Management Accounting Project: Financial Issue Analysis & Solutions

This management accounting project analyzes the application of accounting principles within Rowlinson Knitwear. The project begins with an introduction to management accounting, its importance, and various types of accounting systems, including cost accounting, inventory management, price optimization, and job costing systems. It then explores different management accounting reporting methods, such as performance reports, accounts receivable reports, inventory management reports, and job cost reports. The project further examines the benefits of using a management accounting system and provides a critical evaluation of accounting reporting systems. It delves into various costing methods used to calculate net profit, including discussions on cost accounting systems. The project also explores different planning tools used for controlling budgets and critically analyzes financial issues. Finally, it compares the use of management accounting to overcome financial issues and analyzes various financial problems faced by organizations. The project concludes with a summary of the key findings and implications for effective financial management.

Management Accounting

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Concept of management accounting and associated requirement of various types of
systems...................................................................................................................................1
P2: Different methods used for management accounting reporting.......................................3
M1: Benefits of using management accounting system.........................................................4
D1: Critical evaluation of accounting reporting system.........................................................5
TASK 2............................................................................................................................................5
P3: Various types of costing method which are used to calculated net profit for the company
................................................................................................................................................5
M2: Analysing accounting information techniques...............................................................7
D2: Critical evaluation of using of costing method................................................................7
TASK 3............................................................................................................................................8
P4: Various types of planning tools which are uses for the purpose of controlling budgets. 8
M3: Evaluation of using planning tools.................................................................................9
D3: Critically analyse the financial issue...............................................................................9
TASK 4..........................................................................................................................................10
P5: Comparison of using management accounting is order to overcome financial issues...10
M4: Analysis of various financial problems........................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Nowadays, it has been huge issues that management is not able to analyse their financial
transaction in proper manner. They want an effective system which can provide them better
techniques to record all their financial transactions into their respective format in more right
ways. Management accounting systems are considering that kind of tool and techniques which
can be useful for them. As the main aim of managers to attain maximum return by the help of all
essential resources of the company. Management accounting is utmost important aspects for an
organisation like “Rowlinson Knitwear” in present time. This project is all about discussing
crucial objects like types of accounting systems as well as reporting methods those are useful for
the company in planning their business operations. Apart from this, use of different costing
method can be vital for calculating net incomes generated by the company during the accounting
period (Gond and et. al., 2012). However, various ways in which planning tools can be utilising
in controlling budgets of the company. Likewise, effective measure to deal with various types of
financial issues those are faced by various organisation in their everyday operations.
TASK 1
P1: Concept of management accounting and associated requirement of various types of systems
In current era, business atmosphere and their related wants to be track overall
performance information that goes beyond the cost related data those are related with historical
ledger concepts. These are entirely relying on old accounting system and so called traditional
financial accounting information. Effective accounting is associated with as responsibility to
concern managers to manage ledger variety of crucial management accounting data with the help
of accounting techniques. In more common manner, managerial accounting is said to be utmost
important process for searching, evaluating and recording of financial information so to internal
management which can be use it for future planning and decision making (Abdel-Kader, 2011).
The primary objective of inside managerial accounting system is to deliver data to managers so
they can be sufficient enough to make better decision in coming period of time. The motive is
not to be associated with external demands. Just like that of bankers, while rather to collect
valuable information which will be further use to manage and organise business in better ways.
Financial accounting data is being taken into account for effective decision making through
external users. Like investors and outside parties. This is also reliable aspects of preparing
management report and statistical data to managers to make mid and short term decision
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regarding proper utilisation of resources those are being use during the time of production
process.
As per the IMA (Institute of management accountants): Management accounting is
said to be profession that consists of partnering in effective decision making, diversified planning
and performance management system and guide expertise about financial reporting and assist
department in formulation of correction actions those are beneficial for an organisation in longer
run.
Importance of using management accounting system:
There are various crucial aspects those are more reliable for making better decisions in
coming period of time. Some of them are:
 Enhance productivity: Every managers uses management accounting to make sure that
all data recorded into their statements are sufficient enough to attain more suitable
outcomes in near future (Bennett, Schaltegger and Zvezdov, 2011). This will assist them
to attain maximum profit by selling maximum products to their customers.
