Project 1: Management Accounting, Costing, and Budgetary Control

This project, titled Project 1, delves into the core concepts of management accounting, focusing on its essential requirements and various types. It begins with an introduction to management accounting and its role in improving organizational performance, specifically within the context of Pearl Chartered Accountants. The project then explores different reporting methods used in management accounting. A key component of the project involves calculating costs using marginal and absorption costing techniques to prepare an income statement. Furthermore, it examines the advantages and disadvantages of various planning tools used for budgetary control. Finally, the project investigates how organizations adapt management accounting systems to address financial challenges. The project covers topics like price optimization, inventory management, job order costing, and cost accounting systems, providing a comprehensive overview of management accounting practices and their impact on financial decision-making within an organization.

Project
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1Explain management accounting and give the essential requirements of different types of
management accounting..............................................................................................................3
P2 Explain different methods used for management accounting reporting................................5
TASK 2 .........................................................................................................................................7
P3 Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................7
TASK 3..........................................................................................................................................11
P4 Explain the advantages and disadvantages of different types of planning tools used for
budgetary control......................................................................................................................11
TASK 4 .....................................................................................................................................12
P5 Compare how organizations are adapting management accounting systems to respond to
financial problems.....................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Management accounting is the accounting where the employees will help in improving
performance of the organisation (Alhatabat, 2020). They will help the organisation in making the
plans for increasing the quality of the products. The organisation is focusing on the decision
making and selecting the employees that will help them in increasing the performance. It
includes financial and non financial factors of the organisation. The organisation is having
financial and non financial factors and they are important for making the plans. There are
different methods used by the organisation to increase the financial performance. The
organisation has to analyse the financial methods that will help the employees giving quality
products. The organisation chosen for the report is Pearl Chartered Accountants which is one of
the largest accountancy organisation in UK. It is giving accountancy services to the many
organisation and helps them in increasing the business. The report includes management
accounting and different types of management accounting, cost analysis to prepare an income
statement, the advantages and disadvantages of different types of planning tools used for
budgetary control and management accounting respond to financial problems.
TASK 1
P1Explain management accounting and give the essential requirements of different types of
management accounting
Management accounting is the process used by the employees to make the financial plan
that will help them in improving the performance. The employees of the organization will have
to make the decisions that will impact the quality of the products. The Pearl Chartered
Accountants will have to give the accountancy services to the customers who are having small to
medium size organizations and they will help them in the accounting decision making and they
will help them in increasing the performance (Nimtrakoon and Tayles, 2015).
Accounting system in management is the gives the information to the employees that will
impact the performance of the organization. They are giving the internal factors of the
organization to the employees that will help them in making the plans to improve the
performance. The Pearl Chartered Accountants will use the cost accounting system that will help
them in planning, analyzing and communicating the information that is important for the
organization.
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Price optimization system will help the organization in the market research that is giving
the accuracy of the pricing for increasing the performance. The organization is having the plans
that will help in making the plans to skimming, penetrating, premium pricing and value to the
employees. The organization has to include the cost that will help in making the pricing to
increase the performance.
Inventory management system is the process in which the organization has to reduce the
costs that will help in analyze the inventory. The organization has to analyze the performance to
reduce the cost (Phan, Baird and Su, 2017). They should focus on reducing the waste and
increasing the quality of the products. There are different methods used by the organization that
will help in inventory management and gives good products to customers.
 AVCO (Average cost method)- This is the process used by the organizations to allocate
the costs to the good manufactured in the specific time and they will help in analyze the
performance. It is known as the weighted average methods and the products are given the
costs in the specific time like weekly, monthly and yearly. The organization has to
analyze the cost of the quantity of the goods in the specific time.
 LIFO (Last in first out)- This is the process used by the organization to give the products
that are purchased in the last to help in inventory management. The organization has to
increase the performance by reducing the costs. The Pearl Chartered Accountants will
have to reduce the costs and they will help the employees in using the LIFO methods to
increase the performance.
 FIFO (First in first out)- This is the process used by the organization to increase the
performance by using the products that are in the inventory. They are focusing on making
the plan to use the products that are helping in increasing reducing the costs of the
organization. The Pearl Chartered Accountants will reduce the inventory by FIFO
methods that is increasing the quality of the products.
