Management Accounting Report: Analysis of AstraZeneca and TPG Firms

This report provides a comprehensive analysis of management accounting principles and their application within two companies: AstraZeneca Plc and TPG Processing Company. The report begins with an introduction to management accounting, its role, and different types of accounting systems, including cost accounting, price optimization, inventory management, and job costing systems. It then examines accounting report methods like budget reports, performance reports, and accounts receivable reports. Part A of the report analyzes the integration of management accounting within an organization and its benefits, along with critical reflections on its application. Part B explores the advantages and disadvantages of planning tools used for budgetary control, comparing the two entities, and examining how management accounting can drive businesses towards sustainable success. The report includes calculations of net profits using marginal and absorption costing methods, and it concludes with references and appendices that provide additional details and supporting information.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
TASK 1............................................................................................................................................1
1. Management accounting explanation.................................................................................1
2. Management accounting role as well as different types.....................................................1
3. Accounting report methods................................................................................................3
6. Critical reflection about management accounting application...........................................5
TASK 2............................................................................................................................................5
Covered in Appendices...........................................................................................................5
PART B ...........................................................................................................................................5
a. Advantages along with disadvantages of planning tools that are used for budgetary control 5
b. Different planning tools with effective applications..........................................................7
c. Comparison among two entities.........................................................................................8
d. Examination of the ways management accounting with responses to financial problems can
drive businesses towards sustainable success.......................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
APPENDICES...............................................................................................................................13

INTRODUCTION
Management accounting is the word utilised to define the accounting methods, schemes
addition to techniques having particular knowledge and power for assisting administration in its
task so to maximise revenues or minimising losses (Bartlett and et.al, 2016). The business
concern selected for this assignment is AstraZeneca Plc and TPG Processing Company that
executes their operations within manufacturing sector. The report provides the fundamental
requirement of several kind of managerial accounting system and analysis different method of
management accounting reports. Further, three years net profits are calculated through marginal
including absorption costing method for understanding actual position of company. It also covers
advantages and disadvantages of various planning tools along with comparison among the two
companies identify financial problem and resolve after applying management accounting system.
PART A
TASK 1
1. Management accounting explanation
Management Accounting – The term of management accounting is defined as technique
that is applied by company to analysis the different business activities than collect information
from different departments. In AstraZeneca Plc, accounting is utilised for the reason of deciding
status of an organisation. After that planning for future to acquired goals and objectives (Boyns,
Anderson and Edwards, 2014).
2. Management accounting role as well as different types.
Management accounting Role : Important part that management accounting plays at
concerned entity are to design financial along with cost controlling reports, to analyse relevant
costs, reporting information to other units and predicting future.
Management Accounting system – The particular system can be described as an
instrument that business executives use to maintain statistics so that choices can be made to bring
out daily basis operations. In AstraZeneca Plc, managers uses following systems to prepare
strategy and apply to get growth and success could be attained by the company.
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Different management accounting system – In the contest of AstraZeneca Plc,
discussed about different management accounting system that directors utilises to analysing the
position of institution. The detail description of all is underneath:
Cost accounting system – This system is mostly utilised by the manufacturing companies
due to gather detailed data in respect to cost of production and other functions. Director of
AstraZeneca Plc are using this system to determine accurate cost of each and every unit of house
hold appliances which are factory-made by it. It is essentially required for a company because it
directs management how to reduce cost from the products and make decision on the basis of
expenditures (Chang and et.al, 2014).
Price optimization system - It is essential for big and small organizations to set suitable
costs for all the products it sells to the customers. According to this system every company send
some piece for uses and take reviews from different types of customers. After analysis company
set trenchant price composition that will carry out the expectation of company and easily
purchase their products. In AstraZeneca Plc, this system is applied to set best appropriate price of
home appliances by it. It is essential require for company to know right price of their products
after analysing of market and existing products. As a result it will help to obtain long term
benefit like profit maximisation through grabbing attention of large customer number.
Inventory management system –The system is mainly applied by manufacturing
company to track record and monitor on production procedure. Inventory management system
helps to managing goods and their services in impressive way. In AstraZeneca Plc, with this
system managers produce different types of pharmaceutical commodities so there is required to
different types of raw materials. It also provide detail information to management so they are
preparing strategy to reduce wastages and proper utilisation of resources. LIFO (Last in Last out) – As per this system which inventories come in last that is used
for manufacturing procedure. FIFO (First in first out) – With in the method inventory management system which
commodities received early that will firstly used by companies for conduct
manufacturing activities (Chen, Cheng and Wang, 2015).
 AVCO (Average Cost) – The particular scheme of inventory management stock is used
for bringing out fundamental cost as per average cost basis.
