Management Accounting Report: Budget Analysis and Improvement

This report presents a comprehensive analysis of management accounting principles, focusing on budget preparation, variance analysis, and strategic recommendations for business improvement. The assignment includes a detailed examination of a budget prepared for a financial year, highlighting the importance of variance analysis in evaluating financial performance. It emphasizes the need for continuous improvement strategies to address potential revenue leakages and ensure the achievement of desired outcomes. The report suggests dividing the annual budget into quarterly segments to increase flexibility and facilitate better monitoring of company objectives. Furthermore, it recommends the development of variance analysis based on budgeted and actual figures to identify areas needing attention and implement internal controls and technological innovations to boost revenue and reduce operational costs. The report concludes with a business memorandum that summarizes the findings and provides actionable recommendations for the firm to improve its budgeting and financial management processes. The bibliography provides the research sources used.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author Note

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Table of Contents
Part 1..........................................................................................................................................2
Answer to requirement a........................................................................................................2
Answer to requirement b........................................................................................................2
Answer to requirement c........................................................................................................3
Answer to requirement d........................................................................................................4
Answer to requirement e........................................................................................................4
Answer to requirement f.........................................................................................................5
Answer to requirement g........................................................................................................5
Answer to requirement h........................................................................................................5
Answer to requirement i.........................................................................................................6
Answer to requirement i.........................................................................................................6
Answer to requirement j.........................................................................................................7
Answer to requirement k........................................................................................................7
Answer to requirement l.........................................................................................................8
Part 2..........................................................................................................................................8
Bibliography.............................................................................................................................11

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Part 1
Answer to requirement a
Answer to requirement b

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Answer to requirement c

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Answer to requirement d
Answer to requirement e

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Answer to requirement f
Answer to requirement g
Answer to requirement h

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Answer to requirement i
Answer to requirement i

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Answer to requirement j
Answer to requirement k

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Answer to requirement l
Part 2
Business Memorandum
To: Exhibition Furniture (Chief Executive Officer)
From: Management Accountant
Date: February 7, 2018
Subject: Business recommendation for continuous improvement into budget schedules

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Sir,
The budget that has been prepared for the financial year of 2018 provides an overview
into the strategies that should be undertaken by the entity in order to achieve the desired
outcomes. However, the preparation of an annual budget does not imply the fact that the
business will be able to incur enough profit as because it is not possible for the firm to strictly
adhere to the budgeted regulations. It has been further mentioned in the prepared budget that
the estimated or projected sales revenue is $1,600,000. However, the preparation of the
budget, can be evaluated with the help of an effective variance analysis.
Furthermore, the preparation of the budget does not also ensure that the firm will be
able to maintain a fixed margin in regards to the gross profit as presented in the budget.
Therefore, it becomes very important for implementing the strategies in regards to the
continuous improvement of the business. Hence, the particular recommendation that should
be applicable in case of the firm has been listed down as follows:
 The first recommendation is that the annual budget that has been prepared further can
be divided and segmented in terms of a quarter of a particular financial year. This will
help in increasing the flexibility of the budget. Moreover, the preparation of the
budget on a quarterly basis will enable the staff of the organization to understand the
company objectives and carry out their roles and responsibilities effectively. The
quarterly preparation of the budget will also help the management of the organization
to look into the particular leakages in the strategies that result in the loss of potential
revenue. Another advantage that the division of the budget will fetch is that the
successful achievement of the different short-term goals will result in the
improvement of the employee morale.

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 The second recommendation is that the management should essentially develop the
variance analysis on the basis of the budgeted figures and the actual figures that have
been incurred by the firm in the particular financial year. The variance analysis will
effectively reveal the financial components that have been represented by a negative
or unfavorable variance. The management of the firm has been should implement
internal controls and implement technological innovations within business in order to
boost the total revenue derived by the business. The implementation of the suitable
internal controls will also help in reducing the costs of operations which in turn will
result in the preparation of a budget for the next quarter that will essentially reflect a
higher degree of revenue. This will fundamentally facilitate the continuous
improvement of the business processes.
Thus, these are the recommendations that should be followed in order to maintain
continuous improvement into business.
Thanking you,
Management Accountant

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Bibliography
Chenhall, R. H., & Moers, F. (2015). The role of innovation in the evolution of management
accounting and its integration into management control. Accounting, Organizations
and Society, 47, 1-13.
Klychova, G. S., Faskhutdinova, М. S., & Sadrieva, E. R. (2014). Budget efficiency for cost
control purposes in management accounting system. Mediterranean journal of social
sciences, 5(24), 79.