Comprehensive Management Accounting Report for Nero Ltd

This report provides a comprehensive analysis of management accounting practices within Nero Ltd, a retail company. It begins with an introduction to management accounting systems, detailing various types like cost accounting, job costing, price optimizing costing, and inventory management systems. The report then explores management accounting reporting, including budget reports, job costing reports, and inventory management reports. Task 2 focuses on net profits using marginal and absorption costing, providing detailed statements of profit and loss for both methods over two quarters. It also includes an analysis of variations in gains and reconciliation statements. Task 3 delves into planning tools used for budgetary control. The report concludes with a discussion of these topics, highlighting the importance of management accounting in achieving business sustainability and competitive advantage. The report covers financial analysis and comparisons within the context of Nero Ltd's operations.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting system and its types:......................................................................1
P2 Management Accounting reporting:......................................................................................2
M1...............................................................................................................................................3
D1................................................................................................................................................3
TASK 2............................................................................................................................................3
P3 Net profits as per the marginal and absorption costing:........................................................3
Analysis variation in the gains....................................................................................................5
Reconciliation statements............................................................................................................5
M2...............................................................................................................................................5
D2................................................................................................................................................6
TASK 3............................................................................................................................................6
P4 Planning tools used for budgetary control.............................................................................6
P5: Comparison with other company's about financial issues....................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Nowadays, there is a cut throat competition in the market where everyone is striving hard
to gain the competitive advantages in an effective manner. However, management accounting
tools are the most effective tool by which the company could attain its pre-set targets such as
lowering of the cost of product by way of rendering the goods in an effective manner. However,
this is the most crucial tool as this can be implemented by the specialist staff who are expert in
this field (Onyon, Stannard and Ridgard, Synchronoss Technologies, 2014). This report is made
on the Nero Ltd company which specially deals in the retail sector, management accountant of
this company would going to use various management accounting systems which are ultimately
helpful in making the business sustainable. Various management accounting reports are made on
this.
TASK 1
P1 Management accounting system and its types:
Management accounting is the most effective procedure by which the management
accountant would identifying, summarising and assessing and evaluating various non financial
data so that the decisions can be made. However, this is the most effective strategy in order to
gain the sustainability (Nerger and et. al., 2015). Management accounting reports would make an
effective strategy so that the organisation will make strategy in order to gain the competitive
advantage. The main of the MA reports would aim to develop their business in such a manner
where the company would gain the sustainability in an effective manner.
There are various kinds of management accounting systems which are explained in an effective
manner. Some of them are mentioned hereunder:
Cost Accounting system: this is the most effective and crucial tool which helps the
business to lowering down the cost of the product in an effective manner so that the competitive
advantages in an effective manner. By using this accounting technique, management could avoid
the wastage costs from the cost of production so that the organisation could gain the advantages
in an effective manner.
Job Costing system: This is the most effective system where instead of knowing the cost
for single unit, costs of the lot is assessed. By using this system, company could lower down the
costs for an entire job costs (Laudon and Laudon, 2016). This is basically used in manufacturing
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units and pharmaceutical units Under this, an entire cost of a particular job is analysed. Job
costing system are the best tool which could be used by those organisation which are specially
deals in manufacturing pharmaceutical units where the products are made on a job basis.
Price optimising costing: By using this system, management of the cited company could
get to know about the price at which the product can be ready to sold by the company. However,
price of the competitors can also be known by the company so that the management could decide
the price in an optimum manner which would ultimately helps out to make the business in an
effective manner.
Inventory management system: By using this tool, inventory is managed in an optimum
manner. However, this can be also said that the organisation could lowering down the cost of the
product in an effective manner. The cited company could make sure that the inventory is
managed effectively. This is the system under which all the inventory of the cited company
usage in an effective manner. However, as per this optimising of the resources are done so that
the organisation could gain sustainability.
