Management Accounting System Analysis and Reporting: Unicorn Grocery

This management accounting report analyzes the financial systems and reporting methods used by Unicorn Grocery, a small enterprise. The report explores the concept of management accounting, its objectives, and various types of accounting systems like cost accounting and inventory management. It also examines different management accounting reporting methods, including account receivable reports, performance reporting systems, and inventory management reports. The report further delves into cost calculation using marginal and absorption costing, advantages and disadvantages of budgetary control tools, and how the organization adapts its management accounting system to address financial problems. The report emphasizes the significance of accounting systems for effective decision-making, resource allocation, and future estimations, ultimately contributing to the success of the enterprise.

Management
Accounting

Table of Contents
FROM: MANAGEMENT ACCOUNTING OFFICER..................................................................1
TO, ..................................................................................................................................................1
GENERAL MANAGER..................................................................................................................1
UNICORN GROCERY...................................................................................................................1
SUBJECT:- MANAGEMENT ACCOUNTING SYSTEM ...........................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Concept of management accounting and types of accounting systems.................................1
P2 Different methods used for management accounting reporting.............................................3
M1...............................................................................................................................................6
D1................................................................................................................................................6
TASK 2............................................................................................................................................6
P3 Calculation of cost and prepare a income statement using marginal or absorption costing. .6
M2...............................................................................................................................................8
D2................................................................................................................................................8
TASK 3............................................................................................................................................9
P4 Advantages or disadvantages of various types of planning tools used for budgetary control
.....................................................................................................................................................9
M3.............................................................................................................................................11
D3..............................................................................................................................................11
TASK 4..........................................................................................................................................11
P5 How organization are adopting management accounting system to respond towards
financial problems.....................................................................................................................11
M4.............................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

FROM: MANAGEMENT ACCOUNTING OFFICER
TO,
GENERAL MANAGER
UNICORN GROCERY
SUBJECT:- MANAGEMENT ACCOUNTING SYSTEM
INTRODUCTION
Management accounting is signifies as a financial information which is used by
managerial group of an association in order to make corrective decisions within enterprise. In
fact , it helps staff members or higher authority while financial planning process and during
designing strategies for controlling extra or unused costs (Albelda, 2011). Unicorn grocery is a
very small enterprise whose main motive is to offer good items to their desired customers and
believes in fulfilling their basic needs by manufacturing various qualitative products. This
project is going to categorized into various parts for explaining the usage or benefits of
management accounting for entire corporate world. Initially, report will be shows various types
of financial system and report which is adopt by selected company while forming their strategies.
Along with this, throw lights on suitable methods that is used by managerial groups to calculate
various costs and design corrective income statement with the help of marginal or absorption
costing. Advantages and disadvantages of methods used by company to control their budget is
also outlined in this project. Moreover, an organization is also using management accounting in
order to respond towards various financial problems in more efficient manner.
TASK 1
P1 Concept of management accounting and types of accounting systems
Meaning:- Management accounting is a term which means handling or regulating
various financial information in most appropriate manner in order to make impressive plan
(Arroyo, 2012). Along with this their main objective is to control other expenses which is
incurred in an enterprise while performing various business operation. Thus, this term of
business entity falls under finance because it assist managers during allocating funds for various
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department. Main objective of accounting system is to record expenditure which is going to
incurred in an enterprise for gaining objectives of an association.
Definition:- It is an appropriate process of formulating various accounting reports or
records which helps in providing accurate or reliable data to their managers who are responsible
for making various decisions. Thus, management accounting represent information in numerical
or statistical form that supports in estimating accurate fund for specific task. According to
Becker, Messner and Schäffer,( 2010) administration of finance plays a major role in profit
maximization because it aids in highlighting hidden losses, costs which is incurred in an
enterprise while accomplishing various business activities. Along with this, it also helps
managers while achieving several number of short term or long term goals. Thus, unicorn
grocery is focussing on their accounting system for generating maximum revenue by controlling
expenses because it provides precise data related with day to day expenditure. Hence, financial
information are expressed into various forms such as; journals entries, ledgers and budgets which
shows debited or credited amount with actual information.
