Management Accounting Report: Analysis of Financial Problems

This comprehensive management accounting report, prepared for Pearl Chartered Accountants and focusing on their client Connect Catering Services, delves into several key areas. It begins by defining management accounting and its essential requirements, including price optimization, inventory management, job costing, and cost accounting systems. The report then explores various management accounting methods, such as performance reports, budget reports, job cost reports, and inventory reports, along with their benefits and applications within the catering context. A significant portion of the report focuses on cost analysis, contrasting marginal and absorption costing methods, and includes calculations for income statements using both techniques. The scope of management accountancy is applied with suitable financial reporting documents. The report also examines the benefits and limitations of different planning tools used in budgetary control. Finally, the report compares how firms can adjust management accounting in response to financial problems, analyzing financial problems and evaluating planning tools to address them. The report concludes with a discussion of the findings and provides references for further study.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1 ............................................................................................................................................1
P1. Define management accounting with their essential requirements of management
accounting systems......................................................................................................................1
P2. Methods that are used in management accounting report.....................................................2
M1. Benefits of management accounting system with their application ...................................3
D1. Evaluating management accounting systems and report is integrated with context to
organisation..................................................................................................................................4
TASK 2............................................................................................................................................5
P3. Calculate cost analysis and prepare an income statement using marginal and absorption
costing .........................................................................................................................................5
M2. Apply a scope of management accountancy with suitable financial reporting documents.
....................................................................................................................................................10
D2.Make a financial reports that are applied and interpret data for a extent of business
activities.....................................................................................................................................10
TASK 3..........................................................................................................................................11
P4. Benefits and limitations of different kinds of planning tools that are used in budgetary
control........................................................................................................................................11
M3. Examine different planning tools with their applications..................................................12
TASK 4..........................................................................................................................................12

P5. Comparison how firms can adjust management accounting in respond to financial
problems ...................................................................................................................................12
M4. Analyse financial problems can lead organisations to sustainable occurrence..................14
D3. Evaluate planning tool in respond to solve financial problems that lead to organisations. 14
CONCLUSION.............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Management Accounting is a procedures that defines and give financial information to
provide valuable information for managers in which they would make a business decisions in
effectively and efficiently manner (Anand, Balakrishnan and Labro, 2019). The aim of this is to
assist their operations of business in an efficiently performing its functions. This report is based
on Pearl Chartered Accountants is one of best UK firms and its main client is Connect Catering
Services is a family owned catering services based in Oxfordshire that delivered best quality
products and services. Several topics are covered in this report which are named as essential
requirements of management accounting, different methods are used in management accounting
report, calculate cost analysis techniques using marginal and absorption costing, benefits and
limitations of different types of planning tools and comparing any two organisations that are
respond in financial problems.
TASK1
P1. Define management accounting with their essential requirements of management accounting
systems
Management Accounting: It is said to be determine internal operations of enterprise and
control various activities to provide accounting information in a systematic way (Baños Sánchez-
Matamoros, 2020). Within Connect Catering Services, firms used this accounting because it
helps to provide information of management and helps to complete day to day operations in
enterprise.
Management Accounting System: According to this system, it helps to provide internal
system of management that used in internal decision making. The report said that identify
various ways to run their firm's operations. For Connect Catering Services, it helps mangers to
used financial data and business action for internal direction of enterprise. Key essential
requirements that are used in management accounting schemes with context to Connect Catering
Services are as mentioned below:
Price Optimization System: This system is determine changes in price level with the
changes in demand and combined data with information on expenditure or stock to improve their
profits. Essential requirements of price optimization system is a practice that used in how target
customers and market find out most effective price that will impact of maximize sales and
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profitability. In case of Connect Catering Services, mangers used this system to identify the
effective price for target customers that will determine increased profit margins, consumer
growth and customer can meet its objectives.
Inventory Management System: This type of system defines procedure to flow of
inventory from one place to another place. It determine and identify each and every stock are
placed to right person at right place and at a right price. Within Connect Catering Services, it is
important for organisation to identify how much stock are left and how much inventory need to
improve their sales. Essential requirement of inventory management system is to improve order
accuracy because are placed on a timely basis and helps to maintain a proper of warehouse that
makes easier to pull right customers with greater quality.
Job Costing System: It is a process to collect those information related to specific cost
for a specific job to meet the customer expectations. It involves those required information in
order to submit particular cost to a customer and estimate the cost for a upcoming years based
on a specific project (Brierley, 2017). With relation to Connect Catering Services, it helps to
managers for comparing actual cost with standard costs. It leads to better profitability,
management decisions and provide timely reporting. Essential requirement of job costing system
deliver as service or job so that firms can charge their price for customer to achieve target of
gross margin.
