Management Accounting Report: Jupiter PLC Case Study Analysis

This report delves into the realm of management accounting, employing Jupiter PLC as a case study to illustrate key concepts and applications. It begins by defining management accounting and outlining the requirements of different systems, such as job costing, price optimizing, cost accounting, and inventory management. The report then explores various management accounting reporting methods, including budget reports, accounts receivable reports, operating reports, cost accounting reports, and inventory management reports. It critically evaluates the benefits of these systems, highlighting their impact on operational efficiency, customer understanding, and cost control within Jupiter PLC. The analysis further examines how these systems and reporting mechanisms are integrated within the organizational context, emphasizing their role in decision-making and achieving business objectives. Finally, the report applies specific management accounting techniques, presenting income statements based on absorption and marginal costing methods, showcasing practical applications of the concepts discussed.

Management Accounting
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Table of Contents
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Introduction
Management accounting is a vital tool for the management of the company because it
helps the manager to make strategies and plans for business activities. By management
accounting reports and system, the manager can take effective control on the unnecessary
activities and also control the expenditures in the business operations. In this report, Jupiter PLC
information will be taken for further investigation. Jupiter PLC uses management accounting
tools and techniques to enhance their productivity and profitability in their business operations.
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Task 1(LO1):
1. Explain what is meant by ‘Management Accounting’ and give the essential requirement
of different types of management accounting systems.
Management Accounting: This simply refers to accounting which is used for the management,
i.e., this is the accounting which provides useful and essential facts to the management for
settling its functions. The management functions are: planning, organizing, directing and
controlling. It gives the required information to the management for efficient and effective
performance of these functions (Wouters, et. al., 2018).
The essential requirement of different types of management accounting systems which are
summarized below:
Various types of accounting systems and their role in integration with different organizational
process related to Jupiter PLC are discussed in below table:
Management Accounting Systems Description and uses in Jupiter PLC
Job Costing System As job costing is a system, with the help of
this manufacturing cost is assigned to an
individual product or batches of products.
Usually, job costing system is used only when
the products manufactured are sufficiently
different from each other. As Jupiter PLC can
implement this system when the products are
same to keep the track of order expenses. The
price estimation of job is done by accountant
keeping customer taste and preference in
mind. As after receiving the order, company
start the production and record cost in books.
And at time of completion of job comparison
is made with reference to estimated cost. So,
Jupiter PLC can use this, can get benefit out
of this job costing system (Wouters, et. al.,
2018).
Price Optimizing System This system is optimizing the product price so
that consumer would able to purchase at
agreed price. As, this system assist
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organizations to determine how demand will
fluctuate at different price levels. Jupiter PLC
can use this system for tailoring the prices for
customer segment by getting their responses
to different price levels. This type of systems
will help Jupiter PLC to decide pricing
structure for initial pricing, discount pricing
and promotional pricing (Cooper, et. al.,
2017).
Cost Accounting System It is a framework which is normally executed
by organizations to forecast cost of products
for profitability analysis, inventory valuation
and cost control. As it will be useful for
Jupiter PLC to know which products are
profitable for the organizations and which one
are not through estimating accurate cost
(Azad, et. al., 2016). Two types of costing
which can be used by organization to estimate
accurate cost:
Actual Cost:
The cost which is actually incurred or
paid. Actual cost is realized and does not
depend on an estimate. It is the cost which
included in financial statements. This cost is
recorded during the year while the company
is conducting business. For an example, for
company, Jupiter PLC, the standard cost for
manufacturing unit is 10 pound per unit and
actual cost is 8 pound per unit. And company
manufactures 100 units. So, the actual cost
which is going to be record in books is 800
pounds.
Standard Cost:
Standard cost is that, estimated
standard cost is set for the products. For an
example, Jupiter PLC, manufactures the
goods for the retailers, and they set the
standard cost for that is 25 pound per unit.
But actual cost occurs that is 30 pound per
unit, so the actual is more than standard cost,
there is variance of 5 pound per unit (Cooper,
et. al., 2017).
Inventory Management System It refers to the procedure of ordering, storing
and implementing a company's inventory: raw
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materials, components and finished goods.
Inventory is one of the most valuable assets of
company. In manufacturing, retail and food
and another sector which are inventory
intensive. And it is very important to manage
the inventory because shortage and excess
inventory both can leads to loss for company.
As it is necessary to know that when to
restock items, at what amount to produce and
at what price to pay. Jupiter PLC use this
system to check the inventory level in the
business operations. The proper inventory
supply in entire system reduces the time and
expenses for the organization. The Jupiter
PLC can use the different method of this
system like: FIFO, LIFO, JIT, etc (Wouters,
et. al., 2018).
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2. Explain different methods used for management accounting reporting.
