Management Accounting Systems and Reporting: Jupiter PLC Report

This report examines the application of management accounting principles within Jupiter PLC, a UK-based manufacturing company. It begins with an introduction to management accounting and different system types, including job costing, price optimization, cost accounting, and inventory management systems. The report then explores various management accounting reporting methods such as performance, inventory management, accounts receivable, budget, and sales reports, highlighting their benefits for Jupiter PLC. Furthermore, it analyzes the integration of management accounting systems and reporting within organizational processes, using Tesco as a case study to demonstrate how these systems can be integrated. The report also delves into marginal and absorption costing methods, calculating profit and loss under different scenarios. Finally, it identifies planning tools used in budgetary control, and the use of management accounting for solving financial issues, and guiding the organization towards sustainable growth.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Management accounting and different types of systems............................................................1
Methods of management accounting reporting...........................................................................2
Benefits of management accounting systems related to Jupiter PLC.........................................3
Critically evaluate how management accounting system and reporting is integrated with in
organisational process ................................................................................................................3
TASK 2............................................................................................................................................4
Marginal costing..........................................................................................................................4
Absorption costing......................................................................................................................5
TASK 3............................................................................................................................................6
Advantages and disadvantages of different types of planning tools used in budgetary control. 6
Different planning tools and their application............................................................................7
TASK 4............................................................................................................................................8
Management accounting system to respond to financial problems............................................8
Management accounting leads organization to achieve sustainable growth...............................9
Planning tools in terms of leading organisation towards sustainable success of organisation. . .9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Management accounting is the application of suitable concepts and techniques in process
existent and proposed economic data of an entity to help management in establishing plans for
sensible economic objectives in the making of logical judgement with a view towards these
subjective (P. Tucker and D. Lowe, 2014). In the context of report chosen company is Jupiter
PLC, it is a medium sized manufacturing company that are based on UK.
The present report consist of meaning of management accounting and different types of
management accounting systems as well as managing report methods. Describes benefits of
systems related to management, management accounting systems and management accounting
reporting integrated of organizational process. Calculate profit and loss with the help of marginal
and absorption costing method. Identify planning tools in management accounting and
organisation use this accounting for solving financial issues.
TASK 1
Management accounting and different types of systems
Management accounting is the process of organisation that recording all information after
that arrange these information according to uses then merge all accounting information. It is
directly connected to top level management for proper manage of every departments.
Job costing system – It is a framework of the costs that are related to specific job because in this
accumulated of costs related to material, labour and overhead. It is related to specific production
and specific job for required to submit information about the cost to the customer (Hiebl, 2014).
With the help of cost information estimate the accuracy of the Jupiter PLC and also record the
activity of each item. It should be able to excerpt prices that accept for a reasonable profit.
Price optimization system – It is the mathematical analysis to find out prices of the products that
are customer easily to pay for purchase of the product. If Jupiter PLC have too high price of
products so custom er are not easily purchase of product but price of items is too low so business
do not make profit. Prices of the products are decided according to overall demand in the market
and also according to level of competition.
Cost accounting system – It is framework that are used by firms to predict the cost of products
related to Jupiter PLC. It is also using for profitability analysis for cost control and inventory
valuation. A firm must know about those products that are giving profit long time to company
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and also know about that product are not giving profit for long time. It will helping to know
actual cost of every products of Jupiter PLC.
Inventory management system – It is the ongoing process that are keep tracking to goods are
coming and outgoing from Jupiter PLC. It is a manufacturing company so for production needed
different types or material for different stages. When production start so many times materials
movement happen so that time need to manage of inventory. It will be managed by technology
related to software and hardware (van der Steen, 2011).
Methods of management accounting reporting
Management accounting reports are using for evaluate the performance of the Jupiter
PLC. It is related to various departments for maintain effective accounting system and measure
of performance by planning and executing. These reports are as follows-
Performance Report – Mainly this report effected to management accounting of Jupiter PLC. It
will keep track of the performance of every department that are related to the company. With the
help of this report junior administration accountant evaluate and represent to show strategical
development apply by company and what effect shows on performance.
Inventory management report – This management report prepare for maintain stocks in proper
way. In these reports inventory are shows by using methods of LIFO ( Last in first out ), FIFO
( First in first out ) and weighted average cost method. Company according to suitability adopt
and method and apply on stocks regulation. In this including items like as inventory waste,
overhead costs and labour per unit cost.
