Comprehensive Management Accounting Report for Imda Tech UK Ltd

This management accounting report provides a detailed overview of the functions of management accounting, including planning, organizing, coordinating, controlling, and communication. It differentiates between financial and management accounting and highlights the importance of management accounting in achieving business objectives. The report also discusses various management accounting systems such as managerial accounting, inventory accounting, job costing, and price optimizing systems. Furthermore, it includes a practical task involving absorption and marginal costing methods applied to Imda Tech (UK) Limited, analyzing production costs, sales, and net profit. The report also touches upon the importance of budgeting and its role in identifying financial problems and improving financial governance. This comprehensive analysis aims to provide a clear understanding of management accounting principles and their practical application within a business context.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Prepare a well-researched written report on the functions of Management Accounting.......3
(A) Difference between financial accounting and management accounting...............................4
(B) Importance of management accounting................................................................................5
2. Types of Management Accounting Systems .........................................................................6
TASK 2............................................................................................................................................7
Absorption costing......................................................................................................................8
TASK 3..........................................................................................................................................12
Managers have requested for more information and training on budget preparation..............12
TASK 4 .........................................................................................................................................14
(1) How it can be used to identify and respond to financial problems.....................................15
(2) improve financial governance and development of effective strategies.
...................................................................................................................................................15
CONCLUSION .....................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Management accounting is the system to manage and control on activities and works in
the financial term that help to identify financial position and status of the company. Management
accounting maintain the all records and data relating to the financial transaction of the company
that help to identify actual capabilities and skill to invest in the market and also determine the
past invest in the market(Zimmerman and Yahya-Zadeh2011). Management accounting help to
the manage all works and give proper suggestion to take effective decision regarding company in
the financial position of the company. Management accounting is the financial and non financial
system in which maintain all fanciable or non financial transaction of the company in which that
help to take effective and systematic decision regarding company. Imda Tech is the charger and
gadget providing company in the UK market in this company all employees not having any
financial informations and data related to the company so they will not effectively able to take
better decision that's why higher authority of the company wants to provide a financial document
to employees so they can easy to determine company's financial positions and status and take
better decision.
TASK 1
P1 Prepare a well-researched written report on the functions of Management Accounting.
Management accounting is the system to mange all financial and non financial
transactions in the systematic manner. That help to take better decision by the company's
employees and easy to evaluate and determine actual performance and position of the company
in the financial term. Management accounting having many functions those are under the below:
Planning: Planning is the systematic process in which decide how to achieve the objective and
targets of the company. Planning of the company play an vital role to develop and increasing
production of the company. In which mention company's products, services, capability, financial
capabilities, equity and debt fund of the company. After evaluation to all these things then
prepare a effective plan to achieve decided targets an goals of the company( Macintosh,and
Quattrone, 2010).

Organising: Organising is the another function in which implement the plan in the process to
manage an control company's activities to take effective decision and maintain the all financial
and non financial transaction of the company. Effective planning help to take better decision and
help to achieve objective sand goals of the company.
Coordinating: Coordinating refers to working in unity in the company with all employees and
build better relationship with each other. Coordinating is play important role to manage and
control on the employees and their works. This function through all employees are easy to
understand each others and if they having any issues and problems so easy to find out their
solutions.
Controlling: In the company having many activities and works that should controlled by the
company's managers. Controlling function through use minimum resources and produce high
number of productions. Controlling element through manage and control over all works and also
financial transaction of the company.
Communication: Communication is the important elements in any kind of company by this easy
to transfer data and information one persons to another. That help to understand each other in the
effective manner and help to take better decision regarding company and other issues and
problems.
(A) Difference between financial accounting and management accounting.
Financial Accounting Management Accounting
In this accounting only maintain the financial
transaction of the company not other all
transactions( Simons, 2013).
Management accounting refers to manage all
financial and non financial transactions of the
company those are in the systematic manners
mange and maintain.
This type of accounting related to the internal
and external environment of the company in
which maintain the transaction and data those
Management accounting in only maintain and
record the transaction relating to the internal
business not relating to the external business or

