Management Accounting Report: Enhancing Zylla Company Performance

This report, prepared by a management accounting officer, provides a comprehensive analysis of management accounting practices within the Zylla Company. It begins with an introduction to management accounting and its various types, including cost accounting, job costing, and inventory management systems, highlighting their importance in improving firm performance and achieving sustainable development. The report then delves into the diverse methods of reporting systems used by the company, such as performance reporting, operational reporting, and inventory management reports, emphasizing their role in enhancing profitability and transparency. The core of the report explores costing methods, specifically absorption and marginal costing, demonstrating their application in profit analysis through detailed calculations. Furthermore, the report discusses the advantages and disadvantages of different planning tools and how management accounting can respond to financial problems. The report concludes by summarizing the key findings and recommendations for improving the management operations of the Zylla Company, emphasizing the use of management accounting tools for effective decision-making and sustainable growth.

MANAGEMENT
ACCOUNTING

Table of Contents
From: Management account officer.................................................................................................1
To: General Manager.......................................................................................................................1
Subject: For improving the management operations of the Zylla company. ..................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting and its types:.............................................................................1
P2 Diverse methods of reporting system used by the Zylla company:..................................2
M1:.........................................................................................................................................3
D1:..........................................................................................................................................4
TASK 2............................................................................................................................................4
P3 Costing methods used for profit analysis:.........................................................................4
M2:.........................................................................................................................................5
D2:..........................................................................................................................................5
TASK 3............................................................................................................................................6
P4 Advantages and disadvantage of different planning tools:...............................................6
M3:.........................................................................................................................................8
D4:..........................................................................................................................................8
P5 Management accounting to respond financial problems:..................................................9
CONCLUSION ............................................................................................................................10
REFERENCES..............................................................................................................................12

From: Management account officer
To: General Manager
Subject: For improving the management operations of the Zylla company.
INTRODUCTION
Management accounting is the tool which is used by each firm in order to improve the
performance in an effective manner. With the help of management accounting, Zylla company
can gain the sustainable development. Under this report, various management accounting tool is
defined their advantages for getting the firm development are used. But for gaining the
sustainability, firm makes certain management accounting reports. In this assignment, absorption
and marginal costing methods are used by the firm in order to optimise the profits of the firm.
With the help of budgetary tools, company could perform better (Figge and Hahn, 2013). There
are certain tools that can be used by the Zylla company in order to assess the work so effectively.
However, this can be said that the company needs to make certain tools that can be used by the
firm so that this can gain the sustainable development.
TASK 1
P1 Management accounting and its types:
Management accounting is the process which is used by the firm for making management
accounting reports that could helps the firm for making business decisions effectively. This is the
process of assessing, interpreting and demonstrating of accounting information gathered by
taking help of financial accounting system (Management Accounting, 2017). There are certain
tools that can be used by the firm so that the business can be used by the firm in order to assess
the performance of the firm. With the help of management accounting tool, Zylla company can
effectively use the available resources within the firm.
There are some management accounting tools which are explained hereunder:
Cost accounting system: Cost accounting system is the major tool which are used by the
firm on order to renders the cost efficiency in the firm. However, this is the most effective tool
which are used by the firm in order to lower the per unit cost of production. By using this,
company can eliminate the cost. This is also known as the lean accounting system which is used
by the firm in order to improve the performance. This helps the firm to eliminate the cost
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effectively. Cost accounting system is the best way to make the cost of production so that they
could effectively eliminate the wastage cost.
Job costing system: This is the collection of costs of materials, labour and the overhead
costs for a particular job. Such approach is an effective tool which is used for tracking the
particular costs to the individual jobs and assessing them to oversee if the costs could be limited
in a later jobs. Job costing is implemented to gather costs at a small unit level. This is the
procedure of assigning the costs spends to incur to a particular job when the business is covered
with.
Inventory management system: This is the management system which is used by the
firm to keeps track of its stuff (Zimmerman and Yahya-Zadeh, 2011). This is the tool which can
be used by the firm in order to manage the inventory and also helps the firm to effectively
manage the available resources. By using this system, inventory is optimum used and no wastage
of money occurred.
Price optimisation system: This is an effective tool that can be used by the firm in order
to optimize the price of the product. However, for determining the price is a crucial tool, and
price optimisation is the best way to determine the exact price of the firm. This is used by the
Zylla company for determining the price at which customer is willing to purchase the product
and firm can get utmost benefits for the firm.
These are the tools which can helps the firm to gain the sustainable development.