However, these are the management accounting tools which are used by the Nero Ltd
company in order to lowering the cost of the product in an effective manner.
P2 Management Accounting reporting:
There are various management accounting systems which can be help out to make the
report in an effective manner (Stadler, 2013). However, this can be said that the these accounting
reporting systems would help out the management to make the strategy in order to gain the
sustainability. These management accounting reporting are mentioned hereunder:
Budget Reports: This is the budget Report which is made on the basis of forecasting of
expenses and the revenue for a particular period of time. By using this report, Nero company
could make an efficient strategy for attaining the business objectives in an effective manner.
Job costing Report: This is the report which is made on the basis of the production. By
using this report, the management could set the cost of the product which they are going to sell in
the market (Kouvelis and Yu, 2013). This can be effectively said that the job costing report is the
main tool that can be used by the organisation for gaining the sustainability.
Inventory management report: This is the report which is made on the basis of the
inventory of the cited company. However, by using this tool, organisation could attain the pre-set
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objectives of the company. This is the report that can be made by the organisation for gaining the
objectives
These are the report which helps the organisation to gain the sustainable development.
However, there are other tools which could also been used by the organisation in order to make
the strategy in an effective manner.
M1
The main advantages of implementing of the management accounting systems is that this
helps in avoiding all the costs which are not related to product. However, this also can be said
that the management accountant also implement them in such a manner through which the
organisation could attain the objectives in an effective manner.
D1
The management accounting systems and management accounting reporting are
integrated into each other as these are dependent to each other (Kanellou and Spathis, 2013). If
the organisation would not implement the above mentioned accounting systems then they could
not make the management accounting report and that would lead to failure in the strategy.
TASK 2
P3 Net profits as per the marginal and absorption costing:
Marginal Costing: This is the costing method which is used by the management
accountant. Under this method, all the variable costs are considered while calculating the
contribution per unit and fixed costs are ignored under this (Smith, 2017).
Absorption Costing: This is the method under which all the cost which are related to
manufacturing of the product whether the cost are of variable or fixed nature. This is the
advanced method for calculating the profits under the cited case
Statement of profit and loss using marginal costing
Quarter 1
No. Of units ￡/unit ￡ ￡
Sales value 66000 1 66000
Cost of sales
Opening inventory 0 0.65 0
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Add: Production 78000 0.65 50700
50700
Less: closing
inventory 12000 0.65 -7800 -42900
Contribution 23100
Less: fixed costs -16000
Less: selling
&administration -5200
Profit 1900
Quarter 2
No. Of units ￡/unit ￡ ￡
Sales 74000 1 74000
Cost of sales
Opening inventory 12000 0.65 7800
Add: Production 66000 0.65 42900
50700
Less: closing
inventory 4000 0.65 2600 -48100
Contribution 25900
Less:Fixed costs -1600
Less: selling
&administration -5200
Profit 4700
Statement of profit and
loss using absorption
costing
Quarter 1
No. Of units ￡/unit ￡ ￡
Sales value 66000 1 66000
Less: Cost of sales
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Less: Opening inventory 0 0.85 0
Add: Production 78000 0.85 66300
Less: closing inventory -12000 0.85 -10200 -56100
Gross profit 9900
Expenses
Selling &Administration
costs -5200
Profit 4700
Less: Under absorption -2800
Profit reconciled 1900
Quarter2
No. Of units ￡/unit ￡ ￡
Sales value 74000 1 74000
Cost of sales
Opening inventory 12000 0.85 10200
Add: Production 66000 0.85 56100
66300
Less: closing inventory -4000 0.85 -3400 -62900
Gross profit 11100
Expenses
Selling &Administration
costs -5200
Profit 5900
Analysis variation in the gains
According to the above calculation of total net profits, it has been seen that both costing
tools are helpful to deliver individual comparison. This will be arises because of fixed costs
treatment. These would be mentioned underneath:
In the initial quarters:
Total overhead absorbed: 66000*0.20=13200
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Total fixed cost= 16000
Under absorption= 2800
For second quarter:
Total absorption expenses: 74000*0.20=14800
Fixed cost= 16000
Absorption cost= -1200
Reconciliation statements
This would be done by evaluating crucial difference among those are arises in a project
plan which are helpful in eliminating total impacts over the period of time.