Management accounting reports are very important to store and convey the information in the
form of figures and facts which are related to the business operations of the organizations. In
order to study the relevant information about the problems which are incurred in the
organization it is important and necessary maintain the records and review them in appropriate
manner (Demirag, 2017). Jupiter PLC use various management accounting reports to rectify the
problems associated with its operations, budgeting and investments. Some of the management
accounting reports maintained by Jupiter PLC are as follows:
Budget Reports: Budget report helps medium sized manufacturing organization to review their
business operations performance with the budgeted figures. The forecasted budget is usually
depending on the actual costs which are incurred in previous or past years. Jupiter PLC use to
maintain budget reports so that they can make planning to invest their fund according to
function, time and flexibility. Budgets reports also enable to organization to control research and
development and invest budget as per as to requirement (Cooper, et. al., 2017).
Accounts Receivable Reports: Jupiter PLC is concerned with their account receivables reports
as this report assists the management to know about the debtors and how much payment is still
in due and they need to receive payment in the form of bills receivable or other promissory
notes. Accounts receivable reports assists to the organization in preparing credit policy that is
related to investment in receivables (Wouters, et. al., 2018).
Operating Reports: Operating records are prepared and managed by Jupiter PLC to focus on
their operations. This reports also help then to improve supply chain management and deliver
finished products to customer when there is demand. Operating reports helps in calculating
break-even point both for product quantity and sales. This report helps in determining amount of
financial leverages of Jupiter PLC (Chiwamit, et. al., 2017).
Cost Accounting Reports: Jupiter PLC maintains the cost accounts and statements records as it
supervises and provide the management new methods and techniques of costing that is used in
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planning and decision making. The management can record the essential information in this
report so that it can utilize in the future for new product development (Azad, et. al., 2016).
Inventory Management Reports: Jupiter PLC manages inventory management reports to
holds the finished products in the stock and transfer in the market at valuable state. The main
purpose to maintain inventory management report is that it allows Jupiter PLC when to get
orders and in how many units’ order will they get in future. All the inventory cost which
includes carrying cost of holding any items, ordering cost of replenishing any item and shortage
cost comes under inventory management reports (Barr and McClellan, 2018).
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3. Evaluate the benefits of management accounting systems and their application within an
organizational context.
The various advantage of management accounting systems and their application in context of
Jupiter PLC is shown in a tabular format as under:
Management Accounting Systems Benefits
Price Optimizing System  With the help of this system, Jupiter
PLC can easily find out the attitude,
taste and preference of customers
which are based on different prices.
 It is also increasing the organization
operating profits with the best and
suitable prices according to the market
demand.
 With the help of this system, the
management can easily segregate the
customers (Lin, 2017).
Inventory Management System  Jupiter PLC can also enhance and
improve the accurateness of inventory
orders with this effective system.
 This system improves the business
operations effectiveness and efficiency
and also helps in saving money and
time.
 This system reduces wastages of raw
materials and manage entire supply
chain of the organization (Jeste and
Childers, 2017).
Cost Accounting System  Jupiter PLC can evaluate and measure
the business operations efficiency in
procedures and also helps the
management in making changes with
the use of this system.
 This system assists the management in
reduction and fixation of different
prices for the different product.
 It also gives important information
which are required for planning and
also in decision- making.
Job Costing System  This system assists Jupiter PLC in the
assessment of all kinds of cost during
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the manufacturing process.
 This system also avoids repetition of
efforts in the similar job will be
reflected.
 This system assists the management in
assessment of the quality of job done
(Demirag, 2017).
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4. Critically evaluate how management accounting systems and management accounting
reporting is integrated within organizational context.
Management accounting systems assists the Jupiter PLC in order to prepare the management
accounting reports to make and records effective and efficient decisions so that the management
could achieve pre-decided goals and objectives. Management accounting systems is the definite
process which is utilized by the management of an organization for smooth and flexible the
entire business operations of Jupiter PLC. Both management accounting reporting and
management accounting systems are required and also necessary in achieving their pre-decided
goals and objectives. With the help of it the organization can achieve their targets on timely
manner and also maximize their profits (Azudin and Mansor, 2018).
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Task 2 (LO2):
Apply a range of management accounting techniques.
Income Statement as per Absorption Costing Method
Particulars Amount
Sales (16,000*50) 8,00,000
Less: Cost of Sales
Opening Stock Nil
Manufacturing Costs (16,000*35) 5,60,000
Closing Stock (2,000*35) 70,000
Fixed production Overhead Costs 1,00,000
Net Profit for the period 70,000
Working Note:
Direct Material 10
Direct Labour 20
Variable Production Overhead 5
Total variable production cost 35
Income Statement as per Marginal Costing
Particulars Amount
Sales (16,000*50) 8,00,000
Less: Variable Costs (16,000*35) 5,60,000
Contribution 2,40,000
Less: Fixed Costs 1,00,000
Net Profit 1,40,000
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