Comprehensive Management Accounting Report for Capital Joinery Ltd

This report provides an in-depth analysis of management accounting principles and their application within Capital Joinery Ltd., a firm specializing in joinery and custom doors and windows. It begins by exploring various management accounting systems, including cost accounting, inventory management, job costing, and price optimization systems, along with their essential requirements. The report then delves into management accounting reporting, examining job costing reports, accounts receivable aging reports, operating budget reports, and product/service profitability reports. The benefits of these systems are discussed, followed by a critical evaluation of their integration. Task 2 focuses on cost calculation, comparing marginal costing and absorption costing techniques, with calculations and interpretations provided. The accurate application of these techniques is emphasized, along with the production of financial reports for data analysis. The report also explores planning tools, their advantages, and disadvantages, including an analysis of different planning tools and their applications. Finally, it examines how organizations adapt management accounting systems to respond to financial problems, analyzing responding systems and evaluating planning tools. The report concludes with a summary of findings and recommendations for Capital Joinery Ltd.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems..........................................................................................1
P2: Management accounting reporting........................................................................................3
M1: Benefits of Management accounting systems......................................................................4
D1: Critical evaluation of management accounting systems and management accounting
reports..........................................................................................................................................4
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
M2: Accurate application of management accounting techniques..............................................5
D2: Producing of financial reports for accurate analysis and interpretation of data...................5
TASK 3............................................................................................................................................5
P4: Advantages and Disadvantages of planning tools.................................................................5
M3: Analysis of different planning tools and their applications:................................................6
TASK 4............................................................................................................................................7
P5. Organisations are adapting management accounting system to respond to financial
problems:......................................................................................................................................7
M4: Analysis of responding management accounting system over financial problems:.............8
D3: Evaluation of planning tools.................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting refers to a process in which the use of various types of methods
and techniques by the managers of an organization so that they are able to ensure that they can
better manage the firm's financial data, facts and information in a highly effective manner
(Apostolou and et.al., 2016). Its use is quite crucial from the point of view of the organizations
so that they are able to achieve their short-term, medium-term and long-term goals and
objectives in the future. For this report, Capital Joinery Ltd. has been selected. It is a firm which
manufactures joinery, made-to-measure doors and windows. In this report, focus will be made on
demonstration of understanding of management accounting systems, calculation of costs,
explanation of the use of planning tools. Additionally, focus on Comparison of ways in which
the firms can make use of management accounting to respond to the financial problems will be
discussed as a part of this project.
TASK 1
P1: Management accounting systems
Management accounting is a tool which is used for the purpose of decision-making by the
management in a highly effective manner by the management (Management Accounting, 2020).
Its use can be made by Capital Joinery Ltd. so that it is able to ensure that its goals and
objectives can be attained highly effectively and efficiently.
Different types of systems can be used by the organizations in Management accounting.
These systems can be explained as follows-
Cost accounting system- In this system, the organizations are able to ensure that they
can calculate the various types of costs in a highly effective manner (Astami and et.al., 2017).
Thus this system is used for the purpose of identification of costs, their segregation and ensuring
that proper techniques can be applied for ensuring their reduction. Therefore the use of this
system can be made by Capital Joinery Ltd. This will ensure that they are able to achieve their
varied goals and objectives easily.
Essential requirements-
 In this system, there must be use of different methods so that the costs can be effectively
identified. Therefore in this manner this will help Capital Joinery Ltd. to be able to asses
costs effectively and efficiently.
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 This system has to ensure that the use of cost reduction techniques can be made so that
Capital Joinery Ltd. Is able to reduce the costs effectively and efficiently.
Inventory management system- In this system, the use of different methods and techniques is
made so that the level of inventory can be managed in the right manner (Dinh, Kang and
Schultze, 2016). Thus in this way, Capital Joinery Ltd. Is able to ensure that it can manage stock
in the right manner. Therefore this raises the overall level of efficiency and effectiveness in the
management of inventory.
Essential requirements-
 The use of this system ensures that the organizations are able to manage their level of
stock in a proper manner. Thus in this way Capital Joinery Ltd. is able to ensure that it
can manage inventory by making use of techniques like LIFO, FIFO, Weighted Average
Cost etc.
 In this system the use of certain types of techniques must be made which ensures that a
reduction in the level of overall costs related to the level of inventory can be made
effectively and efficiently. Therefore, In this way the management of Capital Joinery Ltd.
Will be able to reduce the maintenance costs effectively and efficiently.
Job costing system- In this system, the use of appropriate methods and techniques can be made
so that the management of the job orders can be done in the right manner effectively and
efficiently (Egan, 2018). Thus, In this way Capital Joinery Ltd. Can make sure that it can manage
its job orders in an appropriate manner.
Essential requirements-
 In this system, the use of right methods and techniques should be made so that the job
orders can be managed in the right manner. In this way, Capital Joinery Ltd. Can ensure
that the management of job orders can be done effectively and efficiently in an
appropriate way.
 This system has to ensure that the use of methods and techniques can be made for the
purpose of ensuring a reduction in the overall level of costs in the right manner. Thus in
this way Capital Joinery Ltd. Will be able to reduce its costs effectively and efficiently.
Price optimization system- This system ensures that the use of mathematical and statistical
models can be made so that the prices are set correctly for earning higher-level of profits
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(Ellström and Larsson, 2017). In this way, Capital Joinery Ltd. can ensure that it can achieve its
higher-level of goals and objectives.
Essential requirements-
 In this system, there must be use of mathematical and statistical models and techniques
for facilitating forecasting of price. Therefore in this way Capital Joinery Ltd. Will be
able to ensure that it forecasts the different prices in the right manner effectively and
efficiently.