Consequently, it has been analysed that finance manager need these records while
making effective decisions for example; these data is very much essential or indispensable for
investors or shareholders as it help them while making decision of investment. It means
managers of unicorn grocery is concerning about their profit or losses due to which they are too
much attentive towards their accounting plans or strategies. As a result it supports them during
forecasting demand which helps them while manufacturing products at marketplace. At last it
has been analysed that management accounting system is very much significant for success of an
association due to number of reasons which is described as follows:- Aids in attaining team targets:- As per this element it is assessed that statistical
information helps in forecasting demand of different customers which helps them while
designing products (Bennett Schaltegger and Zvezdov, 2013). As a result after
understanding the consumer needs an enterprise can easily satisfied their requirements
which resulted attainment of goal in a minimum time period. Proper utilization of resources:- Financial team of an association supports while
allocating resources or assets to various department by highlighting their requirement.
Thus, due to which managers get succeeded in minimizing losses of company.
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 Making effective decision:- As per this term it aids managers while making decision for
organization by identifying necessary information or data.
 Accurate future estimation:- Another advantage is that accounting system can easily
estimate upcoming cost which aids them while allocating funds to several section or team
of an enterprise.
Apart from this, it is identified that numerous types of accounting system are also
available which is explained as under:- Cost accounting system:- As per this component, first and foremost responsibility of
managerial head is to monitor entire business operations in order to control it so that they
get succeeded in minimizing manufacturing cost (Bodie, 2013). Thus, supervisors of
unicorn grocery is using this strategy for controlling their production price for evaluating
selling cost as well as assessing stock. It means, these kinds of concepts are using for
reducing wastage through which prices might be controlled which resulted in acquiring
more benefits. Inventory management system:- It aids in appropriate supervision of non-capitalized
reserves, assets such as stocks of a company. Generally their main activities is started
from manufacturing and ends with sales of produced items. For unicorn grocery it helps
in offering precise or detail data related with fresh or previous food products at that time
frame when it was kept in warehouses with the aim to sell.
 Job costing system:- It plays a very indispensable role in tracking cost of workers which
is utilized during manufacturing process. Mainly, order cost in greatly affects in this
circumstances in which products are fully uplifted from one another. Thus, by using this
method selected firm get aware about actual price of labour or a person job which is
incurred while producing creative items for gaining maximum benefits (Boyns and
Edwards, 2013).
P2 Different methods used for management accounting reporting
Meaning:- It is a term which means collection or storing of accurate information related
with statistical data in order to support business managers while decision making process. Along
with this, it shows analyse data in a more systematic way by considering relevant facts or figures.
In fact, it is a formal process which is follow by entire association in order take corrective
decisions for attaining set goals of an enterprise by satisfying needs of distinct customers.
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Unicorn grocery is small business entity which requires a systematic procedures so that
they can easily formulate their organisational policies, strategies, terms and condition which is
must be followed by everyone. Basically growing or occupational financial practices plays a very
eminent role in upliftment of business firm due to its effectiveness. Along with this, management
accounting helps in developing report for unicorn grocery which shows accurate information
about internal shareholders to outside investors. Generally, sustainability or development is
initial part for every accounting managers as it is necessary for work in an appropriate manner in
order to gain positive results for enterprise (DRURY, 2013). Hence to attain their set goals they
need to asses overall reports or various statements which is designed by financial departments in
order to make effective decision.
Hence, future growth or success is fully depend on these statements which is designed by
managerial team by considering accurate information or data. Basically, it has been analysed that
records which is accumulated to form these reports is acquired from financial or non financial
sources. Thus, it is indispensable for unicorn grocery to assess overall statistical data for gaining
positive outcomes. It means they are trying to gathered information from financial records such
as; income statements, balance sheet, profit or loss account.