Accounts receivable report – It is preparing to show critical instrument for overseeing income
when clients credit to clients. This report shows fluctuations of of cash flow when debtors are not
paying on time and balance of cash up and down after determination. After that many clients are
set as defaulters who are not paying on time and some are reduce from bad debts (Cooper,
Ezzamel and Qu, 2017). In Jupiter PLC prepare report of these types debtors are not paying on
time and find out the number of debtors and invoices of the company.
Budget report – These reports are prepare to estimate of total expenses and income for future
time period. It is mostly prepared by the private companies for preparing strategies to giving
competition of other companies. It is preparing on the basis of past financial reports that are
presenting to situations of the company and how can deal with it for more earnings.
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Sales report – It is useful for management to know sale of the company because it shows
demand of the product of Jupiter Plc. In present time market competition is high so maintain to
sale of the products need to strategies. It will be prepare after know sales of the company as well
as demand of the product. In this report consist of particular accounts and revenues, retail sales
and wholesale (Merchant, 2012).
Benefits of management accounting systems related to Jupiter PLC
Management accounting system are important part of the organisation and it will adopted
by Jupiter PLC according to suitability. All systems have benefit to achieve organisation
objectives and goals and also helping in business growth.
Accounting systems Benefits
Job costing system Provide specific information related to specific
job
Inventory management system Achieve efficiency and productivity in
operations
Price optimization system To know price of each products and services
Cost accounting system Ups and downs in profit and loss
Critically evaluate how management accounting system and reporting is integrated with in
organisational process
Management accounting system and management accounting reporting are the essential
elements of business operations and management. Management accounting system helps in
consolidating the required transactions and reporting is a process of presenting these transactions
and details in a defined format. Management reporting presents the summarised information to
managers and accountants of organisation that helps in managing the sections and operations of
business in more significant and specific way (DRURY, 2013). Moreover, measure and evaluate
the suitability of the dominant part of their genuine activities, exhibiting new activities that
enhance execution where possible.
Reporting work mainly depends upon the accounting system's stability and function. The
feasibility and transactional support helps in managing the business to communicates the goals
and vision of business in more better and significant manner. Authoritative accounting reporting
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add to consistent improvement in a business is through the headway and blend of cost the board
structures.
At managerial level management reports plays vital roles in forming the stages, assisting
decision making process and management of accounting information. The process that mainly
helps in managing the sections are mainly associated with creating the plans and managing the
sections for better development and change. As opposed to arranging and controlling entirely at
the division or utilitarian measurement, associations do in that capacity at the activity level, for
instance, stock purchasing or the charging and portion receipt process. Associations measure the
costs of information sources and decrease or get rid of those costs that include for all intents and
purposes zero regard.
Tesco's Inventory management accounting system and its relation with management
reports
There is reverse cycle runs around the organisation in terms of making the effective
decision and making the effective accounting structure. Tesco is one of the international retail
sector organisation that deals in various customer products. Inventory management accounting
system is the main accounting system that helps in consolidating the essential information for
managing the sections and making the forecasting of upcoming orders. The orders of creating
plans and managing the sections for converting the changes are analysed on the basis of
inventory management reports (Agbejule, 2011). Overall conjugation plans helps in converting
the reports in effective decision making process. Strategic positioning and reporting also remain
integrated with creating the marketing plans for various customer products.
TASK 2
Marginal costing
It is a method apply where the variable costs are reasoned as the production cost and the
fixed costs are well-advised as the costs of the time period. There is fixed cost is totally written
off against the contribution for particular time period and variable cost is charged from unit of
cost.
Calculation of net profit by using marginal costing method
Particulars Amount
Sales revenue = ( No. of goods sold * selling price = 50 * 16000) 800000
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Marginal Cost of goods sold: 560000
Production = ( Marginal cost per unit * Produced units= 35*18000) 630000
Closing stock = ( Marginal cost per unit * Closing Stock Units = 35 *
2000) 70000
Contribution 240000
Fixed cost 100000
Net profit 140000
Absorption costing
It is a method that regarding to both variable costs and fixed costs as commodity costs.
This method of costing is essential especially for reporting purposes. In the reporting purposes
including financial reporting and tax reporting.
