Management Accounting Report: Analysis for Imda Tech Business

This report provides a comprehensive overview of management accounting systems and their application to Imda Tech. It begins with an introduction to management accounting, emphasizing its importance for organizational decision-making and financial performance. The report then delves into various accounting systems, including cost accounting, inventory management, and job costing, highlighting their advantages. Different accounting reporting methods, such as performance reports, account receivable reports, and inventory management reports, are discussed. The report further explores various costing methods, including cost-volume-profit analysis, absorption costing, and marginal costing. It also includes an analysis of accounting techniques and a critical evaluation of income statements. The report also covers the merits and demerits of different types of budgets, the use of planning tools, and a critical evaluation of financial issues. Finally, the report discusses the balance scorecard and its role in resolving financial issues, concluding with a summary of key findings and recommendations.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting and their essential need for Imda Tech.........................................1
P2: Different method of accounting reporting............................................................................3
M1: Advantage of types of management accounting system......................................................4
D1: Critical evaluation of various types of reporting method.....................................................4
TASK 2............................................................................................................................................4
P3: Various types of costing method use in calculation net profit .............................................4
M2: Analysing various accounting techniques...........................................................................9
D2: Critical evaluation of incomes statement.............................................................................9
TASK 3............................................................................................................................................9
P4: Merits and demerit of various types of budgets....................................................................9
M3: Analysis of various planning tools....................................................................................11
D3; Critical evaluation of financial issues................................................................................12
TASK 5..........................................................................................................................................12
P5: Balance scorecard...............................................................................................................12
M4: Evaluation of financial issues............................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
This project model is all about discussing vital information about management accounting
systems. It has been determine that company is always looking to gab new opportunities those
are valuable in order to attain their future aims and objectives. The role of finance officers is to
make use of appropriate accounting systems in order to make entries of financial transaction
incurred during the time. This project report is providing vital information about various
accounting system and reporting those are essential for them. While use of costing methods in
calculating net profit for Tech Imda are discuss under this report. Merits and demerits of using
various types of budgets are discussed effectively. Use of balance scorecard in order to resolve
financial issues are assist in this particular report (Amoako, 2013).
TASK 1
P1: Management accounting and their essential need for Imda Tech
In accordance with using crucial accounting systems in organisation are primary reason
for the company. According to be mentioned case study of Tech Imda, it has been analyse that
there financial performance are not effective during the last couple of year. To make analyse
their valuable implication they are appointed a financial analyst to overlooks all necessary
financial statements in more effective manner. Management accounting is a systematic process
of recording, summarising, communication and analysing their implication to an organisation.
This will assist owners of the company to make use of valuable decision to control their all
expenses and costs those are applicable during the course of action (Brewer, Sorensen and Stout,
2014). The role of managers is to analyse all crucial aspects those are vital for the company in
order to increase their efficiency and growth during the period of time. There are various types of
systems which can be helpful in making better understanding of decision making in near future
time. It has been found that their certain specific comparison among financial and management
accounting. Both of them are different on the basis of their nature and characteristics.
Management accounting Financial management
This seems to make proper analysis of all
reports that are prepared by during the
period of time.
In this case, managers use to make report by
collecting necessary information from various
departments.
It does not require any kind of calculation Under this, entrepreneur has plenty of rules
1

