Detailed Management Accounting Report for Imda Tech Operations

This report provides a comprehensive analysis of management accounting principles, specifically tailored for Imda Tech. It begins with an introduction to management accounting and its functions, differentiating it from financial accounting. The report then delves into cost accounting, exploring various types such as actual, standard, and normal costing, and their importance in controlling product and service costs. The core of the report focuses on calculating costs using absorption and marginal costing methods, including detailed income statements based on each method. Furthermore, it examines different types of budgets like master, operating, cash flow, and financial budgets, outlining their advantages and disadvantages. The report concludes with an overview of the balance scorecard approach. This report is designed to offer practical insights into financial resource management, decision-making, and performance measurement, helping Imda Tech to improve its financial planning and operational efficiency.

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Management accounting..................................................................................................3
P2. Different types of management accounting.....................................................................5
Task 2...............................................................................................................................................6
P3. Calculation of cost............................................................................................................6
TASK 3............................................................................................................................................9
P4. Different types of budgets................................................................................................9
B. Process of preparing the budget.......................................................................................11
C. Pricing strategies..............................................................................................................11
TASK 4..........................................................................................................................................12
P5. Balance score card approach..........................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is a term through which it helps the organisation in dealing with
a different kind of the cost that occurs in the organisation. It helps the management to make a
proper kind of decision related to the accounting. It provides the different financial data to the
organisation which they require making process and which would help them in doing the day to
day operations (Amidu, Effahand Abor, 2011). It also helps the employees to make their day to
day performance and that would help them in making the proper plan to reduce the risk in a firm.
Imda Tech is firm which deals with a product which are been related to the mobile
chargers and the other electronic gadgets. This organisation is facing the lack of the financial
resources issues which would help them in effectively carrying out the operations of a firm. This
report would help to know about the proper management of the financial aspects of the firm.
TASK 1
P1. Management accounting
Management accounting is a system is the thing which is methodology used by the firm
which helps them in preparing the budget for the firm for the day to day operations. Management
accounting can be said as the cost accounting system because the firm deals in a cost of firm in a
management accounting. The financial resources are being used for the most effective manner in
an organisation all that had been with the help of a management accounting system (Askarany
and Yazdifar, 2010). It helps the management of the firm in getting the proper amount of the
information’s which are been related to the financial resources. And by the help of the
management accounting the performance and the risk factors of a firm can also be identified.
Functions of management accounting
 Planning- Management accounting helps the management team to make a proper amount
of the planning in an organisation which would help them in doing the work in a proper
way.
 Organising- It helps the organisation to make proper plan and the work according to that
has to be allotted to the people in the organisation which would help them in doing their
work in a proper manner.

 Controlling- The task which is been planned and then allotted to the particular person or
a group has to be controlled in a proper way which would help them in doing their work
in correct manner (Baldvinsdottir, Mitchell and Nørreklit, 2010).
 Decision making- Decision making is the most important function of an accounting in a
firm which helps them in making a proper decisions.
Difference between management accounting and the financial accounting
Basis Management accounting Financial accounting
Definition Management accounting is a
technique which is been used
by the firm so that they could
make proper plans and the
policies regarding the day to
day activities a correct manner.
Financial management helps in
making a correct financial
budget of a firm.
Users of the information The person who uses the
management accounting are
called an internal user of an
organisation.
The users of an financial
accounting is an from
internally or externally.
Regulations The reports which are been
made by an organisation is
mainly to satisfy the
requirements of a managers of
a firm.
In a financial accounting the
standards of an accounting has
been forced.
Published In Management accounting, it
is not necessary to be
published.
The financial accounting has to
be published.
Time The management accounting
used to be made when the
management of an firm needs
to have the evaluation of an
Financial accounting is been
made in the year end.

performance
Importance of management accounting in decision-making.
 Determining the aim and objectives - Management accounting is a technique by which
the firm would get the proper precaution to identify the aims and the objectives of that
firm.
 Plan Formulation- The correct plans which are important for the organisation to operate,
they can be made in an effective manner and it will help in management accounting
(Bennett, Schaltegger and Zvezdov., 2013).
 Better services to the clients- Imda Tech limited should try to provide the proper and best
services to the customers so that could be according to the society in which they live.
 Enhancing the efficiency- This would help them in making their employees performance
in better manner.
 Performance measure- Controlling by the help of a management accounting would be
helpful to measure the performance of the employees of firm.
P2. Different types of management accounting
Management accounting is a process by which the firm can get to know about the
financial statement of the organisation. This helps the organisation making an appropriate
decision in the organisation which would help them in getting proper plans. There are different
types of a management accounting system which are as follows:
1. Cost accounting system- This type of an accounting system is being used to make a
proper measurement and monitoring of the cost production. It is same as a traditional
accounting system and that also can be identified an incurred cost of a projects (Bodie,
2013). For the organisation, it is essential for controlling the cost of a products and the
services of the firm. Actual costing- It is a cost which has a direct connection with a production of products or
the services which company produces. Standard costing- it is cost which is been identified before it gets planned some of the
examples like a material, overhead and the cost of labour.
 Normal costing- in the cost is which tit is being identify its value of goods and that it is
been manufacture.