are help for company's development. market.
Financial accounting in calculate and record
public or market data in the financial term that
help to determine other company financial
position and status.
Management accounting in only calculate and
resolve the financial errors and issues of the
company. Its only help to take better and
effective decision regarding company.
This kind of accounting for require a financial
formate in the mention all transactions of the
company.
But this kind of accounting not specially
require any kind of formates to maintain
company's financial transactions.
Financial accounting based on annual data and
information of the company.
This accounting based on quarterly and half
yearly data of the company.
(B) Importance of management accounting.
Management accounting play and vital role to develop business in the systematic manner
and help to achieve goals and objectives of the company. Stage-manage accounting through
manage and control on all activities and works and maintain the financial transactions of the
company that help to take better decision of the company and help to identify financial position
and status. Management accounting through easy to determine equity fund and debt fund by this
evaluate the financially capabilities and kills to invest in the market. Management accounting
having many importance those are under the blow:
Determining the goals and objectives: Management accounting through easy to identify and
determining the goals and objectives of the company and also financial capabilities how much
able to invest in the market.
Effective planning: Management accounting though prepare a effective plan to achieve the goals
and objectives of the company and earn high number of profits that help to develop company in
the market. Effective planning play and important role in the company on the basis of planning
complete all works and tasks and achieve decided goals and objectives(Baldvinsdottir, Mitchell
and Nørreklit2010)

Measuring the performance: Management accounting help to measure the performance of the
company. In which easy to identify debt fund that represent the how much liable to pay money to
the public with interest and equity fund that help to represent how much invest own fund by the
company. Its help to measure performance of the company in the financial terms and help to take
effective decision.
2. Types of Management Accounting Systems .
Management accounting is the system to manage all financial transactions of the
company. In which create the financial reports and statements relating to the company. That help
to evaluate financial position and status of the company. That help to take better and effective
decision and help to determine financial capabilities to invest in the market to earn profits and
develop business. Management accounting through help to achieve goals and objectives of the
company. There are using many kind of accounting systems to prepare the financial statement
and reports those are under the below:
Managerial accounting system( cost accounting system): Managerial accounting systems or
cost accounting system is refers to mange all financial transaction and activities of the company
in the systematic manner. Its help to identify financial position and actual stays of the company
in the financial term. In this type of accounting system comparing to past and present selling
status and financial status of the company after that take effective decision. To comping the
positions of the company already set the standard that help to comparing actual position and
provide better result(Ward, 2012.).
Inventory accounting systems: Inventory accounting system refers to prepare the report and
statements relating to the inventors of the company. Inventory items are identify by the bar codes
. In this accounting systems maintain the records and statement relating to the inventories and
calculate the purchased items and selling items in the market after that prepare the financial
report for identify actual financial transaction in the company ion the inventory department.
Job costing system: Job costing system refers to not actual cost of the production products and
services in the company that relates to the basis of customers orders to services and products. Its

create indirect way by the customers like repairing cost, maintenance cost, printing paper and so
more. These kind of cost develop for provide actual and better services to customers so they are
high number of customers attract towards their products.
Price optimising system: Price optimising systems refers to manikin records and financial
statement relating to the production and promotion of products in the market so customers are
attract and purchase their products. In this system calculate the financial investments by the
company to promote and
TASK 2
Imda Tech (UK) Limited commenced business on 1 September 2010 producing special charger
for mobile telephone and other carry-on gadgets, the cost card of which is as follows:
£
Direct Labour 5.00
Direct Material 8.00
Variable Production Overhead 2.00
Fixed Production Overhead 5.00
Standard Production Cost £ 20.00
The fixed production overhead figure has been calculated on the basis of a budgeted
normal output of 36,000 units per annum. The fixed production overhead incurred in