Job order costing system is the process used by the organization accumulation and giving
the costing according to the per unit of the goods manufactured and they will help in increasing
the performance (Spraakman and et.al., 2015). The Pearl Chartered Accountants will analyze the
per unit manufactured by the organization and giving the cost to the products. It will include the
costs that will affect the performance of the organization.
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Cost accounting systems is the process that is helping the organization in making the
plans that will help then employees in increasing the performance. The organization will have to
making the decisions that are important for the financial performance of the employees. The
Pearl Chartered Accountants will have to analyze the performance of the employees and
reducing the costs. The organization has to analyze the methods that will help them in giving
good products.
P2 Explain different methods used for management accounting reporting
Management accounting reporting is the process use by the organization to improve the
performance. The organization is having internal methods to increase the performance by using
the periodic and financial methods. They are focusing on the report that is giving the accounting
of the organization. The management accounting system is having the internal methods to
analyze performance (Ismail, Isa and Mia, 2018). They are having different accounting methods
to have the internal factors that are affecting the decisions of the employees. The Pearl Chartered
Accountants is having many methods to analyze the reports that are having the financial
conditions of the organization. They will have different methods like profits of the organization,
cost and analyzing the performance.
The performance reporting is the method used by the organization to analyze
performance of the employees. The organization will have to give the work to the team that will
have the involvement of the employees and the performance is analyzed to give the quality
products (Alaeddin and et.al., 2019). The Pearl Chartered Accountants is communicating to the
employees that will help in increasing the long term performance of the employees. The
organization is having employees that the higher level that will help them in increasing
performance and analyzing the factors that will impact the customers.
The budge reporting is used as the process that is having the expenses and income of the
organization. They are focusing on analyzing the performance that will help in reducing the cost.
The organization is monitoring the needs of the customers and helps in increasing the
performance. The Pearl Chartered Accountants is making the report to analyze the performance
of the employees.
Account receivable report is the periodic report that is made according to the time and
length of the bills in the organization. The most important factor for the account receivable is
that they are focusing on the financial position of the organization and they are helping in
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analyzing the factors that are important for the customers. The Pearl Chartered Accountants is
having the account receivables that are including the purchase, bills receivables, profit and loss
account and income of the organization.
Inventory management reporting is helping the organization in reducing the cost. The
inventory is the units that is available and they are increasing the costs of the organization. The
stock inventory is of different types and they are available to the organization which should be
given according to the needs of the customers. The Pearl Chartered Accountants is having
inventory that can be used by the organization to increase the quality of the goods. The
organization is having the employees that will help them in increasing the performance (Hörisch
and et.al., 2015).
The advantage of the accounting systems in the organization.
Management accounting system Advantage
Price optimisation system The organisation have to analyse the price of
the products according to the needs of the
customers. They are focusing on the methods
used by the organisation to give the price of the
products. The Pearl Chartered Accountants is
having the pricing that is increasing the
performance of the organization.
Advantage- The organization is having price
optimization system which is helping them in
increasing the performance.
Inventory management system The organisation is having inventory
management system to monitor the
performance of the employees. They are
increasing the needs of the customers and
giving them good products.
Advantage- The Pearl Chartered Accountants
is having the methods that are increasing the
performance (Braumann, 2018). They are
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helping them in monitoring the inventory that
is reducing the cost of the organization.
Job order costing system The organisation is having the process that is
helping in analysing the costs that are involved
in manufacturing the products. The Pearl
Chartered Accountants is having costs that
should be according to the products of the
organization.
Advantage- The organization has to focus on
the factors that are helping them in increasing
the performance.
Cost accounting system The organisation has to analyse the factors that
are increasing the costs.
Advantage- The Pearl Chartered Accountants
is having the methods that will help them in
improving the performance.
Management accounting system and reporting process in the organization
The organization should have different methods that will help them in increasing the
performance (Kovaleva, 2015). They should have the employees that will help them in making
the organization according to the needs of the customers. The organization should use the
methods that are important giving good products. The Pearl Chartered Accountants is having
methods that will help them in analyzing performance of the organization.