2. Inventory management system- It is a method used in managing the inventories of an
organisation. It is an important part of a firm which would help them in accepting the
stocks of the firm in a correct manner (Brandau and et. al., 2013). The inventory items
use to bring to the wire houses and then the bar codes are being scanned in that so it
could make add or subtract the inventory form the items.
3. Job costing system- Job costing is a system for making manufacturing cost for an
individual product of an organisation. Mainly the job costing system is being used in a
firm when the products which is been manufactured are in sufficient and are different
form the other products. There are different kind of the products as they would have to
create the job costing system which would record for each item.
4. Price optimising system- It is an use of the mathematical analysis from an company to
identify that how would the customers would respond to the different prices of their
product and the services which they use to produce (Busco,and Scapens, 2011). The data
which is been used in an price which is been optimised which is been included like the
operating cost, etc. the prices optimisation has the practice that had been done in an
industries which would be included in it are retail, banking, etc.
TASK 2
P3. Calculation of cost
Costing is a system to compute or to calculate a cost of the productions or so that they
could run their firm by assigning the expenditure to the various stages of the production as well
as a different function of an firm. Employees of Imda Tech Limited should use correct tools and
techniques so that they can find the cost of the products and services. They are using absorption
and marginal costing techniques to get helps in computing the net profit of their company. By
using both methods, firm can be getting loss and both are different. There are two types of
costing which is been used by the employees of the Imda tech to calculate the cost of the
merchandise.
 Absorption costing- It is a method or an instruments of an accounting cost and the
manufacturing cost which is been absorbed by firm by manufacturing one more units
(Chiarini, 2012). In this all the expenses of May it has direct or the indirect expenses and
the cost.

 Marginal costing- marginal cost is a cost which has the accounting system in which the
variable costs are been charged in charged cost units and it can be fixed cost of a period
also which can be written off in a full against the aggregate in contribution.
Income statement on the basis of Absorption costing method:
Selling Price £35
Unit costs
Direct materials £8
Direct Labour £5
Variable Production overhead £2
Variable sales overhead £5.25
Budgeted production for the period is 3000
units
Fixed cost for a month:
Production overhead: In this budgeted cost is £15,000and Actual cost is £10,000
Selling cost: In this budgeted cost is £10,000and Actual cost is £7875
Absorption costing
Working 1: Calculate full production cost
Direct material £8
Direct labour £5
Variable cost £2
Fixed cost £5
Total £20
Working 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 2,000*20 = £40000 500*20 = £10000
Working 3: under/ over absorbed fixed production overhead
Actual fixed production: £15000

Fixed overhead: £10000
Total £5000(under absorbed)
Net profit using absorption costing £ £
Sales
(-) Cost of Sales:
Opening stock
Manufacturing
Closing stock
(Under)/ Over absorbed fixed prod. O/h
Gross Profit
Less Expenses
Variable sales expenditure
Fixed selling expenditure
Net loss
0
40000
(10000)
7875
10000
52500
(30000)
(5000)
17500
17875
(375)
Income statement on the basis of Marginal costing method:
Working 1: Calculate variable production cost £
Direct material 8
Direct labour 5
Variable production O/h 2
Variable production cost 15
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
0 2000*15 = 30000 500*15 = 7500
Net profit using marginal costing £ £

Sales
Less Variable costs
Opening stock
Manufacturing
Closing stock
Variable sales
Contribution
Less Fixed costs
Fixed Production expenses
Selling cost
Net loss
0
30000
(7500)
15000
10000
52500
(22500)
(7875)
22125
(25000)
(2875)
TASK 3
P4. Different types of budgets
Budgets allows the individual amount of a money in a budget. It is a financial planning
for pre-defined period of the time which defines the quantitative expressions. There are different
kinds of a budget which are:
 Master budget- it is a sum total of all the budgets which is been done on the lower level
and produced by the various functions areas of the firm, the budgeted financial
statements are been included in it (Chiwamit, Modell and Yang, 2014).
Advantages:
This budget helps the firm to establish their goals and to assess the performance of a business.
Disadvantages:
It does not have any specificity.
 Operating budget- It is an analysis of an income and the expenditure of an company
which is for the period of time which is been set and it is been aim on the forecasted sales
in an revenue.
Advantages:
 It requires the long run planning.
 It helps in assisting in building a budget flexibility.
Disadvantage:

They face problems which would provide the federal tax.
 Cash flow budget- It is an analysis of all the cash receipts along with an expenditure that
are expected to occur in a specific time period. The estimates which are been made in this
can be monthly or can be made quarterly.
Advantages:
 It helps the firm to show the actual cash position which is in the firm.
 It provides help to collect the appropriate projections.
Disadvantage:
It only defines only the cash positions so it can’t be done to arrive at an actual profit and
the loss of a business entity.
 Financial budget- It is from one of that which would hold the impact on a financial
decision of a firm. It is a plan in which the budgeted balance sheet is been included which
have an effect of a planned of an operation and the capital investments on assets and the
liabilities and on it equities (Christ and Burrit, 2013).
Advantages:
This provides a firm its guide for taking action which would help the management in
their process, as it is important also for a management process.
Disadvantage:
This type of a budgets is administrative in nature.
 Static budget- It is a budget which incorporates the anticipated values which is been
entered and the result which came are then conceived before the time. After that they
have to make the comparison of the actual result with this then they would get the correct
budget.
Advantages:
It is very easy to make implement and it does not have to be updated on a continuous
basis on the whole accounting periods.
Disadvantage:
It does not have a proper flexibility.
B. Process of preparing the budget
There are various steps which would be included in an process of budgeting in which all
the analyses which are been required to the make an budget so that they could obtain and it have

to be them coordinated and should be allotted in between the different units (Cinquini and
Tenucci, 2010). After completing the budget, it is important to have a proper communication to
their authorities. Later doing a proper communication and giving the appropriate information
they have to add it in a budget plan. Later doing this they have to take feedback and has to make
a report so that they can inform the management so that they can achieve the proper
performance. There are some steps to prepare a budget plan which is:
 Gather information
 Record all the sources of income
 Create a list of monthly expenses
 Break expenses into categories
 Total the monthly income and the monthly expenses
 Make adjustment to expenses
 Cut spending
 Review the budget monthly
C. Pricing strategies
Imda Tech limited uses variety of a pricing strategies while selling of a product or a
service (Contrafatto and Burns, 2013). Price can be made to set to the maximizing of the profit
for the unit sold. The company should use the different kinds of a pricing strategies which would
help them in providing the products and the services in an affordable price so that they could
increase their profitability in marketplace. Some of the pricing strategies are like:
 Pricing at a premium- Under the same, particular sets the cost of his products higher than
its competitors.
 Pricing for market penetration- It is a process in which the firm use to attract the
customers by offering them the goods and the services in lower prices.
TASK 4
P5. Balance score card approach
It is tool of strategy which helps in managing the performance of a firm in a competitive
market and in that it is been included the semi standard structured report and it is been supported
by an design methods with the automation of an instrument and could be used by managers of an

Imda Tech so that they could keep an proper track on their performance of the activities by their
employees in their control and by that they have to check the effects in the firm. It helps the firm
to make proper alignment of the different kind of the business activities. The balance score card
is a supervision process so by that, Imda tech can use to communicate about what they are
wanting to accomplish (Dillard and Roslender, 2011). And on the side of this they have to make
a proper plan to make a day to day work so that they employees working in a firm can do their
working a proper manner by using the appropriate strategies. Thus, it helps in focusing and to
measure the progress towards the targeted strategies. The balance score card approach is having
a different type of a prospective which would help in developing it objectives. And with this they
should measure their key performance indicator (KPI) which would help in fulfil the target by
doing a proper initiative. Some of the different perspectives are:
 Financial: In this they have to include some of the correct names in a public sector and
that having the perspective views on the financial performance of a firm and by that they
have to use the financial resources.
 Customer or stakeholder: In this the perspective of a balance score card would assist in
viewing the organisational performance from their point of view of a customer or it can
be different key of a stakeholder which the employees of Imda Tech has planned to
design to serve the required services to the customers.
 Internal process- this helps in making the proper organisational performance by giving
the better-quality products and the services by an effectively and efficiently by having the
proper use of a business process.
 Organisational capacity- In this perspective of a balance business scorecard it uses to
help in proper analysing of the lenses of a human capital, infrastructure, technology,
culture and many capacities which would breakthrough a performance.
Employees of an entity of a firm they have has to use a strategic objective which would
help them in doing their ongoing improvement of an activities so that they could implement the
strategies (France, 2010). It mainly occurs to increase the revenues, and to improve the
customer's and the stakeholder experience and they could rise the cost of the firm’s products and
the services. Main performance shows of a balance scorecard issues in a showing the increment
which would help them in indicating the increasing towards the analysed outcome. It helps in
identifying the gap between the actual and the targeted performance among with the