 Increase efficiency in forecasting: In order to make planning for the future, managers
always tried to make crucial decisions those are effective enough for the company in
longer run. Rowlinson Knitwear is always tried to enhance their business growth by
effective decision making.
Types of management accounting system:
 Cost accounting system: As per this type of accounting which included normal
historical costing that are consider basis of cost system, and job costing as accumulation
method. It is considering more effective process costing that are used by department,
operations manager or other concern. It is known as internal reporting system for an
organisation in respect to own management for effective decision making. There are
various types of cost which will be lead to control the additional cost for the company.
Such as standard, normal and actual cost incurred during the production of product and
services.
 Inventory management system: Inventory is considering as overall quantity of products
that are owned and stored by Rowlinson Knitwear that is intended for resale or keep as
raw material and element used in developing products that are produce by the company.
The most valuable strategy is being used by mentioned company is Just in time to
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enhance efficiency and reduce waste through retaining products only as they required in
manufacturing process. Such kind of methods are essential enough in forecast demand
properly. Although, there are certain techniques which are responsible enough to deal
with any kind of difficult situation such as FIFO, LIFO and AVCO methods.
 Price optimisation system: This seems to be consider as utmost important system which
is use as numerical analysis by Rowlinson Knitwear to analyse how customers will react
to various prices for their product and services by using various mode (Hiebl and et. al.,
2015). This is also considering that kind of prices those are determine will be more best
meet their needs as well as objectives within the set limited period. Such as increasing
operating profit the company.
 Job costing system: This refers to be used in order to accumulate cost at small level of
unit. Like for examples, job costing is valuable for deriving cost of constructing a
building, office or any other batch of products. Basically, it is used for the purpose of
standardised products mainly reliable for very small manufacturing units. There are
various types of job costing which are taken into account for the manager while planning
for productions. Such as process costing. Batch costing and standard costing.
P2: Different methods used for management accounting reporting
As Rowlinson Knitwear is operating in small business units which conducting their
everyday business directly to other companies. They do not supply directly their product to the
public. Most of the time, they used to deal with various retailers that can made easy for the
company to increase their chain of business. A report is always prepared by the company for the
purpose of detecting all essential changes and growth position. It provides a formal account of or
detail statements of deficit and surplus Rowlinson has generated during the period of time. This
seems to provide information regarding serious wrongdoing or reliable modification they are
done in the last couple of year. Accounting reports are associated of financial data that are
derived from all financial record collected from a business. These are considering to be custom
made reports those are intended for a particular objective (Al and McLellan, 2011). It is used to
provide sense of firm’s financial investments and save time as well as money with outsourced
financial reporting activities. There are various ways from information can be gather for
reporting purpose. Some of them are taken from statement of cash flows, profit and loss and
balance sheet of the company. These report are made for the purpose of taken in better overview
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of present performance as compare to their companies. After making suitable analysis, manager
present this report in front of various investors and shareholder that are known as valuable
aspects for the company. They use this to make analysis of financial position and make future
decision regarding capital investments.
Types of reporting methods:
Performance report: It is considering as one of the effective activity in project
communication system. It consists of collecting and disseminating information, progress of
projects and proper utilisation of resources all are taken into account under this report. These are
presented for each employees of an organisation and might assist an administration to assess the
success of a project or services (Laine, Paranko and Suomala, 2012). This reports are more
reliable aspects for attaining better outcomes in coming period of time.
Account receivable report: This seems to be utmost important report that consist lists of
unpaid customer detail invoices and unused credit memos. This is primary tools which will be
used for the collection information from debtors. AR are the balance of money that are due to a
business for production of products and services. The report assists them to record total time
frame of recovery all amount that are outstanding for longer period of time.
Inventory management report: According to this particular report, managers uses to
various tools and techniques which will be consider for effective management and control of
their stock. It is mainly considering as effective element of supply chain to supervise the flow of
products from one place to another one. The all crucial detail information about opening and
closing of stock details are taken into account.
