Management Accounting Report: Advanced Engine Research Ltd. Analysis

This report provides an in-depth analysis of management accounting, focusing on its essential requirements, different systems, and reporting methods. It uses Advanced Engine Research Ltd. as a case study, exploring job costing, cost accounting, and inventory management systems. The report details the benefits of management accounting, including planning, decision-making, and strategic management, and also covers various reporting methods such as budgeting reports, accounts receivable reports, and performance reports. Furthermore, it examines the advantages and disadvantages of planning tools used in budgetary control, cost-volume-profit analysis, and pricing strategies. The report highlights how adapting a management accounting system can help in responding to financial problems and achieving business objectives, providing a comprehensive overview of the subject matter.

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management accounting is the process of analyzing various business activities that
provide information related to stakeholders and regulators that are working in the organization.
Accounting plays an important role for the success in business for gaining more opportunity as
well as profitability (Maas, Schaltegger and Crutzen, 2016). It help in providing various
benefits such as planning, taking decision, managing business in strategic form and identifying
problems that influence company’s operation.
Present study based on Advanced Engine Research Ltd. company that is providing an
auto racing engine manufactured in Basildon, Essex, England. It was established in 1997.
Report emphasized on meaning of management accounting and its essential requirement
that help in fulfilling business objectives. It also includes different types of management
accounting systems. It also includes different methods used for management accounting
reporting. It includes analysis of different cost that help in preparing income statement by using
marginal and absorption cost. Furthermore, it includes advantages and disadvantages of different
types of planning tools used in budgetary control. It also emphasize on adapting management
accounting system that help in responding to financial problems.
LO1
P1Management accounting and essential requirements of different types of management
accounting systems
Management accounting is also known as managerial accounting that will be used for
analyzing cost of business and operations that help in preparing financial report, records and that
aid in taking decision for the company. It also helps in preparing internal financial report and
records and enhancing in achieving goals of the company. On the other hand, management
accounting include doing interpretation, identification, analysis of accounting information that
has been obtained with the help of financial accounting (Chenhall and Moers, 2015). It helps
business managers in the formation of policies, in daily operations of the firms and making
decision by classifying important factors affecting the business. Effective managers are required
for effective management accounts so the effective utilization of the resources could be done

along with minimization of risk. In effective management all the resources should be allocated
well so that nothing goes on vain and all deviations and errors could be well defined and could
be controlled effectively. There are different benefits of managerial accounting such as planning,
decision making, identifying early signs of problems and strategic management. Profitability is
another concept that evaluates different aspects for gaining financial gains in the future. Break
even analysis is another segment that provide effective use of resources.
Management accounting is essential for business because:
Measurement of performance:- It helps in measuring performance of employees and efficiency
in the organization. This process include comparison between actual performance with the
standardized performance that help in setting deviations that is necessary steps can be taken and
implemented.
Assessment of risk:- Another essential requirement of accounting management is that it help in
identifying risk factors that is in enterprise can be minimized through effective management
strategy that will be followed by advanced engine research limited company for manufacturing
engines.
Allocation of resources:- Organizations becomes able to achieve efficient and effective
utilization of resources that help in allocation of resources to the various aspects that will be
enhancing changes in creating enterprise that is helpful for collecting information and data (van
Helden and Uddin, 2016). For example: Advanced research engine uses effective use of
resources that help in building various aspects for the future.
Financial statement presentation:- It is also an essential requirement that help in providing
proper presentation of financial position in the enterprise. It is important for providing various
aspects that help in providing changes that evaluate effective use of resources that help in
accepting challenges in creating changes for the future.
There are different types of management accounting system as follows:-
Job costing system:- This help in identifying manufacturing cost that provide various aspects in
enhancing valuation of job and providing standardized actions that create change in providing

different aspects that help in evaluation of cost as well as enhancing expense that provide
effective changes in costing.
Cost accounting system:- This is another method of evaluating cost that enhance profitability as
well as help in controlling cost of the product. This will be further divided into job order costing
and process costing. Both of these help in cooperation and participation of executives required
that used in various departments
Inventory management system:- In this type of system that will be concerned that help in
evaluating different aspects that bring change in non-capitalized assets of the enterprise.
Benefits of management accounting
There are various benefits such as planning, controlling, providing
services to customers. Coordinating is another aspect that helps evaluating changes that provide
effective use of resources. It is also important for improving efficiency that provides changes in
getting into various aspects that will be useful for the future (Ax and Greve, 2017). It help in
improving various perspective that enhance business for evaluating changes and providing
communication that enhance different aspects and improvement is being done for providing
changes that create evaluation in providing motivation to employees and evaluating different
aspects that provide changes in accepting in evaluation of accounting and communication will be
enhanced for bringing effective evaluation of resources that will be providing in evaluating cost
in accounting. It plays an important role in evaluating changes that create effective use of
resources and enhancing management accounting for achieving goals of business. There are
various aspects that involved in providing changes that help in providing effective use in
enhancing business for providing strategic use in business. This provide change in business
aspects and evaluate differences in completing changes for managing business.
Different methods used for management accounting reporting
There are various management accounting reports that help in
managing reports that counts on providing forecast for making critical business decisions. There
are different available sources that provide reliable and accurate statistical and financial

