HNBS 305: Management Accounting Project Report Analysis

This report provides a comprehensive overview of management accounting principles and practices, focusing on the context of UCK Furniture. The report explores various aspects of management accounting, including different types of management accounting systems such as job costing, inventory accounting, price optimization, cost accounting, and managerial accounting. It also delves into the essential requirements of these systems for strategic, risk, and performance management. The report further examines different methods used for management accounting reporting, such as accounts receivable reports, budget reports, inventory reports, and job cost reports. It highlights the benefits of implementing management accounting systems, including improved cost estimation, enhanced efficiency, and better decision-making capabilities. The report also discusses the integration of management accounting systems and reporting with organizational processes, emphasizing the importance of aligning these systems with business activities for improved performance. The report concludes by providing references to support the analysis.

Management Accounting

Table of Contents
PROJECT 1......................................................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1.1Management accounting and essential requirement of different types of management
accounting systems.................................................................................................................1
1.2 Different methods which are used for management accounting reporting.......................3
1.3 Benefits of management accounting systems ..................................................................4
1.4 Integration of management accounting systems and reporting with organisational process 5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
...............................................................................................................................................8
PROJECT 2......................................................................................................................................9
INTRODUCTION...........................................................................................................................9
TASK 1............................................................................................................................................9
1.1 Calculation of cost using right technique of cost analysis...............................................9
1.2 Range of management accounting techniques for produce a financial report................10
1.3 Advantages and disadvantages of absorption and marginal costing methods................10
TASK 2..........................................................................................................................................11
2.1 Advantages and disadvantages of various planning tools..............................................11
2.2 Estimate the expenses.....................................................................................................13
2.3 Purpose of a budget........................................................................................................13
TASK 3..........................................................................................................................................14
3.1 Adaptation of management accounting system to respond financial problems.............14
3.2 Management accounting system improve financial performance of firms....................15
3.3 Planning tools used in management accounting.............................................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17
.......................................................................................................................................................17

PROJECT 1
INTRODUCTION
Management accounting is broad concept which includes both financial and cost
accounting. It includes the process of collection, evaluation and interpretation of the accounting
information which enhance decision making power of manager. Through preparation of
different financial and cost accounts ascertain both financial and non financial information which
provides opportunity regarding improving the existing performance of employees through proper
guidance. It helps the manager regarding formulation of the policies and strategies which helps
in effective operation of day to day to activities. UCK Furniture provides their products and
services in UK. They planning to provide training course to interns to provide information
regarding management accounting principles (Christ and Burritt, 2013).
In the present report explain about, essential requirement of different types of
management accounting systems, different methods which are used for management accounting
reporting, benefits which are attained by the manager of UCK Furniture through adoption of
management accounting systems and integration of management accounting systems and
reporting with organisational process.
TASK
1.1Management accounting and essential requirement of different types of management
accounting systems
In today's business environment, management accounting is known as an important tool
for business organisations as this help provide an opportunity to identify, collect, analyse and
communicate the data that is important for firms to achieve set goals. Number of management
accounting methods are there which are used by firms to collect information relevant for
business such as cost accounting, inventory control, job costing and various methods of
managerial accounting. All these methods help firm in collect both financial and non financial
data which guide managers in control business activities and increase effectiveness of decision
making process (Macintosh and Quattrone, 2010). Collected information support management
in monitor business operations and at the same time help in forecast future sales and risk involve
in business operations. Collected information support managers in formulate financial reports
and budgets which support in achieve set objectives.
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Under concept of financial accounting managers prepare income and financial statement on the
basis of past information available. One of the main reason behind preparation of these accounts
is that it provide direction to all staff members to perform their job roles in an effective manner.
Various type of management accounting systems
Concept of management accounting is very important for enterprise as this help managers
in take informed decision which help firm in achieve its set goals and objectives. Various type of
management accounting systems art there which support the business activities. One of the main
benefit of this is that it bring coordination among various business functions. Different type of
management accounting systems is give under following points:
Job costing: This is one of the most popular and effective system of management
accounting. Basically this is used by firms to record the cost of a job. This can be use by UCK
furniture to remain inform about the cost related with each job. Both indirect and direct cost is
consider by this system. One of the main benefit of this method is that it help in ascertain the
profits generated form a specific job at workplace.
Inventory accounting: This system is tool by firms to value the inventory available.
Mainly inventory of enterprise is divided into three main categories known as raw material, work
in progress and finished goods. This system help firm in maintain a record of inventory which
help in reduce the cost related with storage of inventory. Further, it help in utilise all resources to
an optimum level (Nandan, 2010).
