Unit 5: Management Accounting Report: Connect Catering Services

This report delves into the application of management accounting principles within the context of Connect Catering Services, a UK-based catering business planning to expand by selling homemade pizzas to superstores. The report examines the necessary requirements of various management accounting systems, including cost accounting, price optimization, job costing, and inventory management. It evaluates the benefits of these systems and their application in the business. The report also explores management accounting reporting methods, such as inventory management reports, performance reports, and budget reports, and their role in providing financial insights. Furthermore, it covers cost calculation techniques, including marginal costing and absorption costing, and their use in preparing financial reporting documents. The report analyzes various planning tools for budgetary control, including their advantages and disadvantages, and evaluates their application in preparing and forecasting budgets. Finally, it compares two organizations, analyzes how management accounting systems contribute to an organization's sustainable success in addressing financial problems, and evaluates the effectiveness of planning tools in solving financial challenges. The report concludes with a comprehensive overview of the findings.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Necessary requirements of various types of management accounting systems ...................1
M1. Evaluation of benefits related to management accounting systems with their application in
context to organisation.................................................................................................................2
D1. Critical evaluation regarding how management accounting systems along with
management accounting reporting are incorporated in process of company..............................3
TASK 2...........................................................................................................................................4
P2. Management accounting reporting methods..........................................................................4
TASK 3............................................................................................................................................5
P3. Calculation of costs................................................................................................................5
..........................................................................................................................................................8
..........................................................................................................................................................8
..........................................................................................................................................................9
M2. Implementation of various types of techniques of management accounting accurately and
producing correct financial reporting documents......................................................................10
D2. Interpretation data for a range of business activities and application of accurate financial
reports........................................................................................................................................11
P4. Explanation of advantages and disadvantages for various types of tools of planning that
are utilised for budgetary control...............................................................................................11
M3. Examine the utilisation of various planning tools and their application in preparing and
forecasting of budgets:...............................................................................................................12
TASK 4..........................................................................................................................................13
P5. Comparison of two organisation .........................................................................................13
M4 Analysing how management accounting systems leads to sustainable success of an
organization in response to financial problems:........................................................................14
D3. Evaluating the response of planning tools in solving financial problems for sustainable
success of an organization:........................................................................................................15
CONCLUSION..............................................................................................................................15

REFERENCES..............................................................................................................................16
APPENDICES...............................................................................................................................17