P2 Diverse methods of reporting system used by the Zylla company:
There are various methods of reporting system that can be used by Zylla company in
order enhance the profitability and growth. They needs to have the great organised reporting
systems so that each business transaction can be recorded transparently. However, management
accounting systems are used by taking help of the financial statements of the firm. MA tools
does also assist the firm to gain the profitability by minimising the wastage costs. The
management of Zylla company can take the decisions so effectively only by taking help of
management accounting reporting tools. The performance of the firm can be assessed so
effectively so that the business could lower the wastage of the firm. Management of the firm can
accumulate the data from financial and non- financial sources for making the reports which are
useful for making strategies for the firm so that the firm can get the competitive advantage so
effectively. This is crucial for the firm to maintain reports so that any mistakes and any fraud can
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not incur. The future investment of the firm is totally relied upon these reporting upon which
goodwill is totally depends. There are so many reporting system which could be implemented by
the Zylla firm. Few of them are as follows:
Performance reporting system: As per this reporting, essential information about firm
previous and current year performances which are recorded. This reporting system is used by the
firm by applying diverse statements. This is essential report as future investment related
decisions are interpreted if the performance of the firm is sound in the past few years.
Operation reporting: This is the information which are connected with the production
process which covers the costs and expenses which covers the over production procedure. This
would assist the firm to identify actual costs spend by the firm during the particular period
(Ward, 2012). However, this can be said that operational reporting system are connected with the
internal reporting system.
Job cost reporting: This is the reporting system which covers of those costs which
charged over material, labour and other production overhead. This is an efficient tool which are
used by the firm to track actual costs levied on an individual jobs and evaluate them critically.
Inventory management report: This is the key decision in production, retail and few
service organisations is at what level of inventory firm needs to have on hand? Stock in the firm
is commonly a firm largest asset. This helps to apply the effective component of supply chain
which demonstrates flow of products from manufacturer to storehouse. This reports is totally
related to chase of products, billing records, supplier information and delivering data.
Account receivable report: This covers of particular lists of debtors. With the help of
this report, firm can get the sustainability so that the business can able to have the effective
policies. The company can attain the pre-set targets by applying account receivable report.
M1:
This has already elaborated that MA is an efficient technique for assessing firm's
performance. This would likewise to assist management of Zylla company to acquire optimistic
outcomes by using available resources. For this aim, they assist the firm to get positive outcomes
with the available resources. For achieving the positive outcome, management of the cited firm
uses diverse management accounting system which could assist them to satiate their aims and
objectives. This is considered as one of the key aspects to firm. Because, optimum profitability
could attained via effective system (van der Steen, 2011). Long term decisions can be formed by
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using MA techniques. In addition to this, the overall efficiency of the firm can be achieved
under this.
D1:
An accurate outcome can be achieved only by applying adequate financial information which
could assist the firm to plan their future aims. For this aim, reporting is the useful technique on
which decisions of the cited firm are based. Financial report are made by implementing essential
information about the current year and previous year performance. This is implemented by
investors for making capital investment plan in the forthcoming projects. The key source of data
collection is taken from income statement and balance sheet. Job cost reporting and performance
reporting is on the topmost priority as optimum attention of the firm are depends upon these two.
TASK 2
P3 Costing methods used for profit analysis:
Costing is termed as the process by which all the cost related to the manufacturing and
selling of products are covered. These are covered under material, labour and overheads which
implemented at the time of manufacturing. This is normally known as monitory value which
brief with efforts and resources implements for delivering quality products to its customers. This
covers variable costs which change with the vary in the unit. These are known as the direct costs.
In the financial accounting, there are so many costing methods which are implemented for
incurring optimum profits and sustain a great future for the firm. Few of them are as follows:
Absorption costing: This is the costing tool which treats all the costs, whether these are
variable or fixed, are covered. This is assumes to be the best method which allocates particular
part of fixed production costs to each unit and also fixed costs (Tucker and Parker, 2014). This is
also known as the full costing methods as entire manufacturing costs are known as the product
costs.
Marginal costing: This is the cost which vary with the change in the per unit of
production. However, this can not consider the fixed cost while calculating the marginal costing.
However this can be said that the company charge the price of the product for per unit of
products if these are more than the marginal cost of manufacturing goods then this is positive
sign to produce that unit.
Calculation by using marginal costing:
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Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Computation through Absorption costing
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
M2:
There are so many components that are influencing the profitability of a firm. They could
be concerned with the internal and external factors. For eliminating these, managers are
implementing diverse management accounting tools like- microeconomic tools which are
concerned to the cost-volume profits analysis, flexible budgeting and the cost concerned
variances. By implementing these techniques under the firm, each issues can be solved in an
effective manner (Tayles, 2011)By adopting these tools in the business operation, each issues
could be resolved. While other tools and techniques are the activity based costing and overhead
cost techniques that are totally connected to the manufacturing process. This is done to frame
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positive comparison between actual and the standard costs which are implemented by the firm in
order to manage the wastage funds.