and analysis of financial statements. and regulation needed to be followed to make
decisions.
The time horizon is identified through the
company itself.
The primary focuses are made on the financial
years of an organisation.
Besides value data, it is generally provide
specific ideas of quantitative data made by
the accountant.
All vital information in the financial statement
is mostly distinct as per the required financial
regulations.
Importance of using management accounting system:
It is a helpful for an organisation to make appropriate decision making in order to attain
future aim and objectives. Another crucial aspect of using various accounting systems is to
enhance efficiency of Tech UK in coming time. This is preparing accurate and timely financial
as well as statistical data to managers in order to make short terms obligations.
Types of accounting system:
Cost accounting system: It is an effective process of recording, classifying, evaluating
and allocating alternative actions in order to control overall costs for an organisation. The
primary aim is to advise the management in the vital course of action those are relies on cost
efficiency and capability of an organisation. This will guide accountant to analyse overall
production done during the period of time.
Inventory management system: It is said to be ongoing process of moving effective
parts and products into the company’s location. It is responsibility of managers to control their
stock on regular basis as they place any new orders for their product. This will assist in analysing
overall performance by measuring overall quantity of product owned and kept by a business that
is related either for resale or as raw material (Lim, 2011).
Job costing system: It is an essential system for assigning production costs to an
individual product or group of products during the period of time. Basically, the job order
costing is useful only in case of products produce are relevant from one another.
Batch costing: It is more similar just like job costing in which every information
regarding product manufacturing data and time are recorded effectively. Total list about group of
batch produce during the time are mentioned under this costing.
2

Contract costing: This seems to be continuous flow of costs that are associated with a
particular contract. It is use to track cost those are related with a particular contract in accordance
with a customers.
Product costing: It is a kind of cost that is related in order to create an specific product.
These costs consists of direct labour, direct material and factory overhead.
Service costing: This particular process which is associated with operating cost that is
used by an organisation that produce services to the customers instead of developing products.
P2: Different method of accounting reporting
In every organisation, whether related with retail or manufacturing they need to make use
of valuable information in order to generate more crucial outcomes during the period of time.
Business reporting is said to be summarise form of all financial information which are collected
from various department in order to identify current position of the company. On the basis of this
report crucial decision are needed to be taken by the managers. There are different sources from
which information would be collected such marketing, finance and operational department.
Every data will be collected, summarise, communicate and make valuable comparison on the
basis of past position (Tessier and Otley, 2012). These reports are presented by the company in
front of investors and external stakeholder to analyse and make valuable investment decision in
their ongoing projects. There are various types of accounting reporting method those are helpful
for an organisation to record crucial information associated with the company’s present time
performance. Some of them are discussed underneath:
Performance report: It is an essential activity in accounting system. It consists of
collecting and disseminating project data, communication of upcoming growth in project, proper
utilisation of resources and future progress as well as different stakeholders. The analysis is done
by evaluating actual performance with the present time position of the company. An yearly
performance report could be produce for every employee of Tech Imda so that they can able to
increase their skills and capability.
Account receivable report: According to this particular report which is made to determine
total list of unpaid customers bills and unused credit memos as per their mentioned date. This
particular report is happens to be primary tools which will be used for collection of personnel to
analyse which amount is still outstanding for payment.
3

Inventory management report: as per this particular report which is use by Imda tech to
manage their stock position those are incur during the period of time. By the help of this report
all necessary detail about opening and closing entries of data is being recorded in effective
manner. There are various accounting techniques which are needed to be use for the purpose of
analysing position of stock such as inventory turnover ratio and Economic order quantity level.
Job cost report: this particular report is the initial place of the data contained in under the
report. All list of job a company are working on and list of total cost which are incurred on the
job in period of time are recorded in this particular report. This must allow total number of lot
size of products a company is able to produce during the period of time (Zoni, Dossi and Morelli,
2012).
M1: Advantage of types of management accounting system
In accordance to generate more valuable outcome for the company in near future, they
need to make use of appropriate accounting system those are helpful to analyse financial stability
at that period of time. All essential types of systems those are discussed above are having their
own benefit which makes them separate from one another. Such as cost accounting system is
more reliable tool that assists an organisation to delivery more specific outcomes in respect to
costs and expenses. While some other are job costing, inventory management system are
effectively important to increase profitability for the company.
D1: Critical evaluation of various types of reporting method
On the basis of all detail report those are prepared by the managers in order to determine
current position of the company is essential aspects for Tech UK. These reports are presented to
the investors and stakeholder for the purpose of making valuable decision regarding capital
investment in their projects. Some of them are performance report which is necessary to be
analyse on continuous basis to remove any obstacle arise during progress of a project plan.
TASK 2
P3: Various types of costing method use in calculation net profit
Cost is a necessary aspect for every business organisation in order to increase overall
production for the company. The cost is directly or indirectly related with the production process
in the form of direct labour, material or other essential overheads. It is the value of amount which
4