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As per the above all the systems in AstraZeneca Plc uses FIFO method that is important
for the producing pharmaceutical items for the customers and fulfil their requirement to deliver
best quality of distinct organisational commodities.
Job costing system – This system has been efficaciously used by a company when
products are produced on the basis of specific customer orders. Each product developed as per
the job distributing and collecting of an individual. In AstraZeneca Plc, manager utilise it to get
effective outcomes through processes that are operated as per specification of clients. This
system is required for the company because it provides cost of several activities of an
organisation.
3. Accounting report methods
Management accounting reporting – It is a routinesed process of developing various
types of reports that are presented in front of internal stakeholders in reference to aware
regarding to actual performance of an organisation. In AstraZeneca Plc, manager apply it to
assure about the detailed information in the context of actual position of a company is kept by
them or not.
Budget Report - Budget report is a caparison statement that compares variances between
budgeted figure and actual outcomes. The budget which is prepared at the beginning of the
financial period is compared with the results at the end of the operation or specific time period to
get variances. These variances have nature of adverse or favourable for the entity. The budget
report also identifies the reason behind these variances so that these variances may be reduced. If
the variances are adverse then remedial actions are taken. With this report, managers of
AstraZeneca Plc manages their funding in various activities.
Performance report - This report is like a report card for its receiver. This report
represents the efforts and efficiency of a particular employee, task or activity. It measures that
the guidelines and standards which were issued at the starting of the task, has been followed
properly or not. The receiver of this report is authorised or liable to take the remedial actions in
order to enhance the performance. The financial analysts of AstraZeneca Plc prepare this report
for each employee and activity so that it can keep an eye on the efficiency and effectiveness of
that particular personnel or operation.
Accounts receivable report – The particular report created by company to make record of
prominent amount of customers that is called as accounts receivable report. The chief reason to
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develop of this report to calculate debts that are owned by different customers. In AstraZeneca
Plc, with such report managers estimates accurate amount related to bad debts. It is advantageous
for company to analysis of funds that are receiving in future (Gersonius and et.al, 2015).
Inventory Management report: For manufacturing company, inventory management
report is defined as one of the major report due to provide accurate condition of inventories can
be determined. In AstraZeneca Plc, the report id produced by manager to assure about the
company and acquire inventory to develop pharmaceutical products as per demand of customers.
The main reason to create of this report to aware about the stock for business operations.
4. Critical judgement of integration of management accounting with organisation.
To conduct business activities in efficient manner company has to apply different forms
of management accounting along with system. These are produced by administrator of
AstraZeneca Plc to run organisational procedure in smoothly manner. Management accounting is
applied by company to know about procedures and evaluate that at different level how much
inventory is required. Price optimisation system used by company to set specific price structure
that can help to gain competitive advantage and fulfil requirement of customers (Gomez-Conde
and Lopez-Valeiras, 2018).
5. Benefits along with application of management accounting system in the context of company
Management accounting
system
Application addition to benefits for the company
Cost accounting system Within AstraZeneca Plc adopted cost accounting system in efficient
manner due to determine cost of various business activities. Further,
it is useful to the organization because resources could be assigned
as per their demands to distinct operations with the assistance of it.
Price Optimization
System
In AstraZeneca Plc, directors use it as it has different advantages for
the organization. One of them being that it serves to assess the
highest appropriate price for products so that consumer requirements
can be adjusted. It is mainly used by company to set effective price
structure.
Inventory management The system is applied to gather reviews from customers about prices
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system of distinct medicines. The management team of AstraZeneca Plc
focus on the raw material and monitor activity of production through
inventory management system. Is is beneficial to understand uses of
different materials at different material.
Job order costing system Management in AstraZeneca Plc applies this system to choose right
alternatives regarding to assorted business activities. It can help to
company to meet requirements of clients.
6. Critical reflection about management accounting application.
The above discussion says that for all entities, management accounting plays useful role.
It is applied for managing information systems, evaluating sales trends, financial planning and
presenting data about business performance. From the information that administrators gets
through management accounting, effective decisions about future invest are made so to get
beneficiary results. Hence, the information presented within such accounting have nature of high
accuracy but some times various problems are in front of business managers while using the
information.
TASK 2
Covered in Appendices
PART B
a. Advantages along with disadvantages associated with planning tools that are used for
budgetary control
Budget – It is defined as written document that is produced by manager to operate all
future operations in efficient manner. For the different types of companies it is essential to
determine that is is executed efficiently to know real position of company. In the context of TPG
processing company, manager develop budgets to predict income as well as expenses in respect
to fulfil the requirement of company.