D2:
In the above-mentioned table, profits is calculated by using marginal costing method and the
absorption costing methods. Net profits is maximised by using absorption costing method under
the cited case. By using absorption costing the net profit is calculated as 7800. while on the other
hand, by applying marginal costing, the net profits is calculated as 7500. which is 300 less than
the profits calculated as per the absorption costing.
TASK 3
P4 Advantages and disadvantage of different planning tools:
The budget or planning tools are the most crucial tools which are used by the firm in
order to gain the competitive advantages over the rivals. The budget is an estimation of incomes
and expenses for a particular period of time. However these are made on the basis of the previous
financial information. With the help of budget, firm can improve the performance of the business
operations of Zylla company (Types of Budgets for Businesses, 2017). However the company
needs to have certain tools that can be used by their managers in order to make the budget or
planning tools.
There are so many budgets or planning tools which are applied in firms. In this, the below
mentioned planning tools are used:
Static budget: This is the budget which is fixed and does not change with the cost of production.
A static budget is the one which forms forecasting values about inputs and outputs which are
conceived before the period in question started. When compared to actual outcomes which are
gained after the fact, the numbers from static budget are usually totally different from the actual
outcomes.
Advantages:
the main benefits of static budget is that this is easy to implement in the firm. This is not required
to be updated regularly via accounting periods which they are intended to cover. In addition to
this, a static budget could offer deep investigation into the firm's costs and profits at the time of
variance analysis is executed. It enables the firm to overview where it is overestimating or
underestimating its expenses and earnings henceforth, it can make changes accordingly.
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Disadvantages:
The main drawback of the static budget is that it's lack of flexibility. If a firm incorporates a
budget which is based on the particular level of sales quantity and quantity increased. This can
not allocate extra resources to keep up (Contrafatto and Burns, 2013). In addition to this, if a firm
determines underperforming areas of the firm, this can't allocate extra resources to help. This can
adversely influence firm's revenues stream. In addition to this, static budget are based on the
earlier data, newer firms might have more difficulty in incorporating and implementing them.
Henceforth, this is the more useful tool for firms with greatly predictable sales volume and costs.
Flexible budget: This is the budget which vary for changes in the volume of activity. The
flexibility budget is highly sophisticated and helpful than a static budget, which keeps at one
amount regardless of the volume of the activity.
Advantages:
This is the budget which changes during the budget. Flexible budget is the one which enables to
adjust relies on the change in the hypothesis which is required to form the budget at the time of
management planning process. A static budget keeps the same even if there are important
changes from assumptions made at the time of planning. The highest advantages which is
flexible budget which has over a static budget is its adaptability.
Disadvantages:
In each time, all production in a budget could be flexible. For instance, a firm's rent
expense is fixed for the entire year. This is not practical to estimate that to vary each month or at
each quarter. In either a flexible budget or static budget, the rent is fixed (Bodie, 2013).
Sales budget: This is the budget or planning tool which covers estimation of the future
sales for a particular period of time. However, this is assumed to be the best tool which are going
to implement these tools that can be used by the firm so that actual outcome could meet out the
budgeted figure. If the variance or deviation covers then the company's management could
overcome these by applying the best management practises.
Advantages:
This is the tool which helps to determines the sales estimation and makes strategy as well. This
planning tool also helps the firm to eliminate the wastage costs so that the firm can get the
competitive advantages over the other rivals. This the tool that helps the firm to make strategies
which help the firm to maximise the sales values.
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Disadvantages:
The main drawback of the firm is that the management not always makes an exact
estimation of the firm. That is why, firm estimate inaccurate data that would make the firm
ineffective performance. The management of the cited firm can not make certain prediction for a
particular period of time. Once this is made can not be altered (Baldvinsdottir, Mitchell and
Nørreklit, 2010).
Cash flow budget: This is the most effective tool which is used by the firm in order to
predict the cash inflow and cash outflow for a particular period of time. With the help of cash
flow budget, firm could get the sustainable development.
Advantages:
By using the cash flow budget, firm could make their future spending plans so that the
management save their amount effectively. The company can use their business operations so
effectively by taking cash budget. Management also know about their future earnings which are
going to realised in cash for a particular period of time. This is an effective organised
information about total cash implement by firm during the year is identify easily.
Disadvantages:
The main constraint of cash budget is that it does not estimate an exact cash inflows and
outflows. Henceforth, on believing this planning tool, firm can not attain its pre-set objectives.
M3:
In connection to get more dependable results, organization's utilized to frame budgetary plans.
For this reason, different budgetary plans instruments are used. These all are utilized to make
powerful assessment of organization's execution and to make essential strides for advance up
gradation. With the assistance of this, long term obligations can be paid to accomplish future
purpose. Operating plans or plans are utilized to make investigation of expenses and costs that
are bring about by Zylla organization at the time of production. While, on the other hand, cash
budgets are utilized in order to decide total cash during particular year.