Price optimisation system: This tool of management accounting is used by firm to
maintain the prices of its products. One of the main benefit of this is that it help firm in generate
large number of profits and at the same time help in offer quality products to its customers. With
help of this company can collect information about the fluctuations take place in prices.
Cost accounting system: This system can be used by UCK furniture for control the extra
expenses which take place during perform various functions at workplace. It support manager in
identify the production cost and help in determine the profits of company.
Managerial accounting: This tool is use by firm for make informed decisions. It help
manager in control and monitor day to day activities of business.
Requirements of management accounting system
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Basically requirement of management accounting is significant for three major areas
known as risk, strategic and performance management. Use of this system under these areas is
given below:
Strategic management: Under this manager collect information about activities of
various department as this help manager in formulate better and effective strategies to achieve set
goal. Further, this help management in guide workers to work effectively at workplace.
Risk management: In this, relevant data related with various reports is collected by managers of
UCK furniture. This help in plan future decisions ion basis of available information. Further this
help in formulate contingency plans (Burritt and et. al., 2011).
Performance management: With such kind of data various budgets related with
management of company's activities is prepared. These budgets are used as a standard and actual
performance of employees is evaluated with standard one.
Difference between management and financial accounting
Basis Management
accounting
Financial accounting
Purpose One of the main
purpose of use
management
accounting is to
improve
decision making
process of firm.
Concept of financial accounting
consists preparation of financial
accounts that indicate financial
performance of firm to its
stakeholders and various
external parties.
Users This system is
used by the
parties which
work within the
firm.
This is use by third parties for
make investment decision.
1.2 Different methods which are used for management accounting reporting
Report: This is known as written document that contain data related with various
activities of business. One of the main benefit of this is that in enhance understanding among
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various business functions. It is very essential to prepare various reports such as performance
management, account receivable report, job cost report and many more.
These type of report contain financial and non financial data related with business activities.
These reports used by parties to bring and maintain coordination among various business
activities. With effective use of reports enterprise can manage risk and achieve its set targets in
adequate manner. Various type of reports are as follows:
Accounts receivable report: This report of enterprise contain data about the unpaid
invoices of customers and unused credit memos. One of the main benefit of this is that it support
firm in manage all its debtors in an effective manner. This can be use by UCK furniture. This
report help management in identify the time given to debtors to pay to back their outstanding
amount. Further, this help firm in formulate better policies related with collection of debts in
specific time. Effective use of this approach provide large number of benefits to firm.
Budget report: These type of reports are prepared on basis of future transaction of firm.
One of the main feature of this report is that it guide employees in complete the assign work in
an effective manner. Further actual performance of employees is compared with the standard
one. This guide manager in remove extra expenses and increase efficiency of business activities.
Inventory report: As the name implies, this type of report is formulate by manager to
keep a control over the inventory. Further this help in identify the variation take place in
inventory and suggest firm in maintain a optimum level of stock. Main advantage of this is that it
help in allocate raw material to production department for effective production of product to
satisfy the needs of customers. Further this help in reduce wastage of raw material (Chen and et.
al., 2011).
Job cost report: This report make the management inform about the cost related with a
specific job at workplace. Further that expenses is compared with the revenue generated by that
job at workplace. Major feature of this is that it help firm in identify the profitable and non profit
jobs of company. It also assist in reduce unnecessary cost related with job.
1.3 Benefits of management accounting systems
There are large number of benefits are achieved by the management of UCK Furniture
through implementation of the different management accounting systems which are mentioned
below:
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Job costing system:
 This tool of management accounting help firm in estimate different type of cost take
place during manufacture process.
 This help in avoid duplication of work and enhance efficiency of production process.
 Further this help in maintain the quality of work and action taken by employees at
workplace.
Price optimising system:
 This system, provide opportunity to manager to identify the perception and attitude of
customers towards the final price of company's product.
 It help in generate large amount of profit and offer quality products to customers.
 Segmentation of customers can be carry out by which with help of this (Goyal, 2014).
Inventory management system:
 This system help management in enhance the accuracy of inventory management and
improve inventory orders.
 It save both time and cost of company.
Cost accounting system:
 This system assist manager in analyse the efficiency of process and methods use by
company to improve the performance of employees.
 It help in reduce the fixed prices.
 This help manager in collect relevant data related with future decisions of enterprise.
