HNC Business 2019-2020: Unit 5 Management Accounting Report

This report delves into the core concepts of management accounting, emphasizing budgetary control and its significance. It explores various tools used in budget planning, including variance analysis, zero-based budgeting, and master budgets. The report outlines the advantages and disadvantages of budgeting, along with how management accounting aids in resolving financial problems through techniques such as benchmarking and key performance indicators. Furthermore, it examines how management accounting contributes to achieving sustainable success by addressing environmental and social trends, linking company strategy to sustainability challenges, and informing pricing decisions. The report references several academic sources to support its findings, providing a robust understanding of management accounting's application in a business context.

MANAGEMENT
ACCOUNTING

MANAGEMENT ACCOUNTING
• Management accounting is an important concept and in
that budgetary control is also involved.
• In the budget planning various tools are involved and
shall be considered.
• The financial problems are also resolved with the help
of management accounting.

ADVANTAGES OF BUDGETARY
CONTROL
• Proper allocation and delegation of work and responsibilities.
• Appropriate cost planning to reduce the wastage and ensure
high efficiency.
• Targets will be attained with increased efficiency.
• The communication will be developed in better manner to
collect the information.
• Employees will be motivated to attain the set targets.

DISADVANTAGES OF BUDGETING
• The making of budget is lengthy process and involves high
time and cost.
• The making of changes in budget is difficult due to
involvement of high frequency of changes.
• The budgeting process involves various assumptions and that
reduces its reliability.
• The financial aspects are covered and other areas are left
unattended.

VARIOUS BUDGETARY FORMS
• Variance analysis budget: The deviation that are involved
are determined and then the budgeting is made accordingly.
• Zero based budgeting: Under this there is collection of
information from point zero as no historical data is taken
into use.
• Master budget: Under this all the areas of the business are
considered and that helps in controlling and improving
them.

MANAGEMENT ACCOUNTING AND
FINANCIAL PROBLEMS
• The problems involved in business are identified and resolved
with management accounting.
• The information required to take action is available with
management accounting.
• The identification of issues is made possible.
• Timely disclosures are made which brings the issue in notice.

TOOLS TO ELIMINATE FINANCIAL
PROBLEMS
• Benchmarking: The industry standards are considered in this
as benchmarks and then the activities are performed
accordingly.
• Key performance indicators: They are various parameters
which are specified and then the performance will be evaluated
on that basis.
• Variance analysis: There is the difference in the actual and
budgeted performance and it helps in eliminating same.

ATTAINMENT OF SUSTAINABLE SUCCESS
The sustainable success is attained by management accounting in
following ways.
• Environmental and social trends are determined.
• The sustainability issues are determined and resolved.
• The strategy of the company is linked to sustainable challenges.
• Pricing and other decisions are made on basis of prepared
reports.

REFERENCES
• Barbole, A.N., Nalwade, Y.D. and Parakh, S.D., 2013. Impact of
cost control and cost reduction techniques on manufacturing
sector. Indian Streams Research Journal, 3(5), pp.1-8.
• Komala, A.R., 2012. The influence of the accounting managers’
knowledge and the top managements’ support on the accounting
information system and its impact on the quality of accounting
information: A case of Zakat Institutions in Bandung. Journal of
Global Management, 4(1), pp.53-73.
• Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating
corporate sustainability assessment, management accounting,
control, and reporting. Journal of Cleaner Production, 136,
pp.237-248.