D4:
For assessing the performance analysis, various factors are requires to be analysed which could
affects the performance of the firm. This is linked with management of routine business
operations. This influences the financial and non financial factors which are used by the firm.
This is the main responsibility of the managers of the Zylla company to assess and evaluate those
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financial related problems or issues so that the company can not adversely influence the firm's
profitability. For resolving these issues, firm implement Key performance indicators,
benchmarking, financial governance and others tools.
P5 Management accounting to respond financial problems:
The financial problems arises due to the lack of practises of the management accounting
system in a firm. However, this can be said that the company needs to adopt various systems
which assist the firm for getting the sustainable development. The financial problems are the key
major constraints which can occurred in the firm (Guest, 2011). This is the reason, company
could not make certain tools. However, there is a need to make overcome these financial
problems in the firm by applying effective management system in the firm. However, there are
certain tools in the management accounting which are used by the firm so that the business can
attain various pre-set objectives of the firm. There are certain tools which can be used by the firm
in order to provides problems in an effective manner. There are certain tools which are as
follows:
Key Performance Indicators: This is the measurable value which demonstrates how efficiently
a firm attains key business objectives. Firms apply this KPIs at various levels in order to assess
their success by attaining the pre-set targets. A optimum level KPIs must concentrates on the
entire performance of the firm, while on the other hand, low level KPIs concentrate on the
processes in the divisions like- sales, marketing or others.
A KPI is the effective tool whci helps the managers of the firm an also to the employees gauge
the efficiency of different functions and processes which are important for attaining the firms
objectives (Ellis, 2010). A firm KPI is linked to the firm's strategic objectives and are
implemented by the firm to help managers to evaluate whether they are on goals as they work
towards these pre-set goals and targets. A customer support team may assess the average on hold
time for customers and the percentage of call which emerge in a more post call survey rating and
overall customer satisfaction.
There is a need to implement key performance indicators. But that must be well developed so
that the consistent review of the firm's processes can be done. Enhancement in the employee
engagement and customer satisfaction assessment must be positive. Which helps the firm to get
the sustainability.
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Benchmarking: It is an effective management tool which is used by the firm in order to
overcome financial problems that can assist the firm to gain the sustainable development.
This tool helps the firm to show whether the firm performance is stronger or weaker than the
competitors. This would provides a clear picture of where improvements are required and how it
requires to enhance profits (DRURY, 2013). This is the regular process of consistent
improvement. Once the changes implemented, then there is a need to benchmark business in
order to feel the results. With the help of this, what is working, and firm can improve their
performance. This is the continuous process under which firms regularly seek the improvement
of their practices.
This is usually used by the firm in order to evaluate the performance of the firm by
concentrating on one or more particular business. These are the indicators which might be the
cost per unit, productivity, defects per unit or others. The measurement of the performance is
then compared to that of the other firms within the similar industry. This is the process which is
usually applied by the strategic management. Firms needs to assess so many aspects of their
processes and compare them to the procedures of the best practice firms.
With the help of benchmarking information gained from such a comparison enables firms to
assess how well they perform in comparison with the best and in turn emerge new and advanced
strategies in order to work towards improving or considering the best practices (Ball, Grubnic
and Birchall, 2014).
Financial governance: This is the most important tool which are used by the firm in order to
effective transparency in the operations of the firm. However, this can be seen that the company
needs to provides effective tools so that the financial governance can be improved. This complies
all the finance related performance of the firm so that the business can be done so effectively.
Corporate scandals like- Enron Debacle and collapse of Bearings Bank, have demonstrates the
requirement for sound and stronger supervisory regulations for those company which are listed
on any exchange. However, each country have their own regulation like- JSOX in Japan,
Turnbull in the UK, and MI52-109 and Bill 198 in Canada. Every regulation effectively
identifies imperative, stricter personal accountability of the corporation's executive management
and inner controls for the adequacy of reported financial statements (Baird, Jia Hu and Reeve,
2011).
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With the help of financial governance, company could do all the financial related processes so
effectively.
CONCLUSION
From the above mentioned report, this has been concluded that the Zylla improves their
performance by applying various management accounting systems. Under this report, net profits
of the firm is optimised so effectively by using the absorption costing. However, various
advantages of diverse budgets and disadvantages are defined in this report, and also renders the
platform in order to enhance the performance of the firm so that the business can get the
sustainable development. Financial governance, key performance indicators, benchmarking are
also used by the firm in order to respond the financial problems in the firm. However, this can be
said that the company needs to make certain tools which are used by the firm for achieving the
sustainable development.
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REFERENCES
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