work in proper manner then it help them in
sustainability of firm and thus reduce the chances of failure.
CONCLUSION
It is concluded from the above report that managerial accounting is a procedure from which an
organization can take short term decision which provide benefits in long run operations. It is one of the

most essential tool which is completely different from financial accounting in which decisions are taken
on whole year basis. Also it provide flexibility in nature of working because as per considering this a firm
can change their strategies according to demand of time. It includes various cost which are helpful in
determine the price of a product which offer by a business organization. Various financial tools are
determine in which budget plays an important role for this purpose. Hence as per such approaches
many financial problems get sorted out.

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