1.4 Integration of management accounting systems and reporting with organisational process
Today, every enterprise do number of efforts to enhance productivity of company and
enhance performance of employees. Implementation of management accounting system and
reports help firm in achieve the same. These provides provides useful information to manager
which enhance effectiveness of decision making process
Types of reporting Integration of system with process of
enterprise
Accounts receivable report Integration between preparation of account
receivable report and different enterprise
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functions can be achieve with help of amounts
due to debtors in a specific period of time and
by formulate strategies related with collection
of amount in order to make it more effective.
Monitor the process and policy on continuous
level is very essential for attain accuracy and
flexibility.
Performance report Integration of performance report with
business activities of UCK furniture support
manager in decide future actions of firms to
achieve set goals and objectives. All this not
only increase efficiency of business activities
but at the same time increase profits of firm.
Job cost report Integration of business activities of UCK
furniture with job cost report help firm in reach
its objectives with a specific job. Further,
formulation of cost report assist enterprise in
set right price for the product and better satisfy
the needs of its customers (Van der Stede,
2011).
Inventory reports With help of integration of these report with
business activities help firm in maintain an
optimum level of stock which reduce the cost
related with inventory management. Further
this increase effectiveness of inventory level.
For this EOQ is a model which support firm in
do management of stock. All these are the
major types management accounting system,
integration of all system with business
activities help firm in achieve set objectives.
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CONCLUSION
It has been concluded from the above report that, concept of management accounting
system enhance effectiveness of decision making process of firm. It help manager in collect and
analyse relevant information related with various function of business. This provide guidance to
employees so they can perform their job roles at workplace in an effective manner.Further
various report and system support enterprise in manage an optimum amount of stock and this
decrease the cost related with inventory management. Further, it remove all the unnecessary
obstacles and issues arise in production process and help firm in offer quality products to its
customers at affordable prices. With effective integration of management accounting system with
business activities help management in reduce unnecessary obstacles.
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REFERENCES
Books and Journals
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PROJECT 2
INTRODUCTION
Management accounting is the process of examine business activities and cost to
formulate internal financial report, accounts and records and all this aid effectiveness in decision
making process in achieve final goals (Stadler, 2013). Further, it is known as the act of making
sense of costing data and after that translate that information into useful data for management
and higher authority at workplace. Various type of cost are there which take place in business
process such as absorption costing and marginal costing. Collection of data through various tools
of management accounting help manager in take informed decision and formulate better policies
for business activities. Effective strategies help firm in handle various issues and contribute in
success of enterprise. UCK furniture, a firm which offer different type of furniture and various
other services to its customers is taken under this report for study. Concept of marginal and
absorption costing with its merits and demerits is all given in this report.
TASK 1
1.1 Calculation of cost using right technique of cost analysis
Cost is known as the amount which take place in an enterprise during carry out business
activities. Determine the final cost include examination of materials, risks, resources, time and
resources consumed during production process.
Marginal costing: This is one of the cost effective method and this is used by firms in
allocate variable cost to various cost units and the fixed cost which occurred during production
are write off and not involved in the final cost (Stair and Reynolds, 2013). Mainly this method is
used by firms to determine the impact of profitability due to variation in production level.
Absorption costing: This is another method of cost and this consider both fixed and
variable cost take place in enterprise during production process. Various costs are consider by
firm under this for monetary evaluation of products such as direct labour, direct material, fixed
and variable overhead cost.
Marginal costing Absorption costing
Under this costing method only variable cost is
consider by managers and fixed cost is
In this method of costing both fixed and
variable cost is consider by management.
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neglected by management.
In this inventory is valued at variable
production cost.
Inventory is valued at full production cost.
PARTICULARS January February
Sales (35 per unit) 315000 402500
less:
Cost of Production (12+8+5) 275000 237500
variable selling overheads (1 per unit) 11000 9500
variable cost 286000 247000
Contribution 29000 155500
less:
fixed manufacturing overheads 20000 20000
Fixed Admin & selling cost 2000 2000
total fixed costs 22000 22000
NET INCOME AS PER MARGINAL COST 7000 133500
NET INCOME AS PER ABSORPTION COSTING:
Sales (35per units) 315000 402500
less:
Cost of Production (12+8+5+1.82) 295020 254790
Gross Profit 19980 147710
LESS:
Fixed and variable cost:
variable sales overheads (1 per unit) 9000 11500
Fixed selling cost 2000 2000
Total costs 11000 13500
NET INCOME AS PER ABSORPTION COSTING: 8980 134210
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