Job cost report: It is utmost important reporting method which will be consider for
recording of cost of individual products manufactured. A project manager and accountant need to
track and keep record of each job, maintain information which is often relevant to business
operations (Amoako, 2013). These report assist departments to control overall cost that are bared
by the company within an accounting period of time.
M1: Benefits of using management accounting system
In accordance with getting more reliable outcomes from the available resources of the
company they need to make use of better accounting systems. It will assist and organisation to
attain more reliable outcomes in coming period of time. All those above mentioned accounting
systems are having reliable benefits that can assist them to use more effective results during an
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accounting period of time. Cost accounting systems are more reliable for controlling all cost and
expenses those are made within an organisation. While inventory management system is used to
record all stock those are order by the company. Price optimisation is more accurate system that
can assist the department to make use of that price which is more affordable in coming period of
time.
D1: Critical evaluation of accounting reporting system
According to the above mentioned various accounting reporting methods company used to
present their financial reports in order to draw attention of various investors those are reliable for
making future investment decision. The performance report is used to analyse the past
performance of the company in respect to present one. While account receivable reports are
made for analysing total time duration needed to recovery outstanding amounts from various
debtors. Inventory management report are used to determine overall opening and closing position
of the stocks that are being kept by the company with them. There are other accounting reports
those are equally important for the Rowlinson knitwear to plan their upcoming business
operations in more perfect manner.
TASK 2
P3: Various types of costing method which are used to calculated net profit for the company
Cost is considering more reliable and vital aspects for the cited company. These are
directly or indirectly associated with production process. There are certain costs those are
associated with the manufacturing of product and services during the period of time. Some of
them are direct cost, material and overhead costs. The main aim of managers is to control all
additional costs those are incurred during an accounting period of time. This process of costing is
more accurately responsible for attain overall aims and objectives those are being set by the
company in coming period of time (Klemstine and Maher, 2014). Cost accounting is systematic
process of recording, classifying, analysing and summarising with process and then formulating
various sources of actions those are taken by the managers to control and manage cost those are
incurred within production process. This aims is used to capture a company’s overall cost of
production through assessing input cost of every process of production as well as fixed cost like
depreciation of capital assets. The recording of all cost is being incurred in business in a way that
can be utilise to make certain kind of improvement in their management decision.
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Absorption costing: It is known as one of the effective method which will be applicable for all
time production of product and services those are produce during an accounting period of time. It
consists of variable and fixed costs that are charged at that particular point of time. The another
name of this method is full costing because of their particular nature. In spite of all this, manager
does not being able to consider this particular costing technique more profitable for decision
making.
Marginal costing: It refers as more reliable and accurate costing method which will be
applicable for the production of one additional production of products. It includes only variable
costs and fixed cost get absorbed (Parker, 2012). As per this nature, it is known as period costing
method during the calculation of contribution per unit. The best part of this costing method is
that it is more reliable for making valuable decision in coming period of time. By using this,
management can be able to attain more reliable outcomes for long time.
Comparison:
Absorption costing Marginal costing
In this costing method, fixed overhead expense
are applied effectively.
Only variable cost are taken into consideration
in this costing method.
According to this costing approach,
profitability will appear to be minimum.
Profitability of each individual sales will be
appear more higher as compare to other.
While calculating net profitability, gross profit
can be determine effectively under this report.
The measurement of gains under this costing is
marked for uses the contribution per unit.
It applies in all production cost to all units
produced during the period of time.
It is applied only in variable cost to stock
valuation of the company.
Computation of Net profit by using absorption costing Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
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Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Calculation through using Marginal Costing Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
M2: Analysing accounting information techniques
In respect to increase the more effective outcomes in coming future, they need to make use
of accounting techniques which will assist them to attain more reliable outcomes in coming
period of time. There are various tools such as standard costing which will be consider by an
organisation in order make comparison of actual outcomes that are generated within an
accounting time frame. While historical cost are more effective ways of analyse total cost they
are incurred during production of one unit. Likewise, there are certain other costing techniques
such as marginal cost is also more appropriate for future decision making.