TASK 2
P3 Calculate costs using appropriate techniques of cost analysis to prepare an income statement
using marginal and absorption costs
Marginal costing system is used by the organization to analyze the cost involved in
producing per unit of the products. They are helping the organization in analyzing the factors that
are increasing the cost. The absorption costing system is used by the organization to analyze the
factors that are important for increasing the performance. The Pearl Chartered Accountants is
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having the methods that is helping them in analyzing the impact of management accounting on
the organization (Cinquini and Tenucci, 2016).
The methods used by the organization for the management accounting and the financial position
of the accounts- To increase the impact of the management accounting on the Pearl Chartered
Accountants it is important that they are having methods that will increase the performance.
The standard costing is the method used by the organization to differentiate between
actual standard costing and set standard costing. It is the methods used by the Pearl Chartered
Accountants to analyze the factors that are used in reducing the cost of the organization.
The normal costing is the methods used by the organization to analyses the actual cost of
manufacturing the products. The organization is having employees that will help in reducing the
cost.
The historical costing is the methods used by the organization to analyze performance of
the employees. The organization is having employees that are helping them in improving the
performance.
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TASK 3
P4 Explain the advantages and disadvantages of different types of planning tools used for
budgetary control
The organization is having planning tools that is helping in analyzing the performance.
The employees are helping the organization in decision making and help them in giving good
products. The most important factor for the organization to increase the performance according
to the needs of the customers. The organization is having different tools that are helping in
analyzing the performance of the employees. They should focus on the factors that are impacting
the decisions for improving the performance. The organization should have the planning tools
that are helping them in giving good products. The Pearl Chartered Accountants is having the
planning tool that is having the factors to increase the performance of the organization.
The budget is the process used by the organization that is helping them in analyzing the
factors that are including the income and costs. It helps the organization in monitoring the
performance of the employees. The Pearl Chartered Accountants is having the report that is
including the fixed and variable cost of the organization.
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The management by objective is the methods used to help the organization and
employees in improving the performance. For example, the employees will help the organization
in increasing the sales by 20% and they will use the methods that will help them in increasing the
performance. They will have to communicate the factors that are important for giving good
products to the organization.
Benchmarking will help the organization in giving good quality products to the
customers. They will help them in analyzing the factors to increase the performance. It will help
the organization in making ten long term and short term goals and they are giving good products.
The cash budget is the process used by the organization to analyze the cost that will need
the cash and they will help in giving good products. The advantage of cash budget is that they
are helping the organization in improving performance. They are helping them in giving good
products to the organization. The most important factor for the organization is that they are
analyzing the factors that are impacting the performance.
The capital budgeting is the process used by the organization to analyze the fixed costs
that will impact the performance. The Pearl Chartered Accountants is the organization where
they are having the factors that are important for giving good products. The advantage of capital
budgeting is that they will help in reducing the factors that will impact the performance of the
organization. The capital budgeting is helping the organization in analyzing the factors that are
important for the employees. The disadvantage of the method is that they are increasing the cost
of the organization.
TASK 4
P5 Compare how organizations are adapting management accounting systems to respond to
financial problems
The organization is having many issues that are impacting the performance. They are
having the management accounting that are helping in solving the financial issues and increasing
the performance of the employees. The factors that are impacting the performance of the
organization
 Reducing the income of the organization- The most important factor for the organization
is to analyze the factors that are reducing the income and they should not be impacting
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the performance. The Pearl Chartered Accountants is having the external factors that are
impacting the performance of the organization.
 Disrupted in the cost of the organization- The organization has to analyze the factors that
are increasing the cost. They have to focus on the factors that are helping them in giving
good products. The Pearl Chartered Accountants is having factors that are increasing the
costs and they should monitor performance of the organization.
The organization is having tools that impact the financial position
The organization is having tool that will help in solving the financial issues and they will
reduce the impact of the factors. The employees will help the organization in analyzing the issues
that will affect the performance.
 Key performance indicator- The key performance indicators are the financial and non
financial factors that are helping the organization in improving the performance. The
organization should analyze the factors that are important and helping them in giving
good products.
 The pricing of the organization- The pricing is the most important factors that will help
the organization in giving good products. The organization has to make the plan for
pricing to increasing the performance. They are focusing on the factors that are
important for increasing the performance of the organization.