INTRODUCTION
Management accounting are techniques that assist businesses to control, plan, evaluate
and improve their performances (Dalla Via, Perego and Van Rinsum, 2019). It deliver different
paths to managers so that they can manage finances within their entity to achieve their goals and
work on their fouls. Internal controllers form these practices and implement them to enhance the
working of company. For this report we have consider Connect Catering Services which is a
growing company of UK. They run family owed business and run catering service. Now they are
planning to expand their business by selling home made pizzas to superstores for this they should
consider different management accounting systems.
This report emphasis on all necessary requirement of various types of system of
management accounting, methods that are require for reporting of management accounting,
merits and demerits of various plaining tools. Moreover, it also includes cost calculation by the
use of proper techniques of cost analysis for the preparation of income statement with marginal
and absorption cost. Controlling tools of budgeting, their advantages and disadvantages are also
mention in this report.
TASK 1
P1. Necessary requirements of various types of management accounting systems
The concept of management accounting is said to be determine financial information of
the firms and help them to take decisions according to situations. In an organisation, it is a
procedure to identify the certain aspects like measuring, interpreting, implementing, analysing
and communicate with managers within the organization. It is all about making of internal
decision that are used for internal function.
System of Management Accounting
Cost Accounting Systems: This system is said to be that a entity calculate the costs of
their products for profitability analysis and cost activity (Bar-Yosef, D’Augusta and Prencipe,
2019). It aims to getting a entity's total cost of production to measure the variable costs as well as
fixed costs. There are two types of cost accounting such as job order costing and process costing.
In connect catering services, it helps to make a decision making and modify the cost efficiency.
Calculation of cost is very essential for organization because it gives the accurate cost of entity
while determine profits.
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Price Optimising System: The concept of this system is to understand the firms
strategies like how much company acquire their profitability levels when they change their prices
for existing customers (Cai, Li and Tang, 2020). It can decide the prices of many other products
at a particular time, price optimisation is very essential requirement for entity because it
determine overall price at different levels which is decisive to profitability. With context of
Connect Catering Services, before deciding the products of firm it consider several factors such
as product life cycle, rivals strategies and goals of the entity. It will determining initial pricing in
this firms work but for stable base of products, promotional pricing means when new product are
launched in the market their promotions is there, many competitors set their prices at a low cost.
Job Costing System: This system is used to ascertain the special cost to a specific job
and that costs are performed by the customers evaluation (Dewua and Barghatht, 2019). With
relevance of job costing, basically, they assign their cost to each and every individual so that they
find out the profit and loss of a entity on each and every job. According to the Connect Catering
Services, it is helpful to check the firm's quality in which should be capable to allow sensible
profit. They compare actual costs with the help of handle and controlling costs. To helps in
identifying the unsuccessful jobs and various essential involvement in context of connect
catering services are wind-up of job, production process is listed, whether order is received or
not etc.
Inventory Management System: The concept of this system is a tool that determine the
tracking of goods from one place to another place (Hýblová ,2019).. It is a collection of software
to maintain product and procedures of firm whether it is a raw materials, finished goods, assets
of the company are willing to send their seller and consumers. With context of Connect Catering
Services, this type of system is very efficient and effectively to be achieved within the structure.
Most of the entities are to decrease their product and overstocking of inventories. It helps the
firm in early management and cost command of the entity. Managing of inventory consists of
various benefits which includes reduction of cost, suitable stock is achieved in this.
M1. Evaluation of benefits related to management accounting systems with their application in
context to organisation
Application and benefits of certain systems of management accounting inside Connect
Catering Services are as underneath:
System Benefits and application
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Cost-accounting  This system will benefits Connect Catering
Services to see show cost they have generated from
pizza making operations and how much will it take
them to transport them to superstores.
 Application of cost accounting system in Connect
Catering Services will help to know how much
expenses they should do in relation to earn profit
and if they are increased how they should control
them.
Job-costing  In Connect Catering Services, job costing system
will provide then knowledge about cost of each job
and path about what should be done.
 Within the enterprise, application of job costing
system will help them to cut their extra expenses.
Inventory management  Connect Catering Services experiences benefits
with inventory system as they can save time and
they can also check their stock level.
 Application of inventory management system help
to keep an eye on inventory to fit customers
demand.
Price-optimising system  Price optimising system benefits Connect Catering
Services to determine market trends and customers
taste.
 Application of this system in business venture will
provide information about customers willingness
and their reaction to different cost.
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D1. Critical evaluation regarding how management accounting systems along with management
accounting reporting are incorporated in process of company
It can be said that all management accounting systems are incorporated to different
accounting reporting to ensure proper functioning and management of activities. In reference to
Connect Catering Services, inventory management system are incorporated to find out how
much material is required for their pizza making process and it save time. Accounting systems
such as price optimising system, cost accounting, job costing and management of stock helps
businesses concerns in attaining their goals. Apart from these reporting methods, like,
performance, budget and inventory are also integrated with other system in order to manage
staff and make strategy to survive in market competitions.
TASK 2
P2. Management accounting reporting methods
Management accounting reporting displays financial conditions of entities for current and
upcoming years. Accounting records information like profit margin, transactions, sales and cost
of operating are displayed in these reports. In relation to Connect Catering Services, these
reports will provide them idea of how much profit they are generating and their expenditures in
making home made pizzas. They can witness how much profitable this expansion is for them and
how they can attract customers. For this they should prepare following reports to get full
information about their financial position
Reports of inventory management- These reports provide information regarding stock
level of companies (Nishimura, 2019 . These reports contain data's relating to stock such as, its
performance, quantity and its position. Due to advancement in technology, computerised data
provide correct movement of inventory and accurate accounts of stock which helps in decision
making. In context to Connect Catering Services, these reports will act as a measuring tool of
their stock. With these reports they can actual analyse weather they have sufficient stock to meet
their pizzas demand. Use of software's will provide them full information materials that are
require for pizzas and they can modify there changing requirements. Company can also get an
idea about its warehouse area and its location. Warehouse location can save their cost of
transportation and time while importing or exporting their inventory.
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Reports about performance- Performance reports provide information relating to
individual working or practices (Rachmawati, 2019). They are tools of measurement through
which entities can measure actual results with set standards. Any variation in this comparison
will generate scope of improvement in their activities. Connect Catering Services with these
reports can analyse if their practices are going in right direction. They can see how much
workforce they require, current employees working skills and weather they maintain enough
supply to customers demand. These reports will help them to motivate and beat their
competitors. With these reports company can detect how much time they require to make their
pizzas and complete their manufacturing process on time.
Budget reports- Budget reports always discuss about the comparison of existent
performance with pre budgeted ones (Cai, Li and Tang, 2020). These reports provide road map
to enterprises so that they can find out areas in which they are lacking. After analysing these
areas they can strategies how they will deal with difficult situations and work without affecting
there pre set desire goals. Connect Catering Services can discover factors in which they are
inadequate and work accordingly. Planning in advance will provide them full route about how
they will capture market, customers demand and strategy to beat competition. Company with this
report can rely on actual calculations and actual results. Reports of budgets provide information
about what techniques they should introduce to meet customers taste and preferences.
TASK 3
P3. Calculation of costs
The concept of cost is a money that firm used to spend in order to make something. Also
that quantity of money required for the business to a specific job.
Marginal Costing: According to this technique, it determine the consequence on profits
to the changes in the output and distinguish between fixed costs and changeable costs
(Schmidthuber, Hilgers and Hofmann, 2020). With Context of Connect Catering Services,
marginal cost is helpful to decision making of the firm. It helps the management to fixed prices,
methods of production and choose a wide range products.
Absorption Costing: The concept of absorption costing determines the activity of billing
all costs, it involve both fixed costs and variable transaction (Nishimura, 2019). In case of
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Connect Catering Services, it is used to ascertain the marketing price of product as well as cost
involved in the industry. It is also used for stock appraisal procedures.
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