D2: Critical evaluation of using of costing method
It has been determining the rowlinson company is using two of the most effective
accounting method those are consider more effective in coming period of time. These are
considering more reliable for calculating net profit for the company during the financial period.
In case company uses absorption costing they are able to earn maximum number of 7800 net
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earnings during the time. While in case they are going to use marginal costing they are getting
profit of 7500. The point of different which is of 300 is attain because of fixed cost treatments.
TASK 3
P4: Various types of planning tools which are uses for the purpose of controlling budgets
Planning is utmost crucial aspects that are consider by the managers in order to attain more
reliable outcomes for the Rowlinson Knitwear company. In this process budgets needed to plan
in effective manner so that less chances of mistake can be occurring during the period of time.
Budget is an essential aspect for the department to estimate future cost and expenses a company
is going to incurred. All the vital cost can be control in case they are producing more products
during the time. It is an estimation of earning and expenses over a particular future. It is
compiled and re valued on periodic basis (Soin and Collier, 2013). Any financial planning during
the time can be organise by effective budget preparation basically for an accounting year. It can
be planned sales capacity and earning as well as cost that are incurred by the company can be
controlled properly. Budget forecast use to provide more effective results and financial position
of the company for more than future duration. These are mainly used for the future planning so
that better outcomes can be attain in more quick time.
Budgeting process: It is known as one of the crucial planning process which is used for
the purpose of setting the cost for the coming next period. Budget control process uses the
budget to monitor and actual outcomes with standard one. The responsibility of budget is more
given to managers and all company’s supervisor to keep and hold bank account and other
specific detail for more than one year of time. In order to deal with all kind of issues those are
arise in an organisation can be resolve by using appropriate planning tools. Some of them are
mention underneath:
Forecasting tools: It is known as one of the crucial planning tools which will be used by
the managers to make overall estimation of total cost and expense that are going to be incurred in
coming future period of time. These types of tools are entirely relying of control all other cost
those are affecting the profitability position and growth at the same period of time. A large range
of techniques are present for trying to determine the likely dynamics of new market position of
the company in order to attain better results in coming period of time.
 Advantage: By the help of forecasting tools manager would be able to plan their future
cost of production in more reliable and effective manner in coming future. All cost are
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expenses are planned in proper manner as per the overall resources that are made by the
company.
 Disadvantage: The major limitation of using this tools is that future are more uncertain
that can make huge impacts on the overall productivity of the company at the same
period of time.
Contingency tool: It is known as one of the effective planning tools which are used by
the company in order to deal with all kind of business risks those are affecting overall
operational capability of the company (Christ and Burritt, 2013). It is considering more simple
and easy tools that are under taken to ensure that proper and quick follow-up process will be
taken into consideration by the management and staffs of an organisation. These are more
accurately responsible for attain future motive in more effective ways.
 Advantage: The huge benefits of using these tools are considering for controlling all
kind of risks those are arises in operational department of the company. All the decision
is made by analysing all essential aspects those are more effectively impacts the
performance of the company at the same point of time.
 Disadvantage: The major drawback of using these tools is that company cannot be able
to predict risk in more early. It can be analysing because of the qualitative nature of
project planning. These are sometime more hard to control unnecessary risk those are
directly affect the business.
M3: Evaluation of using planning tools
In every organisation to that are operating at more small scale need to make use of all
essential planning tools so that their future can be safe up-to an extent. It is the responsibility of
manager to make use of those tools and techniques which are more reliable for effective decision
making in coming period of time. In this process, forecasting tools are considering more accurate
tools which will be properly profitable for the company to estimate future cost and expenses
those are going to be incurred by the company. While contingency tools are another important
tools which will be having various positive aspect that can assist and organisation to control their
risks that are not able to increase the goodwill of the company.