Consequently, by preferring these statements shareholders make investment decisions in
order to acquire maximum return on their investment. Along with this, all these business
strategies is designed by organization for establishing their positive goodwill at marketplace for
maximizing their productivity as well as wish to compete with their competitors. Hence, it has
been analysed that reporting system act as indispensable tool for corporations in order to achieve
long term objectives by using appropriate reporting systems (Harris and Durden, 2012). Thus,
number of things are available which shows that reporting system is very much essential is
described as follows:-
Significance of reporting system: Role of control systems:- According to this term it has been analysed that an organization
is previously set the standards or target for overall staff of unicorn grocery. After that
managers of an enterprise is trying to encourage their employees towards attainment of
goals as per company terms or conditions in order attain set objectives or goals of an
association in a defined time period. Thus, reports are framed in such way so that they
can monitor the actual performance of staff members within budgeted target.
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 Supporting in profitable operations:- An effective report highlights the corrective
direction of forwarding the business entity as well as maximizing the level of operation.
Thus, by following this management team can provide various relevant information in
order to maximize profitability of its workers.
Hence, various types of reporting system is explained as under:- Account receivable report:- In this project list of unpaid consumers or bills are going to
mentioned as per due date for remembering (Herzig and et. al. 2012). Major objective of
this written document is to examine the total payback time period of outstanding debts
money. Thus, it is helpful in determining accurate duration. Performance reporting system:- As per this document, precise presentation of an
individual or staff members are represented in it which shows potentiality of each and
every employees. Thus, in order to make corrective decision authorities of unicorn
grocery is going to design performance report at the end of every year. It means this
document is framed on annually basis which includes accounting details of selecting
company . Generally, effective evaluation is accomplished by considering records of
previous or current year information. Job costing report:- This document is all about overall cost which is linked with
manufacturing of entire units during specific time period. It means, data in this is totally
related with materiality, employees or expenses which are utilized by firm while
producing goods. Thus, major aim of this report is to determine the entire price which is
incurred by organization while producing each lot size of products. Inventory management report:- One of the indispensable reporting system because it
highlights the management or control of company stocks. Along with this, there are
numerous of tools are available that are having greater impact such as; ABC costing,
inventory turnover ratios and equal order quantity (Kihn, 2010).
 Operating budget:- It is directly associated with manufacturing price of an enterprise
which is having link with revenue and expenses of unicorn grocery. First or foremost
objective of such type of document is to identify accurate cost which might be incurred in
an enterprise while producing one extra units. Thus, number of tools are available which
helps in examining operating expenses for example; sales budgets, manufacturing budget
and so on.
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M1
As per above data it is analysed that without any motive or function managerial team are
enable to use any of accounting tools which are explained above because it have a greater
influence of company performance. Thus, in order to maximize profitability of unicorn grocery,
superiors of firm are adopting these techniques of financial system. As it supports in recording
their day-to-day transaction in an effective way. Basically, first or foremost motive of these
modes are that it aids in maximizing efficiency of an enterprise and supports in making effective
decision (Kotas, 2014).
D1
According to Lukka and Vinnari( 2014) reporting system is very much essential for
success or development of an association because it helps in performing their business roles in
more efficient way as well as enhance their learning. In unicorn grocery entire staff members and
departments is accomplishing their job role for attaining similar objectives. Thus, utilization of
perfect financial reporting system plays a very crucial role in generating maximum revenue by
gaining positive outcomes. Generally, profitability or development of an enterprise is fully
depend upon impressive reporting system because it cover several information related with
income statements of an organisation. Therefore, major aim is to identify the performance of
whole company as well as staff members performing at workplace.
TASK 2
P3 Calculation of cost and prepare a income statement using marginal or absorption costing
Cost:- It is called as a sum of money which is invest by an enterprise for manufacturing
desirable products or services in order to gain maximum return on their investment. Generally, it
value efforts in monetary terms, resources, raw materials or delivery of goods.