Computation of net income by using absorption costing method
Particulars Amount
Sales = (Price of selling * no. of units sold = 50 * 16000 ) 800000
Cost of goods sold- 560000
Production = ( Marginal cost per unit * Produced units= 35 * 18000) 630000
Closing stock = ( Marginal cost per unit * Closing Stock Units = 35 *
2000) 70000
Gross profit 240000
Less – under absorb fixed production cost 10000
Net profit/ operating income 230000
(b) After changes of production unit and closing units changes are coming in profit and loss are
as following -
Calculation of net profit by using marginal costing method
Particulars Amount
Sales revenue = ( No. of goods sold * selling price = 50 * 16000) 800000
Marginal Cost of goods sold: 560000
Production = ( Marginal cost per unit * Produced units= 35*19000) 665000
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Closing stock = ( Marginal cost per unit * Closing Stock Units = 35 *
3000) 105000
Contribution 240000
Fixed cost 100000
Net profit 140000
Computation of net income by using absorption costing method
Particulars Amount
Sales = (Price of selling * no. of units sold = 16000 * 50) 800000
Cost of goods sold- 560000
Production = ( Marginal cost per unit * Produced units= 35*19000) 665000
Closing stock = ( Marginal cost per unit * Closing Stock Units = 35 *
3000) 105000
Gross profit 240000
Less – Under absorb fixed production cost 5000
Net profit/ operating income 235000
TASK 3
Budget
It is a financial plan that are prepare for future estimation on the basis of present and past
activities of the business. It is including in the process of costs and expenses, resource quantities,
assets and liabilities, revenues and cash flows.
Budgetary control
It is controlling process that are focusing on every department budgets and according to
that compare between actual; and standard results of the organisation. It will keep eye on
organisation that follow of the budget to achieve its objectives and goals.
Advantages and disadvantages of different types of planning tools used in budgetary control
Planning tools are helping to using budgetary control in the company for strategic
management, planning, decision making, forecasting and controlling process. It is play crucial
role for budgetary control (Hoque, 2011). There is various types planning tools are using in
budgetary control are as following -
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Contingency tool –
It is using to know about unidentified scenarios are created in the Jupiter PLC. It is
describe situation after evaluation and clarifying expected results acquire after changes and
development in the company. It is mainly used to determine various situations that are
occurrence in the organisation.
Advantages – It is classified in fixed analysis that are control for using to conduct business
operations.
Disadvantages - There is no highlight specific changes are determined for business operations
with in organisations.
Scenario tool
It is method that are using for different types framework related to tasks and projects of
the company. It is presents qualitative and quantitative data to present creating scenario. These
are helping to understand complexity of the business are creating reason of required changes and
variations.
Advantages – It will helping to understand accurate scenario that are creating for particular tasks
and projects of the company.
Disadvantages – By qualitative research are not giving proper information and not easy to
understand exactly situation of the company.
Forecasting tool
With the help of this tool forecasted results that are on the basis of current, past trends.
This tool mainly focusing on fluctuated works and situations in the company and analysing the
project facilities (Yalcin, 2012). It is presents information in graphical way for easy to describe.
Advantages – It will helping to know future estimation and changes and beneficial for
manufacturing and retail organisations.
Disadvantages – After evaluation results are not properly correct and not describe uncertain
conditions and situations.
Different planning tools and their application
Budgets provides a forecasted information regarding future events and tasks. The process
of creating plans and managing the accounting information are consolidated with the budgetary
control process. A well identified and consolidated form helps in defining plans for creating
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accurate budgets and forecasting the budgets. Type of planning tools can be implemented in
organisations as follows;
Application of Scenario tool: This tool can be implemented by analysing the particular
scenario and making the particular task and procedures for creating plans and managing the tool
for better use and implementation process. For better budgeting plans it is required to clarify the
scenarios at initial stage. Organisation can apply this rule at initial stage by comprising the
specific scenario and changes with in organisation. Activities for better change and development
mainly depends upon proper implementation process (SEAL and et al, 2014).
Application of Forecasting tool: Organisation can utilize business figure instruments to
help foresee deals, spending plans, and the sky is the limit from there. Having a precise image of
your business' potential utilizing information and market patterns can enable you to set and meet
destinations. Estimating gives a business a chance to take a gander at past patterns in addition to
their current position and anticipate a future. Here are a portion of the key estimating devices and
procedures to enable you to design and strategic viably.
Application of contingency tool: This tool can be implemented by analysing the
particular contingency with creating the fixed scenario and management of various tools and
management. This can be help organisation by creating plans and operations a for better
criticising and helping procedure (Wouters and Kirchberger, 2015) .
TASK 4
Management accounting system to respond to financial problems
In every organisation have inner problems that are creating financial issues and for
solving this using KPIS and benchmarking. Jupiter PLC adopted management accounting system
to respond to reduce financial issues and manage everything properly. Methods of accounting
system to solving problems related to finance are as following -
Key performance indicator (KPI)
It is a technical tool for using collect information related to financial and non financial
activities. With the help of this measuring actual performance of Jupiter PLC to acquire
objectives and goals of the company. It will assist to success of the company to reach targets and
goals. When in the company suddenly origin unplanned expenses that time it will helping to
reduce it.