 The use of this method should allow the firms to be able to ensure that they can reduce
the overall job costs. Thus in this way Capital Joinery Ltd. will be able to make sure that
it can facilitate a reduction in the job costs.
P2: Management accounting reporting
In Management Accounting the use of different types of reports can be made so that a
proper analysis an interpretation can be made effectively and efficiently. Therefore the use of the
of the following reports can be made by Capital Joinery Ltd.-
 Job costing reports- In these reports, a detailed report of the inflows and outflows of the
overall job orders can be prepared (Farooq and De Villiers, 2019). Thus in this way
overall job costs can be effectively identified by the organization in the right manner in
the firm effectively and efficiently. Therefore this can be quite useful for the managers of
Capital Joinery Ltd. so that they are able to assess their job costs effectively and
efficiently. Thus in this way the management of job costs can be done in the right manner
by the company. If the are any deviations or variations which are identified then they can
be easily rectified using proper methods as well as techniques in the right manner.
 Accounts Receivable Ageing Reports- In these reports, there is a detailed analysis of the
different forms of Debtors in the organization. Therefore, In this manner it is quite crucial
that an overall summary of these Debtors can be prepared effectively and efficiently. In
the context of Capital Joinery Ltd. It is highly crucial that these reports are framed for the
purpose of identifying those debtors who have not paid their dues since a long time which
will help a lot in getting the payment from them within time.
 Operating budget report- In these reports, there is a detailed report of the operating
revenues and expenses in a highly effective manner. Therefore, In the context of Capital
Joinery Ltd. It is very important that these reports are prepared to assess the efficiency
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and effectiveness level of the operations. Therefore in this way the company can target
higher-level of operational profits.
 Product/service profitability report- In these reports, a detailed analysis of the overall
products and services can be made in a highly effective manner in the organizations
(Fitriyani, 2019). Thus, In the context of Capital Joinery Ltd. It can be highly useful to
ensure that the products and services which are not making appropriate profits can be
identified so that a suitable action is taken by the management to improve their overall
profitability level.
M1: Benefits of Management accounting systems
Cost accounting system can be beneficial for the organizations to identify and assess the
various types of costs. Also it can be used for the purpose of ensuring that costs can be
effectively reduced. Inventory management system can be beneficial for the firms to identify the
level of inventory in the organization. Also is use can be made so that the costs related with the
maintenance of stock are reduced effectively and efficiently. Job costing system can be
beneficial for the firms to focus on the right management of the job orders. Also this system can
create an advantage for the organizations to reduce the costs of maintaining the job orders. Price
optimization system can be beneficial for the organizations to set a right price. Also this system
can be helpful for the firms to target higher-level of profits in the future.
D1: Critical evaluation of management accounting systems and management accounting reports
These systems and reports can be easily integrated in the overall processes of the
organization. In Capital Joinery Ltd., the focus has to be put on ensuring that both of them can be
effectively and efficiently used so that the company is able to achieve its goals and objectives in
the right manner. Thus in this way the management of the firm will be able to manage the
functioning of the organization correctly.
TASK 2
P3: Calculation of costs
Marginal costing- It is a technique through which the organizations can calculate the
overall level of profits as well as also ensure that Break-Even Point can be calculated (Gulluscio
and et.al., 2020). It is a point where there are neither profits nor losses for the organization.
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Therefore, In the context of Capital Joinery Ltd. This technique can be used so that the
profitability level is effectively determined.
Absorption costing- In this technique, it can be ensured that the overall level of expenses
can be calculated effectively and efficiently (Matsler, 2019). Therefore, In this way it ensures
that a proper treatment of the overheads can be done in the right manner. It can be done through
ensuring their right allocation according to the various types of expenses of the different
departments. Therefore, In Capital Joinery Ltd. This technique can be used so that the
profitability level can be assessed and the proper allocation of overheads is made.
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Interpretation: With the use of both Marginal and Absorption costing techniques it has
been found that the Profit for May and June under Absorption costing technique is 6500 and
4500 respectively. Also under Marginal costing technique the Profit for May and June is 14500
and 10400 respectively. Thus it has been interpreted that there has been a decrease in the overall
profit within a space of 1 month.
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M2: Accurate application of management accounting techniques
The use of both Marginal and Absorption costing techniques can be made by the
organizations to ensure that they are able to assess their profitability level effectively and
efficiently. Therefore, In this way both of these techniques can be used by Capital Joinery Ltd.
So that it is able to determine its profits effectively and efficiently. In this way the various types
of goals and objectives can be achieved in the right manner.
D2: Producing of financial reports for accurate analysis and interpretation of data
Through the use of financial reports, organizations like Capital Joinery Ltd. Are able to
ensure proper analysis and interpretation of data in a highly effective manner. The use of
Marginal and Absorption costing techniques can be made so that financial reports can be
prepared through which analysis and interpretation can be done in the right manner. Thus in this
way conclusions and recommendations can be derived which can be highly useful.
TASK 3
P4: Advantages and Disadvantages of planning tools
The different types of planning tools can be used by the businesses. These tools are
explained as follows-
Fixed budget-
In these type of budgets, there is a very little scope of flexibility (Opute and Madichie,
2017). They have constant figures which cannot be changed. The use of this budget can be made
in Capital Joinery Ltd. for ensuring a higher-level of consistency.
Advantages-
 In this budget, there is a particular level of consistency. Therefore in this manner Capital
Joinery Ltd. has an advantage here.
 This budget can be implemented quickly in the organizations. Thus in this manner this
creates and advantage for Capital Joinery Ltd.
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