Management Accounting Report: Concepts, Techniques, and Analysis

This report provides a comprehensive analysis of management accounting concepts and techniques, specifically tailored for decision-makers at Connect Catering Services. It begins with an introduction to management accounting, differentiating it from financial accounting, and highlighting its role in internal management and decision-making processes. The main body of the report is structured into four key tasks. Task 1 explores various management accounting systems, including cost accounting, inventory management, job-costing, and price-optimization systems, explaining their applications within Connect Catering Services. Task 2 delves into cost calculations using marginal and absorption costing to prepare an income statement. Task 3 examines the advantages and disadvantages of different planning tools used for budgetary control. Finally, Task 4 compares adapting management accounting systems to respond to financial problems. The report concludes with a summary of the key findings and provides a list of references for further reading. The content is valuable for understanding how to use management accounting for strategic decisions.

Management Accounting
Concepts and Techniques
for Decision Makers

Table of Contents
Introduction......................................................................................................................................1
Main Body.......................................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various types of management accounting systems..............................................................1
P2 Different methods used in management accounting reporting..............................................4
TASK 2............................................................................................................................................5
P3 Calculations of costs using suitable techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................5
TASK 3..........................................................................................................................................10
P4 Advantages and disadvantages of different types of planning tools used for budgetary
control.......................................................................................................................................10
TASK 4..........................................................................................................................................12
P5 Compare adapting management accounting systems to respond to financial problems......12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

