Management Accounting Report: Analysis of Case Studies and Results

This report on management accounting presents an analysis of two case studies. The first case study examines a static budget report, identifies causes of net income loss due to inefficient resource management, and assesses the administration's expense management. It also evaluates management's decisions regarding competitiveness and uses a flexible budget to analyze variances in sales, variable costs, and fixed costs, answering questions about the main causes of loss and management effectiveness. The second case study applies a balance scorecard to evaluate a company's performance from financial, customer, internal process, and organizational capacity perspectives, including the development of key performance indicators (KPIs) for each objective. The report concludes by summarizing the findings and referencing relevant sources.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
Case study 1.....................................................................................................................................1
A). Based on static budget report:...............................................................................................1
1. Main causes of loss in net income...........................................................................................1
2. Did administration do a better, average, or poor job of managing expenses?........................1
3. Were management's decisions to stay competitive sound?.....................................................1
b). Flexible budget:.....................................................................................................................1
Case study 2 ....................................................................................................................................3
2. Apply balance scorecard.........................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Management accounting is the crucial aspects which is implemented under the business
for attaining sustainable advantages over the other rivals. Now, each firm is trying to attain its
sustainable development by using management accounting tools (Hutaibat, 2012). These are the
benefits which can only be achieved after implementing these tools into the firm.
Case study 1
A). Based on static budget report:
1. Main causes of loss in net income
The main issue of loss in the net income is due to the inefficient use of resources. Due to
inefficient use of resources, company did not control the variable costs in an efficient manner.
Which was the main cause loss in net income. Although, fixed cost does not create any impact
over this. But, to be frankly speaking, this affacts the contribution of the company.
2. Did administration do a better, average, or poor job of managing expenses?
I firmly believe that the administration did a poor job in managing variable costs.
Because, the company is wasting their resources by way of inefficient use of resources
effectively. Henceforth, administration was not able to limit the variable costs efficiently.
Although, they controlled fixed costs efficiently.
3. Were management's decisions to stay competitive sound?
According to me, this has been seen that that the management's decisions to remain
competitive probably were healthy. Because, salary and wages, they controlled effectively which
makes the company to stay competitive.
b). Flexible budget:
MONATANA FARM
Per unit
budgeted costs
Sales 3.95
1

Feed 1.5303643725
Nutrition 0.1748987854
Supplies 0.0801619433
Delivery expenses 0.3
Total variable expenses
Particulars Budget Actual Variance
Sales 2015681.05 1939138 -76543.05U
Less: Variable costs
Feed
780943.408906
883 840031 -59087.59U
Nutrition
89250.6753036
437 109911 -20660.32U
Supplies
40906.5595141
7 62806 -21899.44U
Delivery expenses 153089.7 153090 0 F
Total variable expenses
1064190.34372
47 1165838
-
101647.65
U
Contribution 951490.7 773300
178190.70
U
Less: Fixed
costs 0
Depreciation 60000 60000 0
Insurance 69000 69000 0
Utilities 58000 62000 -4000U
Repairs and maintenance 25000 30000 -5000U
Salary and wages 230000 216000 14000F
Delivery expenses 0
Veterinary fee 75900 87000 -11100U
2

Advertisement 105000 120000 -15000U
Entertainment 5000 7000 -2000U
Total fixed expenses 627900 651000 -23100U
Net income
323590.706275
304 122300 201290.7U
C). Based on the above flexible budget report, attempt three questions in part (a) above.
1. What was the main cause(s) of loss in net income?
Ans. The main issues of limit the net incomes are due to the inefficient control over the variable
expenses. This is the main issue by which the loss is occurred. Under this case, company were
not able to manage its variable cost efficiently.
2. Did administration do a better, average, or poor job of managing expenses?
Ans. Under this situation, the management of the company poorly manage their
operations. That is why, management can't manage the variable costs effectively. However, they
only use delivery expenses effectively (JOSHI, and et. Al., 2011).
3.Were management's decisions to stay competitive sound?
Ans: The management decisions were the competitive in nature and this reflects the great
sound for the firm. Now, according to me, management makes certain changes in order to control
their variable costs so that they could able to come in the competitive world.
Case study 2
Balance score card is the strategic planning and administration system which firm
implement to: communicate what company is trying to attain, line up with regular works which
everyone is trying with strategy, specialised projects, products and services. Under the given case
study, BSC declares that company see the firm from four perspectives, and to grow objectives ,
assess, targets, and initiatives relative to following points of view:
Financial perspective: To become a leading retailer of luxury products in Australia and New
Zealand. Company is having surplus amount of return that is why, it is providing greater return
to shareholders and this will also helps the firm to regularly expand and emerge the firm. Under
this report, this also been seen that the management is striving hard to make its surplus profits
more.
3

