Management Accounting Project: UCK Furniture Case Study and Analysis

This management accounting project analyzes the application of various accounting techniques and systems within UCK Furniture, a manufacturing company dealing with tables and drawers. The project covers the concept of management accounting, its requirements, and different reporting methods such as job costing, inventory, and operational budget reports. It explores the benefits of management accounting systems, including improved decision-making, resource allocation, and risk assessment. The project also examines the integration of management accounting reports with organizational processes, emphasizing the importance of aligning financial data with production, inventory management, and operational benchmarks. The analysis includes cost analysis techniques, financial reporting, and an overview of planning tools used for budgetary control and cash budgeting, concluding with recommendations for improving financial performance through effective planning and management accounting systems. The project also explores the merits and demerits of marginal and absorption costing.

Management Accounting

Table of Contents
PROJECT 1......................................................................................................................................3
INTRODUCTION...........................................................................................................................3
TASK ..............................................................................................................................................3
1.1 Concept of management accounting and their requirement in organisation....................3
1.2 Different management accounting reports.......................................................................5
1.3 Benefits of management accounting systems...................................................................6
1.4 Integration of management accounting reports with organisational process...................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Project 2 ........................................................................................................................................10
INTRODUCTION.........................................................................................................................10
TASK 1..........................................................................................................................................10
1.1 Application of cost analysis techniques for formulation of income statement..............10
1.2 Application of management accounting techniques regarding financial reporting .......12
1.3 Merits and Demerits of Marginal and Absorption costing.............................................12
TASK 2..........................................................................................................................................13
2.1 Advantages and disadvantages of different planning tools used for budgetary control.13
2.2 Estimation of expenses if change in number of hours....................................................14
2.3 Preparation of cash budget.............................................................................................14
TASK 3..........................................................................................................................................15
3.1 Application of different management accounting systems to respond financial issues 15
3.2 Contribution of management accounting to improve financial performance.................16
3.3 Application of planning tools to reduce financial issues to achieve success.................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19
.......................................................................................................................................................19

PROJECT 1
INTRODUCTION
Management accounting includes different kind of tools and techniques like budgeting,
marginal costing, risk analysis, standard costing, value analysis, cost volume profit analysis etc.
All such techniques provides statistical and functional information to the executives of
organisation for planning, decision-making and selection of most profitable project which
provides higher return. Through application of such systems, management of organisation
become expert in financial reporting and managing working capital requirements to perform day
to day functions. UCK Furniture deals in table and drawer division (Christ and Burritt, 2013).
In the present report explain about, essential requirements of different management
accounting systems and methods which are used by UCK Furniture for reporting. Also,
application of accounting systems in organisation and benefits of individual management
accounting systems and integration of reports with organisational functions.
TASK
1.1 Concept of management accounting and their requirement in organisation
UCK furniture is manufacturing organisation which deals in two products Table and
Drawer. It is understand by the management of organisation that large number of benefits are
gathered through implementation of management accounting systems. Accounting officer of
UCK decided to prepare training programmes for their interns which helps them to gather
knowledge about different accounting systems and their important in organisational respect.
Concept of management accounting: It is wide concept which includes the provisions
of different costing and managerial techniques. Different tools which are used regarding
collection and interpretation of information are named as responsibility accounting, value
analysis, marginal costing, standard costing, marginal costing, budgetary control etc. Through
use of all such tools accounting officer of UCK Furniture gather financial and statistical
information which helps in forecasting and preparation of effective strategies. Each and every
accounting system have their different role and benefits in organisation. It enhance the decision
making power of manager which helps in short and long term decision-making. The main
objectives for which the management of UCK Furniture adopts such different accounting
systems are defined below:

 Improvement of communication and effective disbursement of roles and responsibilities
 Improved decision-making
 Higher coordination among different departmental functions
 Helps in evaluation of the effectiveness of strategies and policies
 Evaluation and the interpretation of financial statements
 Contributes in planning and formulation of policies
Essential requirements of different management accounting systems
 Presentation of financial position: Application of different accounting systems provides
the data which depicts the financial position of organisation. Collection of such costing
and financial data helps in preparation of effective financial reports which improves
decision making of internal parties (Macintosh and Quattrone, 2010).
 Allocation of resources: Effective implementation of inventory systems helps in
maintenance of stocks within organisation. EOQ model provides the information
regarding the time period about reordering of their stocks. It provides the opportunity to
the manger of UCK Furniture about effective allocation of resources to different
departments for their optimum utilisation. It contributes in accomplishment
organisational objectives for attainment of long term sustainability.
 Assessment of risk: Budgetary control in one of the important process which helps in
identification of the future risks which are associated with project. Such early
identification of uncertainties helps in preparation of contingency provisions and risk is
minimised through effective management.
Different types of management accounting systems
 Job costing system: It helps in assigning manufacturing cost to each products which are
produced by UCK Furniture. It is considered as one of the important cost controlling
method. This method helps in tracking of their actual expenses. This method is used only
when different types of goods are manufactured by organisation. The procedure which is
followed during use of this accounting system is mentioned below:
- Receiving enquiry: It includes the process of receiving the views of customers about quality,
price and time period of completion.
- Estimation of price: It can be done on the basis of tastes and preferences of customers.
- Order receiving: Orders are placed after assurance of customer about prices.

- Production order: It is placed in the beginning of production process.
- Cost recording: Recording each and every cost which is incurred during production process.
- Completion of job: Report is provided to accountant for final costing and its comparison with
estimated.
 Price optimisation system: It is considered as mathematical analysis done by the
management of company for determination of the change in the behaviour of customers
at different levels of price of their products and services. It helps in formulation of
effective pricing strategies and improve their sales figure.
 Inventory management system: This system helps in supervision of the stocks and
assets of organisation. It ensures the effective floe of the raw material to the production
department for development of their efficiency. This system includes the adoption of
effective software's for tracking level of inventories, orders, sales and deliveries (Nandan,
2010).
1.2 Different management accounting reports
UCK Furniture is manufacturing organisation. To attain sustainability in their operations
management of organisation need to implement organised reporting system. It contributes to
keep record of different transactions performed by departments in systematic manner. Manager
of UCK Furniture has the duty to analyse such facts and issues which present in reports to make
their decisions more accurate and reliable. Different kind of reports which are prepared by
organisation are known as job costing, inventory, performance, budgeting etc. Different reports
includes different financial and non financial information to attain proper control over the
functions of different departments.
Different benefits are gathered by UCK Furniture like better understanding between the
employees, reduction in duplication of functions, better coordination, effective communication
channels, appraisal of performance of employees etc. The overall impact of reporting system is
upon organisational capabilities which provides the opportunity to accomplish their targets
within stipulated period of time. These reports not only beneficial for internal parties of
organisation but also used by the external stakeholder to enhance their decision making about
their investments in organisation. It fulfils dual concept regarding ascertainment of the trust and
loyalty of employees and external parties.
Different types of management accounting reports

 Operational budget reports: This report contains the plan which helps in analysis of the
actual performance of different departments by comparison with such set standards. This
report also assist the manger of organisation to pay adequate incentives to their
employees as per their actual performance. Such incentives will proved as motivating
factor for other employees to work hard and get appreciation from their superiors.
 Accounts receivable ageing report: This report helps in segregation of accounts
receivable of organisation on the basis of the time an invoice has been outstanding.
According to this report management of UCK Furniture identifies the financial health of
their customers. If collection process of an outstanding amount is slower than normal
then need to change their credit policies. It provides the opportunity to organisation to
establish effective system which helps in collection of debts within stipulated period of
time and effectively run their day to day activities.
 Inventory and manufacturing reports: Accounting officer of UCK Furniture uses this
report to improve their manufacturing and inventory process more efficient. Information
which is provided by this reports includes actual wastages in their stocks, labour cost,
overhead cost. Such information is compared by organisation with different assembly
lines to grab opportunities (Burritt and et. al., 2011).
 Job cost report: This report is used by the management of UCK Furniture to track the
cost and revenue which they achieved from production of their two division products
Table and Drawer. It provides opportunity to earn large number of profits through
controlling of their unnecessary expenses. Through application of this costing system
profitable jobs are identified so, they can give more emphasis on jobs to earn large
number of profits.
1.3 Benefits of management accounting systems
Management accounting system enable in taking beneficial judgement on the basis of
short period consideration. It is really important to understand such facts and things which reflect
by the MAS so that effectiveness and efficiency could be maintain. Every management
accounting system have several benefits which need to evaluate in appropriate and suitable
frame. Following are several benefits which need to underpin by UKC Furnitures so that better
and appropriate working could be promoted:

 Job costing system: A major benefit which could be gain through implementing
appropriate job costing system is that individual and separately profit margin could be
assess with high frequency accuracy in various operations of business. It also support in
crafting employees benchmarking so that better and effective outcome could be drawn in
working towards effective manufacturing. It is flexible in nature which derive another
benefit which further suppose to enable in evaluating particular indirect cost or
manufacturing process cost. Hence, effective production and manufacturing will lead to
take place under such stances.
 Inventory management system: Inventory and stock need to manage at manufacturing
place properly so that efficacy in operations could be manage and maintain properly. One
of a most appropriate benefits which could be drawn by managing inventory is that it will
support an association to become successful by minimising the cost and wastage as well.
Along with this, this section will lead to improved cash flow of a company so that profit
could be generated in better associated manner. This benefits in manufacturing such
products and services only which highly demanded so that appropriate and optimal level
of inventory could be manage and maintain in order to gain better suited results.
These benefits required to underpin and estimated by UKC Furnitures so that better and
suitable working get promoted which further assist in deriving appropriate and suitable outcome.
As it will also reflect to generate and enhance profit and revenue of a company so that
appropriate and sufficient working operations get done (Chen and et. al., 2011).
1.4 Integration of management accounting reports with organisational process
Integration and combination of two aspects make things correct and appropriate in nature
so that better and suitable outcome could be enforce in gaining effective and absolute results.
Management accounting reports provide regular basis consideration of operations which assist in
gaining and making better results. Such reports need to merge with organisational process and
operations so that beneficial results options could be estimated in better frame. Following are the
management accounting reporting whose relationship with organisational process is essential for
facilitating better and supported working. UKC Furniture required to integrate their management
accounting report with organisational process for assigning suitable outcome and better
productivity:

 Inventory and manufacturing reports enable in preparing such records of production
which need to take place on regular basis. It is really important to maintain appropriate
relationship with such aspects. This could be interlinked with organisational process of
production department whom need to produce only such quantity which demanded from
market world. This will assist in utilising all resources properly so that effective gains
and beneficial outcome possibility get enhance in order to maximise appropriateness in
working and operations with target accomplishment (Goyal, 2014).
 Another integration of organisational process and management accounting report concern
with operational budget report under which there is a need to set some benchmark related
with performance of various employees so that better and suitable operation and target
accomplishment get done. This will enable in gaining better outcome as well as better
associated frame could be sustain. Hence, with meeting of budget requirement
association become able to sustain into keen competitive world for more and better way.
Integration such process with reports is essential so that effective operations could take
place. This will assist them to grow and move towards positive direction in order to gain
effectiveness.
CONCLUSION
It has been concluded from the above report that, large number of benefits are gathered
by the management of UCK Furniture through adopting accounting systems. It helps them to
create more understanding among their different departments. Price optimisation system helps in
influencing the behaviour of customers through fixing of effective prices of their different
products. Ultimately, it helps in improvement of their productivity and profitability. Through
application of accounting and reporting systems essential requirements like determination of
goals, risk assessment, improved judgement, better coordination among functions etc. are
fulfilled which contributes in accomplishment of organisational common goals.