Particular Q1 Q2
Profit under absorption 4700 5900
Profits under marginal 1900 4700
Total -2800 -1200
M2
Various methods are used under this. Marginal and absorption costing are used here.
Marginal costing does not provides effective value while on the other hand, absorption costing
provided more value than others. Statement of net profits are made in this report. The net profits
statement are made by using absorption costing approach is much effective than others. Net
profits as per the absorption costing quarter 1 have 4700 and quarter 2 have 5900.
D2
From the statement of the net profit as per marginal and absorption costing approach, this
can be said that the profits as per the marginal costing is calculated less than the profits as per the
absorption costing. However, this can be said that the absorption costing is assumed to be the
most important tool for the firm.
TASK 3
P4 Planning tools used for budgetary control
Budget is a financial statement of the policy for identifying the forecasted future period,
that could covers future forecasted revenues and expenses for attaining the organisation's targets.
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Henceforth, this is linked to the managerial and accounting function of the organisation. Budgets
are the most crucial tools which ultimately helps to predict the future outflows and inflows for a
particular period of time (Hoye and et. al., 2015). With the help of budget, company's
management could make an effective strategy for the firm which will further help out to gain the
sustainability.
There are various advantages of planning tools which are used for budgetary control. Some of
them are mentioned hereunder:
The crucial rule for measuring the budgets are:
 For ensuring that the organisation would satiate the planned objectives, henceforth, this is
the way for make sure that the plans would be fixed out in details in order to satiate the
objectives of each department
 Planning tools works as an incentives for the managers. They would enhance their future
performance as there is a framework which let them about how efficiently.
 The most crucial tool a system of the budgetary control via through real outcomes are
compared to the established budget.
 This would coordinate diverse departments of the organisation. In this manner,
organisation would requires two kinds of budgets.
The main advantage of the budgetary tool is that they helps to make comparison between
the actual and the forecasted results and make strategies accordingly. There are some of the
planning tools which are mentioned hereunder:
Forecasting tools: This is the tool which is made on the basis of assumption for a certain
period of time. Forecasting tool helps out the business for forecasting of the expenses and the
earnings for a certain period of time and make the strategies effectively. However, this is the
most effective tool through which the organisation could attain the business objectives in an
effective manner.
 Advantages: Forecasting tools helps the organisation to assess the deviation between the
actual outcome and forecasted outcome which would further help out to make strategy in
an effective manner. However, this is could be said that the organisation could make an
efficient strategy which would further help out to make strategy in an effective manner. Disadvantages: This is not always predict the exact value for the firm as this would not
gain the
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Scenario tools: As per the certain method, manager of organisation can optimise this for
analysing modified operation according to requirement of circumstances. This can help in the
operational, functional and planning of Nero Ltd Company's management (Stair and Reynolds,
2013). This chances as per the requirements and as per the cost which is demanded through the
firm.
 Advantages: Through the optimisation of this, manager of organisation can accomplish
proper creative opinion in regard f the opportunities selection as well as the
implementation i.e. unspecific.
 Disadvantages: This does not often right and certain for the enterprise. This tools is
more time relatively to the other tools of management accounting.
Contingency Planning Tool: This can be defined as the tool of planning and designing
that is build for improving enterprise for reacting in ideal manner at the critical condition. This
comprise advance decision making about the coordination, communication procedure, human as
well as financial resources management etc. and being informed of the logistical and technical
range of responses. Developing a proper contingency design include of structuring evaluating in
the advance in relation of HR manager and financial resources (Simkin, Norman and Rose,
2014).