Budgetary Control – It is procedure that is starting after preparing of budget because
manager of business entities use it to set performance objectives for future. The procedure
monitor on business activities and guide how to effectively follow budget in every departments.
As a result TPG processing company reduced unnecessary expenses and focus on the production
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level. It is defined as most effective manner to conduct enterprise in efficient way and make sure
about the resources are used (Klovienė and Gimzauskiene, 2015).
Distinct planning tools – In present context, there are different kind of planning tools
which is applied by decision maker of TPG processing company to control the procedure of
business. There are characterized different types of planning tools in detail -
Zero base budget - This is a kind of budget in which all expenses are start with zero in
every new period. This is effective in small sizes business as they can make plans for new
product and services in market by setting new budget. it helps to maintain the needs and wants of
organization by defining new budget. TPG processing company is a manufacturing company that
manufacture products for increasing sales. it can use zero base budget while introducing new
products that helps to maintain the profits within organization. It is prepared every year for the
purpose of running a business successfully. The manager of TPG processing company prepare
this budget annually and achieve goals by increasing production.
Advantage Disadvantage
Through this budget efficiently allotment of
resources that is depended on the needs and
benefits and it drives manager to search cost
effective ways to modified activities (Laitinen,
2014).
Time consuming – It is time consuming budget
and not easy to defined by managers. So it will
take more time and exhaustive process to arrive
regarding the investment.
Through this budget improve communication
as well as coordination within a company to
take specific decisions. It can help to recognise
opportunities for outsourcing.
Require Knowledge – To produce this budget
report need to proper knowledge to
successfully applied. TPG processing company
have nor expertise who is ultimately
responsible for the management and also for
decision making.
Capital budget - This budget is prepared by organization to know about long term
investment and profits. it helps to provide long term profits within organization with the help of
running business activities. Management concerns of TPG processing company can prepare this
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budget for the purpose of introducing new product. This process helps to get long term profits
after evaluating income and expenses. Therefore, this budget may be effective for chosen
company as it helps to increase investment by using this budget (Liu, 2014).
Advantage Disadvantage
It is helping to understand risks & their effects
and make investments in it to earn more
incomes.
It is considering as expensive method of
budgeting and it cannot expend by all the
companies.
Capital budget helps to recognise of risky
option that would bet analysed with their
impacts so it is defined as profitable
investments and ignored by company.
Through this budget get result for short time
because for long time it will not provide surety.
In short period time provide positive result.
Flexible Budget – Such budget is modifies as per the real income achieved in last year
and the predetermined income for current year. When reporting year completes, real sales as well
as other operatives are added on flexible budget as well as expenditures for the contributions are
properly produced. The budget is prepared by TPG processing company managers for
forecasting future outcomes.
Advantage Disadvantage
With the help of this budget determine the
expenditure because it is connected with
different functional activities and search
different path in references to control it.
In respect to TPG processing company,
manager prepare plan than produce this budget
so as a result it will take more time to
effectively prepare of this budget.
Through the flexible budget all the calculations
or changes are done easily within the budgets.
To prepare of this budget face many confusions
because no proper guidances are followed in its
preparation.
b. Different planning tools along with effective applications
Planning tools which are provided by management accounting are, play an important role
in planning and making decisions. The tools which are used by the management of TPG
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processing company such as flexible budget, cash budget, zero-based budget, etc. helps them in
estimating and forecasting adequate informations. Capital budget is essential for the firm as it
shows the information related to capital investments and revenues and assists the management in
making decisions regarding beneficial investments (Rickards and Ritsert, 2018). Operating
budget helps in measuring operational performance of the company whereas zero-based budget
calculate all the costs from zero and define every increment in cost which helps in eliminating
unnecessary costs.
C. Comparison among two entities
Financial Problem – It is defined as situation that is bear by company in their critical
time such as lack of monetary sources and these are become reason of stress, it is called as
financial problem. TPG processing company is handling with various challenges because of low
funds availability (Tamandeh, 2016).
Various Financial Problem – There are identified different financial problems in the
context of TPG processing company - Unforeseen Expenses – There are several kind of expenses which are origin suddenly
and manager of a company have to utilised monetary resources to reduce them. There is
required of new machine and many other things. On the other side face of these costs by
company to reach to the circumstance of lack of pecuniary resources further activities.
 Late Payment by suppliers – TPG processing company is manufacturing company to
many time dealing into credit basis to increase sales. Sometimes creditors cannot pay
owned amount on time and leads to organisation in the position of deficiency of monetary
resources (Sadikoglu and Olcay, 2014).