Cost Accounting System: In this system, it s a framework to estimate cost of product or
services to achieve profitability or productivity and control cost. In case of Connect Catering
Services, it is helpful for organisation and identify where firm can spend its money, how much it
earns in a year. Essential requirements of cost accounting system that leads to improvement in
internal cost control and ratio. Firm incurs in respect to make goods and services and it also
measuring production cost f enterprise.
P2. Methods that are used in management accounting report
Management Accounting Report: This report says this is used for planning, designing
and decision making in enterprise also to measure performance in organisation. It display
financial status of organisation over a very particular period of time (Brierley, 2017). With
context to Connect Catering Services, managers used this report to identify performance of
enterprise and accounting record like transactions, operational cost and profitability. Managers
guide their business to meet its specific goals and objectives and easily gather information about
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various reports. Several methods that are used in management accounting with reference to
Connect Catering Services are as under:
Performance Report: This report determine for collecting information related to
company's operations for making reports and sending them to stakeholders. They identify all
information required to an appropriate detail while planning their report. In case of Connect
Catering Services, managers used this report to check the overall performance of firm and
identify potential growth of customers. They can track their performance in respect to inheritance
effective strategies that will help to growth of enterprise.
Budget Report: According to this report, it shows incoming and outgoing cash flow of
enterprise and determine which expenditure level are so high. This report present the actual
performance with standard during an accounting period and goal of this report is determine how
well departments use their funds to reach and accomplish their businesses. In case of Connect
Catering Services, it is important for enterprise to achieve their goals and objectives, control
expenditure and revenue of firm. Firm prepared this report daily, weekly or monthly.
Job Cost Report: In this report, it is planned for actual report and quantities that are
based on such reports. This is a tool that used and evaluate their business or production
performance for an estimated standard. Within Connect Catering Services, managers used this
cost to determine and accumulate each and every cost at a small unit of level. Employees charge
their cost to a specific time for a specific jobs in which they are assigned to various on the basis
of labour cost.
Inventory and Manufacturing Report: It is an amount of inventory of business that
present a physical or electronic document (Ferramosca and Ghio, 2018). Manufacturing report is
all about supplies and materials in hand for manufacturing their products or services. With
relation to Connect Catering Services, it is used for business help to run their business without
interruption and reduces cost or risk to running out of inventory. It saves money in business and
allow customer to fulfil their customer needs and wants. In business, proper managing of
inventory is very important and easily manageable. It contains all raw materials, finished goods
or services and production goods.
M1. Benefits of management accounting system with their application
Systems Advantages Application
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Price optimization scheme Benefit of price optimisation
in Connect Catering Services
is market transparency because
it can deliver up to date
information related to price
modification.
Managers of Connect Catering
Services uses this system to
check their price level and
identify how to improve their
profits.
Inventory Management
Scheme
With context to Connect
Catering Services, it helps to
cost savings because it lead to
loss of revenue and over
spending of money.
Application of Connect
Catering Services used in this
system that product are placed
on right customer on right
time.
Job Costing System This system used in Connect
Catering Services to determine
the present cost on basis of
previous records.
With context to Connect
Catering Services, manager
uses this system to identify to
deliver their services for a
particular cost in a specific
job.
Cost Accounting System In case of Connect Catering
Services, it helps in decision
making to determine whether
to buy this product or to make
their product.
Managers uses this system to
help internal cost of control
and measure production of
business.
D1. Evaluating management accounting systems and report is integrated with context to
organisation
It is unfavourable to measure that management accounting helps managers to take a
business decision and system determine internal system of organization (Ferramosca and Ghio,
2018). Managers uses price optimization system to check the level of prices with change in
demand. With management accounting report managers uses job cost report that identify each
and every cost at a small unit of level. Several reports are used which are named as performance,
budget, job cost and inventory management report.
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TASK 2
P3. Calculate cost analysis and prepare an income statement using marginal and absorption
costing
Cost: It is the amount that firm spent in day to day expenses to bring forth something or
creation of product and service (Hanif, Rakhman and Nurkholis, 2019). In case of Connect
Catering Services, mangers used this cost to determine profitability and productivity of
organisations. It is important for firms because it helps manger to take business decision whether
it is related to how much cost are available in firm, calculation of production and estimate work
efficiency.
Marginal Costing: The term marginal costing is a technique that increased or decreased
of cost per unit of output. It is based on production cost that are variable such as direct labour,
direct materials and direct overheads. In case of Connect Catering Services, it help managers to
take business decision making whether changes in cost per unit of output or provide maximum
return in enterprise to achieve maximum profits.
Absorption Costing: This type of costing determine that cost are associated with
production process and indicate all manufacturing cost have been assigned to units of goods
produced. It include both variable cost with changes per unit of output and fixed cost it remain
constant. In case of Connect Catering Services, it is mainly used in business for external
financial reporting and income tax. This costing helps managers to prepare a financial statements
and display less fluctuation in profits in case of fixed production.
Computation of income statements by help of marginal and absorption costing of Connect
Catering Services:
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