is being given by the company to get something. There are various types of costs which are
associated with the manufacturing of electronic gadgets. Such as:
Cost volume profit: According to this particular analysis which is used to examine about
modification in costs and volume which affect a company’s total operation revenue and net profit
during the period of time (Klychova and et. al., 2015).
Absorption costing: It refers to the important types of costing method which is related
with all manufacturing process. It consists of both variable and fixed costs because of this; it is
termed as full costing sometime (Absorption costing, 2018). In order to make future decision
managers cannot consider this tool more reliable for making valuable decisions.
Marginal costing: According to this particular costing method which is said to those cost
which is incur with the production of additional units during the time. It included only variable
cost and fixed costs are taken as just to analyse total contribution they are getting from overall
sales. In respect to make future decision, it is consider more dependable and reliable up to a great
extent.
5

6

7

8

M2: Analysing various accounting techniques
In respect to analyse the overall performance of Tech Imda, it is necessary to make use of
appropriate accounting techniques. It will assist an organisation to make reliable and accurate
results in terms of increasing overall productivity by using proper resources in right manner.
Some of the techniques are said to be standard one which are use by an organisation to
evaluation their actual target which are being set before delivery product to their customers.
Historical cost are also need to be considered because on the basis company use to make certain
comparison.
D2: Critical evaluation of incomes statement
Reconciliation statement
Net profit as per the financial account -375
Add: Under absorbed cost 5000
Selling cost 2125
Net profit as per cost account 6750
It has been found that managers of Tech UK can use two of the most important costing
method which are will assist them to get more close results. Those two are absorption and
marginal costing. In case company go with marginal costing they are able to get negative loss of
2875. While with the use of absorption costing they are able to incur 375 losses during the period
of time. The results are not in the favour of the company. They need to cut down their expenses
those are incurring during the production process. After deducting all necessary under absorbed
cost those are incurred during the financial accounting period. On that basis, they are able to earn
a net profit of 6750.
TASK 3
P4: Merits and demerit of various types of budgets
It has been seen that a company can only attain its aims and objectives in case they are
using right planning tools which would assist them to control budgets in more effective manner.
There are various types of budget Imda can use in their daily business growth. Some of them are
discuss underneath:
9

Operation budget: According to this particular budget which will be use by managers to
analyse their total cost and expenditure incur during the time of production process. It includes
proper estimation of total values of resources those are needed for the performance of any
operations (Bovens, Goodin and Schillemans, 2014).
 Advantage: According to this particular budget which is used by an organisation to track
their entire business. It would indicate both amount that is spend and cost which is
needed to make any products.
 Disadvantage: Time factors are the important aspects which are needed to be considered
by the managers. An experiences person can attempt to consider effective tools which are
needed for the company are missing under the plan.
Cash flow budget: According to this particular budget which is prepared by the account
offices to determine total flow of cash which is going from business or coming back. These
primary sources of budget preparing are taken from various activities such as investing,
operating and financing.
 Advantage: It does not able to consider time value of factors. Proper flow of cash will be
easily being identified as deficit form or surplus.
 Disadvantage: It is used to analyse cash receipts and cash disbursement for the period of
time. The major limitation is that once the recovery period is completed it can be able to
provide reliable outcomes for the company (Klychova, Faskhutdinova and Sadrieva,
2014).
 Financial budget: It is known a combination of balance sheet that indicate all effects of
planned operations and capital investments related with assets, debts and equity. It
consists of a cash budget that is prepared to forecast total flow of funds.
 Advantage: One major advantage of having a financial budget for the company is to
recognise total opportunities that can assist in the market and increase the overall budgets
for the company.
 Disadvantage: It can be able to deal with more subjective problems such as quality of
products those are delivery to their customers.
Capital expenditure budget: These are those funds that are being used by the company
to attain, upgrade and maintain physical equipments as per the property and assets.
10