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Benchmarking
It is the process of evaluating performance of the company with other company to
improve profitability in Jupiter PLC. It is measures quality of the organisation related to product
and services, policies, processes, programs and strategies. In the company when origin problem
related to minimum expected result that will be acquire by bench marking.
Financial governance
It will using to collect all information that are related with finance because these types of
information are easily collect, manage and control that regarding to Jupiter PLC. When in the
company financial problems are grow up that time need to using this tool for maintain all types
financial information (Yeshmin, and Hossan, 2011). It will also helping to KPI and
benchmarking for the process in then organisation.
Differences between Jupiter Plc and KCM limited
Jupiter PLC KCM limited
It is adopting cost accounting system that are
manage cost of products and services. It will
helping to know prices of the products on
different levels (Zainun Tuanmat and Smith,
2011).
It is manufacturing based company so it will
adopt inventory management system to track
the process of materials on different stages. In
manufacturing process many times materials
come and in so wastage of the material
For solving problems relating to that collecting
financial information with the help of KPI.
Key performance indicator are helping to
analysis of financial information of the
company.
When in the company origin problems reacting
to inventory so for solving problems using
benchmarking. It is using to getting minimum
expecting result.
Management accounting leads organization to achieve sustainable growth
Sustainable development is an essential requirement of business organisations. Management
accounting systems are implemented to operate and manage various financial and non financial
issues of organisation. A well organised accounting system not only assist managers and
accountants to identify the financial issues but also provide aid to overcome and respond these
financial issues in effective format. Management accounting improve the planning tactics and
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forecasting process for better development and changes in various forms (Management
accounting, 2018). Strategic position and management skills get improved by comparing and
analysing the basic procedure for development and change.
Planning tools in terms of leading organisation towards sustainable success of organisation
The above mentioned planing tools are mainly associated with creating plans and
forecasting budgets for upcoming years. All the planning reduce the uncertain elements and
aspects from organisation and utilise the process in more significant and effective manner.
Accurate assumptions and expectations helps in determining the financial issues and creating
plans accordingly.
CONCLUSION
It is concluded that management accounting play important role in the organisation
because it helps to achieve objectives and goals. Different types of management accounting
systems are adopting by the companies as well as managing report to evaluate the performance
of the company. For know profit and loss of the company using marginal and absorption costing
method that are based on fixed and variable cost. Different types planning tools helping to
understand to business activities that are fluctuated according to market policies. In the company
grow up various financial issues that are solving by KPI, financial governance and
Benchmarking. For know the performance of the company it will compare with other
organisation.
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REFERENCES
Books and Journal
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van der Steen, M., 2011. The emergence and change of management accounting routines.
Accounting, Auditing & Accountability Journal. 24(4). pp.502-547.
Cooper, D. J., Ezzamel, M. and Qu, S. Q., 2017. Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research. 34(2). pp.991-
1025.
Merchant, K. A., 2012. Making management accounting research more useful. Pacific
Accounting Review. 24(3). pp.334-356.
DRURY, C. M., 2013. Management and cost accounting. Springer.
Agbejule, A., 2011. Organizational culture and performance: the role of management accounting
system. Journal of Applied Accounting Research. 12(1). pp.74-89.
Hoque, Z., 2011. The relations among competition, delegation, management accounting systems
change and performance: A path model. Advances in Accounting. 27(2). pp.266-277.
Yalcin, S., 2012. Adoption and benefits of management accounting practices: an inter-country
comparison. Accounting in Europe. 9(1). pp.95-110.
SEAL, W. and et al, 2014. Management Accounting. 5th Ed. Maidenhead: McGraw-Hill.
Wouters, M. and Kirchberger, M. A., 2015. Customer value propositions as interorganizational
management accounting to support customer collaboration. Industrial Marketing
Management. 46. pp.54-67.
Yeshmin, F. and Hossan, M. A., 2011. Significance of management accounting techniques in
decision-making: an empirical study on manufacturing organizations in
Bangladesh. World Journal of Social Sciences. 1(1). pp.148-164.
Zainun Tuanmat, T. and Smith, M., 2011. Changes in management accounting practices in
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Online
Management accounting. 2018. [Online] Available through:
<http://www.businessdictionary.com/definition/management-accounting.html>
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