Basically, costing is a term which shows the approx or precise estimation of total costs
that is associated with specific small or large project or business entity. It includes variable cost
which always fluctuated due to various kinds of activities or because of changes in other factors.
Unicorn grocery is focussing on their transaction for controlling their expense because it affects
their decisional process. Thus, few of costing techniques that is associated with selected
company in determining profit of an enterprise. Hence, few costing methods are described as
follows:-
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Absorption costing:- Expenses related with production department in which goods or
services are framed are falls under this category. It includes variable costing and fixed cost. In
fact these type of tools are adopted by organization to calculate cost of goods by considering
indirect overheads and direct prices (Macintosh and Quattrone, 2010).
Marginal costing:- Cost which is incurred by organization to manufacture one extra units
of products for making corrective or appropriate decisions. For example; if cost is charged per
units which greater than marginal cost of manufacturing additional units then it becomes more
effective for selected firm to produce that units.
Thus, an appropriate comparison between marginal and absorption costing is described as
follows:-
Absorption costing Marginal costing
According to this costing, expenditure which is
invested by unicorn grocery while examining
entire cost which is consume by manufacturing
team of an enterprise.
Whereas, this cost are valued while production
process.
Major advantages of adopting this technique is
that cost per unit get eliminated with more
units.
Contribution per units is not going to alter due
to availability of additional units.
It is fully linked with long term planning
process and costing.
On the other hand marginal costing is used
while short term planning formulation by top
authority.
Absorption costing is not highly appropriate or
suitable for decisional process.
Whereas, most of the managerial team utilized
this tool for making valuable decision for their
organization.
Mainly sustainability is totally based on
extrinsic prospect of reporting system.
On contrary to this, it is fully linked with
intrinsic reporting system for upcoming
development and profitability.
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Figuring of Gross profit by adopting absorption costing
Income statements
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
Calculation with the use of marginal costing
Income statements
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
M2
It has been stated that perfect planning is useful for the organisation. Unicorn company
can use various tools and methods for earning maximum profits. This is more profitable for the
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firm is do future prediction and stability in proper manner. Thus, for regulating or handling
business errors and mistakes which may identified in a business entity are resolved with the use
of these tools or techniques (Otley and Emmanuel, 2013).
D2
According to above calculation, it has been analysed that unicorn grocery are using two
of useful or most appropriate costing methods in order to acquire more accurate outcomes. Thus,
if an organization is using absorption costing tool then they can acquire around 7800 profit.
Whereas, on the other hand by using marginal costing they are acquiring benefits of nearly 7500.
Thus, around 300 difference is arises between both the method due to fixed expenses which are
not used in marginal costing.
TASK 3
P4 Advantages or disadvantages of various types of planning tools used for budgetary control
Budget:- An impressive official document which consist of detailed information for
specific time period by considering relevant facts or figures. Basically, it determines various cost
or expenses that an organization is investing while manufacturing qualitative products or services
(Parker, 2012). It is term which is comprehensive formulation of operational department as well
as highlights overall plan of capital investment. Mainly, it is designed for usually one year which
is followed by entire association as well as shareholders and it might be change if desired results
are not achieved. Along with this, it is mainly covers planned sales volume or income, quantities
of resources engaged in producing goods, costs or expenses and overview of overall variables
which is involved while producing products.
Budgetary control:- It is consider as most indispensable tools of budgeting which
influence management to carry out business operations such as; planning, cooperation and
assessment. Mainly it can be linked with number of business parts that is classified into different
sections called as budget centre. Moreover, it guides the managing team the method or
techniques of regulating or handling various resources without charging additional cost.
Thus an appropriate process of budgetary control is mentioned as follows:- Acquiring suggestion from concern managers:- It is essential for managing head to
analyse the information in an appropriate manner either that particular data required for
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