 Advantages: This can assist in the trimming on cost down which is weed in the
operations and functions of organisation. This can help in saving organisation from
passing in loss creating condition.
 Disadvantages: Some circumstances, this is more complicated procedure or plan due to
the complex nature.
P5: Comparison with other company's about financial issues
Within a business enterprise, this can be affirmed that an entity has to cope up with
numerous financial issues in order to emerge amongst the financial duration. This can be
associated with the investing activities, financing and other organisation operations. Various
problems of finance can be emerged cause of lack in opting the different methods of transaction
and recording of data (Haimes, 2015). The procedure of budgetary management and control is
one of the effective method through which organisation can influence their operation control and
affect their business activities. Nero Ltd company is opting this method in regard of supporting
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their control of outflow as well as inflows of capital i.e. utilised for the meeting and determining
benefits purpose.
KPI: Key performance indicator also referred as KPI can assist in measuring the values
which demonstrated how the organisation effectively accomplishing their main objectives of
business (Galliers and Leidner, 2014). This is often optimised for measuring the success at the
attaining targets. An organisation use various levels of KPI at various phases in regard of
accomplishing their set target. This can be proven one of the most optimising techniques in
regard of sited organisation.
Benchmarking: Benchmarking can be defined as the comparison one's organisational
performance and procedures metrics to the best and most practices of other organisation in the
industry. This procedure is used to measure the business's service, products and performance of
company assist their major competitors for understanding the achievements and required
amendments of company. Nero Ltd Company will utilise this management framework within
their system in regard of fixing their standard results in association with the operating team as
well as asking them to meet higher level reach (Bennett and James, 2017). Fundamentally, each
elements that render their role in ability of organisation to be components along with the
regulatory direction.
Financial Governance: it is stringent guidelines and rules set enacted through the higher
authorities and regulators making certain that financial procedure are governed in well defined
manner. This ensure various elements such as automated control, coordinating constant risk
assessment, external and internal audits, compliance regulation up-gradation etc. This can be
termed as the regulation and policies of state government that is formulated or issues certainly
for the industries and companies for better functioning of their business operations.
Nero company Unicorn Grocery
The company is operating their business
activities and practices on wide scale. Hence,
the enterprise will require Key Performance
Indicators (KPI) in regard of setting their
standards of financial performance.
As, the organisation is linked with
development and evolution of retailing sector
and grocery products. The most effective
approach for enterprise would be operation
control device for tracking and controlling their
levels of operations (Holsapple, 2013).
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Through building SMART goals, which is
crucial, organisation can accomplish their
target in more efficient manner.
Financial governance can more efficiently
implied under this firm due to their losses of
firm which is under their track and monitoring.
This can affirm from understanding the components of various issues that numerous
financial problems emerge while functioning a large or small organisation. These issues can
affect their performance, recognition and productivity of enterprise in negative manner which is
required to be solved within certain period of time. In regard of resolving those menace, this is
necessary for manager of enterprise to opt the technique and effective method more suitable
according to the organisation able to resolve the issues in best way. This rely over the types of
issue, enterprise and their provided services of products that among all probable methods such as
benchmarking, KPI and financial governance etc. which is more appropriate as per the
enterprise's consequences.
CONCLUSION
From the above project report, it has been concluded that management accounting is an
essential aspects which would assist an organisation to attain more effective results. On the basis
of collected information management uses to make valuable decision regarding betterment of an
organisation. There are various accounting systems and reporting are explained which are useful
in generating more suitable outcomes for the company. Various costing methods are use to
determine total net profit generated during the time. With the use of planning tools they are able
to control all effects that are related with budgets. Comparison of various accounting systems
and financial issues related with the company and valuable measures to overcome those are taken
into consideration. The overall growth and productivity of the company can only be attain with
the use of appropriate tools and techniques. This will assist in attaining overall growth and
stability of an organisation.
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