D3: Critically analyse the financial issue
In accordance to increase the productivity of the company, manager need to make analyse
all financial impacts those are hard to predict. These are affecting internal as well as external
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department of the company. There are various types of issues those are related with production
process of the product and services. Some of them are related with fund that are going from the
business and inventory valuation. These are can be resolve in more quickly so that major
implication can be control before they get their impacts on the overall profitability as well as
efficiency of the company at the point of time.
TASK 4
P5: Comparison of using management accounting is order to overcome financial issues
It has been considering more big issues nowadays that financial issue is affecting the
overall growth and financial stability of the company. The Rowlinson internal department
managers are used various ways and accounting systems to deal with all kind of problems those
are arises in an organisation. It is a kind of situation in which capital worries are causing
company more stress. Plenty of people as well as organisation are facing hard financial times and
implication on mental position can be important (Wickramasinghe and Alawattage, 2012). These
issues can be seeming to impossible to overcome, while company can get assist and take process
to make improvement in the present situation that are available in an organisation. There are
various kind of financial issues those are affecting the profitable position of the company are
discussed underneath:
 Late bill payment or often seeking extension: In case company is getting delay in
payment of product those are sold by the company to various customers. Or the major
issues are related with taking additional time to making payment of outstanding bills.
 Minimum or missed amount of credit card: It is another aspect which are related with
those amount which are missed during the time of using credit card bills. The company
need to make continuous overlook on these kind of issues (Financial Problem, 2018).
 Product and services quality: There are various products and services those are sell by the
company to various customers. In case they are not satisfy with the product quality they
are going to pay for those products.
All the above mentioned financial issues those are affecting the performance of the company
they need to make use of various tools and techniques which will be analyse through using below
mentioned aspects:
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 Key performance indicators: It is known as one of the important tools which will be
consider for analysing present performance to that with past one. This seems to be more
reliable systems for the company.
 Benchmarking: It is said to be more reliable financial tools which will be based on set
standard that are set by the company in order to get more profitable in coming time. It is
essential for getting more reliable future with this tools.
Rowlinson knitwear Tech (UK)
As this company is operating at small scale so
they need to make use of various tools such as
key performance indicators to deal with all
kind of financial issues.
Tech UK is more large organisation which will
responsible for attain more benefits by using
benchmarking that are related with attain more
better outcome in coming time.
M4: Analysis of various financial problems
There are various accounting issues those are affecting the profitability position of the
company. It can be affecting the internal department operations in effective manner. This can be
resolve by using more reliable financial tools such as benchmarking, financial governance which
is based on total government rules that are made for smooth running of business.
CONCLUSION
This project report is providing various information about management accounting systems
that are helpful for attaining more reliable outcomes in coming time. This can be concluded that
by using accounting system and reporting method they are able to record all financial
transactions that are made during the time. While all the costing method and planning tools are
equally effective for the company. All the essential analysis is responsible for achieving better
results in near future period of time.
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REFERENCES
Books and journals:
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Ghana. International Journal of Business and Management. 8(24). p.73.
Bennett, M., Schaltegger, S. and Zvezdov, D., 2011. Environmental management accounting.
In Review of management accounting research (pp. 53-84). Palgrave Macmillan,
London.
Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of
contingent variables for adoption. Journal of Cleaner Production. 41. pp.163-173.
Gond, J.P., and et. al., 2012. Configuring management control systems: Theorizing the
integration of strategy and sustainability. Management Accounting Research. 23(3).
pp.205-223.
Hiebl, M.R., and et. al., 2015. Family Influence and Management Accounting
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Klemstine, C.F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A
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management accounting research: Assessing deliverables and relevance. Critical
perspectives on accounting. 23(1). pp.54-70.
Laine, T., Paranko, J. and Suomala, P., 2012. Management accounting roles in supporting
servitisation: implications for decision making at multiple levels. Managing Service
Quality: An International Journal. 22(3). pp.212-232.
Soin, K. and Collier, P., 2013. Risk and risk management in management accounting and
control.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Online
Financial Problems. 2018.[Online]. Available through:
<https://www.lifeline.org.au/get-help/topics/financial-problems>.
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