REFERENCES
Books and Journals
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.
Macintosh, N.B. and Quattrone, P., 2010. Management accounting and control systems: An
organizational and sociological approach. John Wiley & Sons.
Nandan, R., 2010. Management accounting needs of SMEs and the role of professional
accountants: A renewed research agenda. Journal of applied management accounting
research. 8(1). p.65.
Burritt, R.L., and et. al., 2011. Environmental MA and supply chain management (Vol. 27).
Springer Science & Business Media.
Chen, H., and et. al., 2011. Effects of audit quality on earnings management and cost of equity
capital: Evidence from China. Contemporary Accounting Research. 28(3). pp.892-925.
Goyal, D.P., 2014. Management Information Systems: Managerial Perspectives. Vikas
Publishing House.
Van der Stede, W.A., 2011. Management accounting research in the wake of the crisis: some
reflections. European Accounting Review. 20(4). pp.605-623.
Baldvinsdottir, G., Mitchell, F. and Nørreklit, H., 2010. Issues in the relationship between theory
and practice in management accounting. Management Accounting Research. 21(2).
pp.79-82.
Ward, K., 2012. Strategic management accounting. Routledge.
Albelda, E., 2011. The role of management accounting practices as facilitators of the
environmental management: Evidence from EMAS organisations. Sustainability
Accounting, Management and Policy Journal. 2(1). pp.76-100.
Zang, A.Y., 2011. Evidence on the trade-off between real activities manipulation and accrual-
based earnings management. The Accounting Review. 87(2). pp.675-703.
Qian, W., Burritt, R. and Monroe, G., 2011. Environmental management accounting in local
government: A case of waste management. Accounting, Auditing & Accountability
Journal.24(1). pp.93-128.
Online
Management Accounting. 2017.[Online]. Available Through: <https://www.imanet.org/insights-
and-trends/management-accounting-quarterly?ssopc=1>.

Project 2
INTRODUCTION
Principles of management accounting are used by the manager of organisation to drive
success in their business operations. This data which is gathered from different accounting
systems assists manager in business decision making and control. Different benefits which are
achieved through implementation of accounting systems are analysis of cost and revenue,
provides insight into business performance, work of cost reduction projects, helps in variance
analysis and strategic planning. This system consists different planning tools which is used for
forecasting future actions and accomplishment of desired targets. UCK Furniture is
manufacturing organisation provides tables and drawers (Christ and Burritt, 2013).
In the present report explain about, application of different cost analysis techniques,
merits and demerits of marginal and absorption costing, advantages and disadvantage of
planning tools. Also, adaptation of management accounting systems to respond financial issues
and use of planning tools to achieve success.
TASK 1
1.1 Application of cost analysis techniques for formulation of income statement
Cost: It is the monetary value which is paid by the management of UCK Furniture
regarding production of tables and drawers. While calculating the actual cost different aspects
which are considered includes efforts, resources, time and utilities, opportunity foregone etc.
There are different types of cost which are defined below:
Fixed and variable cost: Fixed cost remains constant and not fluctuated with the change
in production units. This cost will decrease with the increase in the number of units of
production. On other hand, variable cost means which is incurred by organisation regarding
production of products. This cost is directly related to production of number of units.
Opportunity and outlay costs: Outlay costs are considered as actual expenses which is
incurred by organisation on plant and machinery, labour, material etc. On the other hand,
opportunity cost means the cost in terms of earning which is foregone due to selection of next
alternative.
Difference between marginal and absorption costing

Marginal costing: This method is used by UCK Furniture to enhance their short term
decision making. This method is used to ascertain increase or decrease in total cost due to
production of one extra unit. It is calculated in the situation of no profit and loss. It considers
only variable cost which is incurred on labour and material (Macintosh and Quattrone, 2010).
Absorption costing: It is also known as full costing method because component of fixed
cost is also included while calculating total cost of product. It also used by the organisation for
valuation of their inventories. This method helps in long term decision making.
Marginal costing Absorption costing
This can be done for the purpose of internal
reporting
It is calculated for the use of external parties
Fixed manufacturing overhead is considered as
period cost
Fixed manufacturing overhead is considered as
product 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
1.2 Application of management accounting techniques regarding financial reporting
The two different cost techniques are used regarding production of financial reports. As
per marginal costing method, it is observed that in month of January and February the net
income which is earned by UCK Furniture is 7000 and 133500. On other hand, by use of
Absorption costing method, the net income of January and February month is ascertained as
8980 and 134210 (Nandan, 2010).
1.3 Merits and Demerits of Marginal and Absorption costing
Marginal costing
Merits
 It provides the information about relationship between cost, price and volume.
 The valuation of stock is not get affected due to present year fixed costs
 Impact of production and sales policies is clearly visible and understood with the helps of
marginal costing technique
Demerits
 The major limitation of this method that it uses past data and decisions are taken for
future period of time
 It is not effective method for long term decision making
 It ignores the component of fixed cost
Absorption costing
Merits
 It fulfils the requirements of GAAP Compliant and helps in reporting to internal revenue
services
 It considers all cost which are incurred during production means both fixed and variable
Demerits