Introduction
Word management accounting is made with combination of two separate words that is,
Management and Accounting. It also widely known as managerial accounting. Which can be
define as a process that provide information resources to the manager of the organisation which
help them at the time of decision making. In simple language it is the accounting for internal
management. It provide overall financial information to business mangers that it is only used by
internal internal team. The process involve sharing of sharing of financial informations , reports
such as, invoices, ledgers, financial statements etc. by finance administration with management
teams of the company (Appelbaum and et. al., 2017). It help in increasing managerial efficiency
by providing all necessary informations and facts to them to facilitate the managers in decision
making and control all other functions in the company. The objective of management accounting
is to take better decisions, control management performance, interpret financial information etc.
in the organisation by using all necessary statistical information. On the other side, Financial
accounting is the measuring, processing, recording and presentation of informations for the
benefit of the company's stakeholders. It is the process of recording daily financial transactions
in a manner which help in preparing suitable informations regarding financial affairs of the
business. For report purpose Connect Catering Services is the chosen organisation which is a
family owned contract caterer service in UK. In following report is going to cover several
aspects of accounting which is necessary to understand overall management accounting concept
and its methods which are used by business to create report and take decision on the basis of
them (Heryanto and Sudibyo, 2017). Finally the impact of financial problems of the organisation
and what are the key affecting areas of the company will be discussed and how they are going be
addressed with the help of different methods.
Main Body
TASK 1
P1 Various types of management accounting systems.
Some major types of management accounting are discussed below in the following
sections:
 Cost Accounting System: It is model used by company in order to calculate the costs of
the services or products for the purpose of analyse profits of the company. In this process
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of assessing the exact cost of products is significant for gainful operations. Company
need to know which products can be profitable for them and which are not. This is only
possible when obtained figures of the costing are correct enough. Moreover, the product
costing system help in calculation of the final value of materials from the stock, work-in-
progress and finished goods in inventory at the time when financial statements are
prepared. There are majorly two types of cost accounting system are there: Firstly job
order cost and secondly process costing. In context to Connect Catering Services can
adopt this system, which is useful in providing benefit to the company in order to develop
strategy. It is also useful in assessing the significant level of the inventory of the
company. Therefore it is significantly required for Connect to adopt this system as it can
be helpful for them in identify the cost of materials and build important strategy for them
(Tuan Mat and Smith, 2016). Therefore it is indispensable requirement for Connect is to
develop effective cost for their different department making output. Moreover, this
system is also helpful in order to calculate cost for all of their products and company can
consider the purpose and profitability for the inventory.
 Inventory Management System: It is the system which include aggregation of both
technology that is, hardware and software. The system oversee processes and procedures
in order to monitor and maintaining the stocked products. The products can be company's
raw materials, asset and supplies or any finished products which can be ready to be
dispatched to other businesses or ultimate users of the product. The key function of
inventory management is to keep a elaborated record of all stocks and product as it enters
or leaves from warehouse of the company (Omagbon, 2015). At Connect, the company is
dealing with catering services which means they involve in delivering finish products to
it customers. Thus the system can be helpful to them to maintain the inventory for raw
materials like; fruits vegetable, meat and other cooking items to make the finish products.
The complete inventory management system include:
- A system which distinguishing items present in the inventory and its related information, such
as scan code labels, tags information receipts etc.
- Hardware equipment for reading scanned labels, like; code scanners or smartphones with all
equipped scanning apps.
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- Different processes and policies such as; labeling reporting and documentation,. This should
include an inventory management technique which can include: ABC Analysis, FIFO, Stock
Review or any another proven method.
- Different inventory management software are also used by companies which provide central
database system and point of citation for all the materials are present in inventory. Coupled with
the ability to analyze data with the help of system also produce reports by forecasting the future
demand so much more.
Thus, the primary obligation of the inventory system at Connect is to keep track its
products and materials considering their supply chain and warehouse. Because it is also useful in
checking the flow of materials in order to make sure the demand within the company have an
accurate time period.
 Job- Costing System: This system involves, process of collecting information regarding
the costs related with a specific product or any service. Such data may be required in
order to present the cost information to a customer under a contract where costs can be
compensate. The information is also useful for determining the accuracy of a company's
estimating system, which makes company to be able to quote prices which allow
reasonable profit (Nielsen and et. al., 2014). Such information can also be useful to
delegate inventory related costs while manufacturing the goods. In Connect, company
with the help of this system determine its price of the output accurately. The method use
three other types of information too like; direct labor, materials and overheads cost to get
the exact amount. Such type of approach guarantee that revenues of the company can
associated with expenses at the time when they take place.
 Price- Optimization System: This refers to improvement in pricing strategy regarding
the product the company is offer keeping in mind the willingness and ability of their
customers can pay which can maximizing price as per the need. Company during ups and
downs in their supply chain system, they accurately dedicate a large amount of time
towards price optimization which ensure that their products can sell quickly at the right
price with a motive of earning sufficient profits that survive them (Betsch, T. and
Haberstroh, eds., 2014.). In Connect, the leaders can use this system to drive profits from
sell. Connect is B2C company as the formula is depending upon the overall demand for
its products, level of competition in the industry and the cost of manufacturing their
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goods all these have benefit to utilize the system for company. Having the right balance
among profit and value is important that's what price- optimization is all about
(McCormick, 2017). As the values of relative goods and services get changed due to any
reasons thus its a never-ending duty for most businesses and specially in food business.
P2 Different methods used in management accounting reporting.
Management accounting report consist of inside information received from financial
report. The reporting is utilized for designing plans, taking decision and measuring performance
of the organization. The reports are generated on regular basis to keep the track of information.
As the company;s crucial decisions are heavily rely on such reports. It is the responsibility of the
higher authorities to have a close eye on the reports to take any further decisions for company
(Types of managerial reports. 2019). Different types of reports that are generated in company are
discussed below in following sections:
 Budget Report: In this type of reports which reflect the overall company's performance
for each department. A budget help in understand different profitable scheme for the
company. A budget reports consist all types of earning as well as expenses. A budget
estimate is made on the basis past experience including event that are certain and also the
events that are uncertain (Drury, 2013). Company make budget so that unlimited
expenditure can be avoid and fulfill its objectives while stay in estimated budget.
Managerial accounting reports related to budgeting help in guiding managers of the
Connect which content better employee bonus, lower the costs if needed and reconsider
the terms with suppliers etc. Therefore, a report in budget is imperative to any business.
 Account Receivable Aging Report: This type of report is needed when company is
largely depended on credit base business depending upon the size and operations, then
account receivable aging type of report play important role in are in it. The report analyze
the creditors and break down the customer and remaining are get balance into specific
time period this allow managers of the company to recognize the debtors and try to find
issues in the company's process of collection (Groot and Selto, 2013). If company
recognize too many defaulters, then the company may need a change its collection
process and tight the credit policies as cash flow is the crucial need for the operation of
business. It is common that company have some bad debt which need to be written off
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from time to time. However, company cannot make it a habit thus it is advisable to
company must know its debtors.
 Cost in Managerial Accounting Report: The work out in the costs of commodities that
are produced within the company. In such type of report which include all the cost related
to raw material, overhead, labor, adding costs etc. are taken into account. Then, sum of
total cost are divided by the amount of products produced in that unit. The report reflect a
summary of all of such information. The report offer managers of the company to
recognize the costing of their items while producing in comparison to selling prices in the
market (Appelbaum and et. al., 2017). These profit are measure and estimated also,
monitored through these reports provide a clear picture of all of the costs that taken place
during production process and procurement of the overall materials.
 Performance Report: Performance reports are the type of report which reflect either
individual performance or different teams that are made in the company. This type of
report act as guiding tool for the managers to a have full check on their employees and
their performance on regular basis of quarterly, monthly or annually. Also help in review
performance of a company as a whole. These reports enable the managers use them as
this help in making any strategic decisions for the future of the organization. Further,
company recognize individuals according to their performance and contributions made in
the company (Banerjee., 2012). They are also awarded for their commitment and efforts
for keep up their strength continue and sometimes under- performers are dealt as
required. Performance-related managerial accounting reports additionally offer close look
into the working performance of the company. The reports can also help in point out
towards flaws in the organizational structure. The role of performance reports is crucial
for Connect as well, as this help in keep an accurate standard of its strategy towards its
objectives.
TASK 2
P3 Calculations of costs using suitable techniques of cost analysis to prepare an income
statement using marginal and absorption costs.
Marginal Cost: It is the type of costing technique which is use in decision making process
of the company. One of the major reason using marginal cost is that the approach allows
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management's inattention to stay concentrated on the changes which result from the decision
process of the company that bring change (Butterfield, 2016). The marginal cost of an item
considered as variable cost. The marginal cost of an item is the sum total of its direct costs such
as materials cost, labor cost, expenses cost and variable production overhead cost. So as the
volume of production and sales increases when the total variable costs rise proportionately.
Absorption cost: It is undertaken as the prominent costing method which undertake effective
manufacturing and production regarding the fixed and variable cost. According to this, the
significant method of this cost is related with the production of products and services which are
accumulated and allocated for the single commodities.
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