Techniques for resolving problems
In respect to recognise of financial problem in the TPG processing company apply
different management tool that can help to easily identify financial problem
KPI (key performance indicator) – KPI is defined as performance measurement tool
which is applied by different types of organisation to identify financial problem. Through this
tool, measure success and failure of several business activities which are operated by them.
There are two types of KPI such as financial including non financial. Through financial KPI,
identify Unforeseen expenses and non financial through analysis of errors. In TPG processing
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company, manager use this tool to identify Unforeseen expenses by activity of success that is
presented by company.
Benchmarking – According to this tool every company get minimum expected result so
through Benchmarking compare performance of competitors. There are recognised changes to
the strategy as well as concept that would be done. In TPG processing company with this
identify problem of late payments by suppliers comparing own credit policies with other
companies. After comparison make changes in the strategies so that such types of condition wont
take place in future.
The manager of TPG processing company utilise management tool of financial
governance to sort out of these problems, it is as follows:
Financial Governance – The particular tool described as the set of rules and standards
that are utilised by company in order to resolve issues which are connected to lack of financial
resources. In the context of TPG processing company, manager face the financial problem of
Unforeseen expenses and late payment by suppliers by determining that accurate accounting
concept are adopted by a company or not. At the time of all records are operated in right manner
to develop budgets that could be utilised into critical situations (Schulze and et.al, 2016).
Comparison of organisation as per usage of management accounting for responding financial
problems:
AstraZeneca TPG processing company
The manager of the company are applied cost
accounting system in reference to sort out the
problem of unforeseen expenses that will help to
understand cost of each as well as every activity.
It would be determined and afterwards funds
could be allotted consequently to ignore situation
of unnecessary expenses.
The company has been used Job order
costing system to recognise various business
activities so that problem of shortage of fund
for activities can be resolved.
There are applied price optimisation system to
set effective structure of price regarding to
product and attract customer to purchase their
products. Through this system sort out the
Inventory management system applied by
company to tackle the situation of lack of
inventories for business activities. Through
this system get detail information about
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problem of late payments from suppliers due to
get satisfied with the prices then they wont ask
for credit or pay the owed amount on time.
production procedure.
d. Examination of the ways management accounting with responses to financial problems can
drive businesses towards sustainable success
There are different kind of financial issues face by Dyson company. Such as financial
problem sudden expenditure, late payments by supplier etc (Seung, 2014). The management has
been applied different techniques of management accounting in order to recognise and sort out
effectively. Through KPI, benchmarking along with financial governance sort out the problem.
These tools are helping to organisation to identify problem then find out solution and apply on it.
CONCLUSION
As per the above project report it concise that every type of organisation apply
management accounting to analysis financial information of company to understand actual
position. The systems and reports of management accounting used by the manager of company
to effectively run their business. These are helping to manager to develop strategic decision so
that predict goals could be achieved. To sort out financial problem company has been
implemented different planning tools such as capital budget, zero based budget and operational
budget to control business activities and follow the procedure of budget. There are focusing on
financial problems and identify through KPI, benchmarking than sort out through financial
governance.
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APPENDICES
Calculate cost through marginal and absorption cost
Cost – The meaning of cost to defined as cash amount where contains all important costs
related to products. To analysis cost, company has been applied different types of costing method
that can help to easily understand the cost of different products. There are defined two costing
method that will help to calculate net profit after that company apply suitable method.
Difference among marginal as well as absorption costing method.
Marginal costing method Absorption costing method
It is a costing method that will implement by
company to understand marginal cost of units.
The main aim of this method to calculate net
profit of the company and determine
expenditure which have taken place because of
extra stock of home appliances. In selected
company apply this method to analyse cost of
each and every additional unit.
This method applied by the manager of
different types of company to evaluate price of
that is connected with production functions of
specific stocks. In selected entity, it is utilised
by manager to assure about the costs that have
taken different place as reason of various units
get absorbed from the revenues of the same
(Guragai and et.al, 2015).
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14

Absorption costing
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Use of marginal costing in business
At business concerns, marginal costing is basically used to make short term decisions,
ascertaining costs, planning future, computing break even level and controlling costs. Further, it
is also used at AstraZeneca Plc for eliminating complexities while calculating profits, avoiding
problems of absorption overheads and many more.
Reasons for differences in profit/loss under these 2 methods
The reason between the differences in figures of profits or losses that are ascertained
through absorption as well as marginal methods are as marginal costing involves variable cost to
ascertain contributions but absorption costing considers all the costs such as fixed and variable in
profitability calculations.
Demonstrate of ways these financial reporting and statements support business growth and
success
As per financial reports, business concerns analyse actual position together with profits or
losses in specific accounting year. The information included in the financial reports along with
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statements helps in planning future investments together with preparing strategies that are
effective for success as well as growth of business.
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