Customer perspective: This perspective reflects firm's performance from customer perspective
or other key stakeholders which firm is willing to serve in front of them. Under this case, LFR is
ready to provide a best luxurious products to the customers. As this has a brand reputation for
storing the best quality products.
Internal process: This perspective firm's performance from the quality point of view and
superiority regarding to firm's products or services. Under this, LFR is providing best quality
products, which is the company's foremost requirement that are required to be met by the
management.
Organisational capacity: This is the learning and growth perspective which views firm
performance via human resources, infrastructure, technology, culture and different capabilities.
The LFR sales department emerged a strong relationship with their customers which they are
going to serve a strong relationship with the them.
B). Emerge in the form of a KPI for each objective identified.
Financial perspective
a) Objective Comments (c)KPI Comments
LFR have lucrative
benefits, that is why,
this is rendering much
attention on return to
shareholders and such
would likewise assist
the firm to on a regular
basis expand and
emerge it.
To be a emerging firm
of luxurious products
in Australia and New
Zealand, LFR needs to
run their operations
effectively so that they
could attain maximum
advantages.
The financial
performance of the
company can be
analysed by way of
gross profit margin,
net profits margin, its
efficiencies etc.
The financial
performance could be
analysed after having
extensive research of
its financial
statements.
Customer
perspective
LFR is willing to
render best luxurious
products for the
potential customers.
To attain most of the
customers, company
needs to attempt a
great services and
The company's
performance can be
measured by applying
customer lifetime
The customer
performance can be
achieved in order to
attain their business
4

As, this has a brand
reputation for storing
the best quality
products.
qualities to them
(Zadeh, 2011).
value(CLV), Customer
Acquisition cost,
customer satisfaction
and retention, net
promoter score.
objectives.
Process perspective
LFR is supplying
high-grade quality
products, that are the
firm's major
responsibility that are
met by the company.
The process of the
company needs to be
effectively run their
operational process in
order to attain the firm
objectives. The
company also makes
some changes as per
the firm.
The process can be
measured by way
employer turnover
rate, percentage of
consequence to open
positions, employee
satisfaction (Quagli,
20112).
The company's process
performance is
investigated
extensively by using
KPI tools.
Organisational
capacity
Company's sales
divisions develop
sound connection with
their tailored customer
that they serves a
powerful kinship with
them.
The company needs to
organise firms
capacity in an
effective manner so
that its overall
performance could be
achieved.
The firm performance
can be measured under
this, and this could
able to make their
business operations
effectively.
Firm also needs to
know about their
business performance
by applying firm
capacity effectively.
2. Apply balance scorecard
a). Internal perspective measures the firm performance and analysing that firm performance is
great at firm level but this becomes inefficient in store level. Because, firm offer luxurious
products and for that it needs great offer to the firm (Zaleha Abdul Rasid and et. Al., 2011).
5

b). LFR employees provides great services to their customers and trained them by providing
training.
c). These are connected to the previous KPI and try to overcome the issues that would help out to
make the company in order to sustain operational functions.
CONCLUSION
From the above mentioned report, this has been analysed that the Monatana farm
provides budget by which actual outcomes were analysed, and variances are overcome. In
another case study, BSC approach is used in order to attain their business operations effectively.
6