Comparison between dealing of financial problems in two catering companies:
Connect Catering Services Rusty and Roses Catering
Financial problem Business management is utilising
effective techniques and methods
to increase its plan of action and
variety of managerial people but
the development rate is not
increasing and market percentage
of shares is also constant.
Management has determined that even
after having stabilized gross revenue in
past few years, its earnings as per
margin will decrease.
 Planning
tools and
methods
Management should exercise their
methods and technique of bench-
marking to measure the activity
Management should set up respective
monetary fund like gross sales budget,
cash budget, purchase budget, etc. for
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that used
to identify
issue
that are adopted by the best
business management in the
industry. As per the view, they
appreciate the reasons through
which are causing delay in the
development in the activity in the
market share that will turned out,
and also they are not well attached
with the actual activity of market
and the relation that they have
come in the industry that they
provide services.
last years and then analyse the actual
performance to identify the reason of
declination in the activity of market. As
also it ensures the area of field that has
acknowledged it even though
government income is stabilized,
expenditure has accumulated in
previous years as per not
proportionately, declination of the
profit perimeter as per the result.
 Managem
ent
Accountin
g System
used
Once the issue and problem has
been determined, as social control
should decide on resolution of
their problems. It should also use
evaluation of policies and
strategies that choose to build up
the competitive benefits and
advantages. Such as quality of
evaluation of policies, competitive
pricing plan of action, and many
more. As for the various line of
work and respective services that
they offers them. Options to
determine customize situations of
declaration the on going flow of
positive impact that over the
consumer. In the matter of fact,
management of business should
As determined it before that financial
issues and problem had faced by
management of business that is related
to accumulates in business expenditure
structure. However, it should utilise
cost business system to determines the
values of points where effective cost
accounting is increases through
budgeted expenditure. It can also utilize
the state of source by tracking methods
and technique to course those sources
which have imparted the valued of
situations to proportionate it and
increase in expenditure structure.
Consequently, disciplinary the plan of
actions can be interpreted by
administrator to optimize the manner of
cost structure in relation to the gross
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relates their marketing plan of
actions and strategies that they
offers as more promotional
manner that can draw consumer
and visitors attainment and it will
help it ensures their activities of
market share.
revenue to be earned by the
organization to negociate profit margin.
CONCLUSION
From the above report it is conclude there the organization is having employees that are
helping them in increasing the performance. The employees should analyze the factors that are
affecting the financial methods used by the organization. They should help the employees in
analyzing the needs of the organization and they should help them in giving good quality
products. The organization should analyses the performance of the employees and helps them in
having the factors that are important to increase the quality of the goods.
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REFERENCES
Books and Journals
Alhatabat, Z., 2020. The impact of ERP system's adoption on management accounting practices
in the Jordanian manufacturing companies. International Journal of Business
Information Systems. 33(2). pp.267-284.
Nimtrakoon, S. and Tayles, M., 2015. Explaining management accounting practices and strategy
in Thailand. Journal of Accounting in Emerging Economies.
Phan, T.N., Baird, K. and Su, S., 2017. The use and effectiveness of environmental management
accounting. Australasian Journal of Environmental Management. 24(4). pp.355-374.
Spraakman, G. and et.al., 2015. Employers’ perceptions of information technology competency
requirements for management accounting graduates. Accounting Education. 24(5).
pp.403-422.
Ismail, K., Isa, C.R. and Mia, L., 2018. Evidence on the usefulness of management accounting
systems in integrated manufacturing environment. Pacific Accounting Review.
Alaeddin, O. and et.al., 2019. The effect of management accounting systems in influencing
environmental uncertainty, energy efficiency and environmental performance.
International Journal of Energy Economics and Policy. 9(5). p.346.
Hörisch, J. and et.al., 2015. Environmental effects of sustainability management tools: An
empirical analysis of large companies. Ecological Economics. 120. pp.241-249.
Braumann, E.C., 2018. Analyzing the role of risk awareness in enterprise risk management.
Journal of Management Accounting Research. 30(2). pp.241-268.
Kovaleva, V.D., 2015. Formation of subsystems of management accounting in accordance with
International Financial Reporting Standards. International Journal of Applied and
Fundamental Research, (2), pp.81-81.
Cinquini, L. and Tenucci, A., 2016. Challenges to management accounting in the new paradigm
of service (pp. 49-71). CRC Press.
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