September was £15,000 each month
Selling, distribution and administration expenses are:
Fixed £10000 per month
Variable 15% of the sales value
The selling price per unit is £35 and the number of units produced and sold were:
September (Units)
Production 2000
Sale 1500
Absorption costing
Fixed cost for month are give under the below:
Budgeted cost Actual cost
Production overhead £15000 £15000
Administration cost £10000 £10000
Working note 1.
Apportioned of fix cost per unit
£25000/2000= 12.5 per unit
Working note 2.
Calculation of production cost(Lukka and Modell, 2010).
Direct material £8
Direct labour £5
Variable cost £2

Prime cost £15
Fixed cost £12.5
Total £ 27.5
Working note 3.
Calculate value of inventory and production
Opening inventory Production Closing inventory
Nil 2000*27.5= £55000 500*27.5= £13750
Working note 4.
Actual fixed production £25000
Fixed overhead £25000
Total Nil
Net profit using absorption cost:
Sales £52500(1500*35)
(-) cost of sales:
Opening inventory 0
Production £55000
Closing inventory ( £13750)
Total cost 41250
Net profit £27500
The costing method through identify opening and closing inventory of the company, production
cost, total cost and net profit of the company. Imda Tech of total cost is 41250 and net profit of
this company is 27500. To evaluate the net profit of the company by using costing method that
help to take better decision regarding company.

Marginal costing methods
Working note 1.
Calculate variable production cost
Direct material £ 8
Direct labour £ 5
Variable production cost £ 2
Total cost £ 15
Working note 2.
Opening inventory Production Closing inventory
nil 2000*15=30000 500*15=7500
Net profit using marginal costing
Sales £ 52500
Less variable cost
Opening inventory
Production 30000
Closing inventory -2500 -22250
Variable sales -10500
Contribution 12000
Less fixed cost
Fixed production overhead 10000
Selling and admin cost 10000 -12000
Net profit nil

The marginal costing method through identify the production of the company is 30000 and
closing inventory of the company is 7500. its help to determine actual profit or net profit and
sales of the company.
Marginal costing Absorption costing
Marginal costing relating to the variable cost of
the products and items of the company.
Absorption costing is related to the fixed cost
of product. That will never change in
production process of the product.
This costing is mainly divided into two parts in
which involving fixed and variable overhead of
the company.
Absorption costing is divided into three parts
that play an vital role to develop and mange
company's activities and works like production
This costing method in showing profit volume
in the term of ratio.
By using this method easy to evaluate and
calculate net profit of the company.

TASK 3
Managers have requested for more information and training on budget preparation.
A)Budget means an estimate of income and expenditure for an specific period of time. In
any organisation, it is important to plan their financial transaction as without a proper plan their
can be a big chaos in teams and chances of financial failure enhances. Their are mainly five types
of budgets which are as follows:
Master budget- It provide a complete estimate of all the activities that a company is going
to do in future. Generally it is used by big firms to keep all their business all together. Accuracy
is generally not up to mark as in this planning as one can not plan for long time due to highly
uncertain future(Bodie,2013).
Operational budget- This type of planning regarding income and expenditure is done for
short period of time like weekly or may daily activities. It make a business operational but it
unbalancing is always high in this estimation.
Cash flow budget- It is completely about cash as this budget provide estimate of cash that
is needed in hand. It does not involve long term planning which is a big demerit of this
estimation.
Financial budget- This estimation is done for revenue and capital expenditure of a
company. It provide correct direction to a firm but it ignore small elements of business.
Static budget- Most of the planning remain same in this calculation as a fixed budget is
allotted to all department of firm for general activities. It make departments functional but due to
its fixed nature, most of the time it is difficult to change.
B) These are the following steps that can be followed to prepare a budget:
Get estimations- All the departments of company should find what are the expenditures
they are going to do in next year and they also have to take an idea about how much revenue they
will earn. They have to submit a report all the fund they need and it should be done in written
report.
Coordination of estimates- All the reports received from different wings of companies
should be properly analysed and then a coordination between their income and expenditure
should me made. It should be checked that the demand of funds of different groups shoud be
their actual need and they should not receive any extra fund.