information. Different reports prepared by the management that help in benefitting advanced
research engine in are as follows:-
Budgeting report:- Budgeting reports sets out the plan to analyze the company performance
and bringing evaluation that will be depended for improving performance and enhancing changes
that provide effective change in business operations and bringing out incentives for the future. It
help in identifying cost that needed for completing project and evaluating effective use of
resources that enhance business operations (Shields, 2015). Forecasting budget for the future hat
help in evaluating various objectives for bringing change in evaluating various aspects in
business. Therefore, this system help in developing objectives that evaluate aspects and bringing
changes for development of reports in business.
Accounts receivable report:- This is another type of report that is concerned while managing
accounts receivable for companies that are engaged in extending credits that is given to
customer. It is important for improving efficiency that is required for completing various aspects
that will be helpful for the future course of action. This help in removing old bad debts and
maintaining liquidity of the company. It helps in improving problems that associated with
company’s collection process.
Job cost reports:- It is concerned with identifying cost, profitability and expenses of particular
job. This can be made about the earning aspect of the projects that help in evaluating profitability
and productivity of business that provide enhancement of activities that help in reducing efforts
or less profitable in various activities. This help in evaluating changes that identify various steps
that needed for gaining productivity and enhancing business for the future. It also help in
evaluating cost that needed for completing project.
Performance reports:- This help in identifying differences calculated comparison between
actual results and estimated results and information regarding reports that are presented in
performance reports. These reports are generally prepared on monthly and quarterly basis.
Order information report:- It is providing information related to see the trends in business
effectively and efficiently. Through this it help in integrating management operations that help in
achieving low cost on placing of orders and their management.

Business situation or opportunity reports:- This is prepared for management so that they can
be well aware of occurrence of a particular event. By using this report that help in evaluating
different changes that will be important in taking important business decisions with regards to
events and their understanding for the future perspective.
Inventory and manufacturing reports:- Companies involved in manufacturing processes and
preparing different aspects that will be evaluating in managing various changes that will be
providing evaluating manufacturing and inventory process can become more efficient
(Wagenhofer, 2016). These reports providing labour cost, per unit overhead cost and wastages
that help in managing all task for the future. Therefore, all these methods help in evaluating cost
that needed for continuing business for the future course of action. All these cost help in
evaluating changes that will be needed for gaining various perspective. By using different
techniques in business that create evaluation of business that changes in business operations.
From all these changes that create different aspects in providing aspects that help in bringing
change that enhance operations in business.
Advantages and disadvantages of different types of planning tools used in budgetary control
Budgetary control refers to the tool that is used for selling and promoting products and services
for doing coordination between departments and motivating managers and to evaluate
performance. This plan help in identifying all aspects of Advanced research engine to ensure
organizational achieve its objectives in a given period of time (Nielsen, Mitchell and Nørreklit,
2015). There are different departments in the company that help in managing and coordinating
budgeted goals. On the other hand, budgetary reports evaluates performance and sorting different
aspects that provide changes in business operations as operating promotion and incentives
enhanced by the company for changing this aspect for the future. From the above changes that
have been taken place for evaluating plan that is going to be expected for the future.
Advantages and disadvantages of Budgets
Coordinating all activities of business of various departments that help in evaluating changes that
create effectiveness in business. On the other hand, there are various problem that occurred in
evaluating changes for providing rigid change in business. It help in translating strategic plans
that provide effective change in business operations and provide revenues for gaining changes

that provide effective use of resources. In contrary, budget provides demotivation to employees
and that lead to bring lack of participation in business. It provides excellent record of
organizational activities and improving communication with employees. It provide resource
allocation and due to rigid budget structure that enhance business initiatives and innovation at
lower levels for obtaining different ideas and concepts.
Advantages and disadvantages of cost volume profit analysis
Calculation that is being set up a standard of formulas that will be added into business for the
future course of action. In contrary, it assumes that cost are fixed however mixed cost changes
with change in production. It helps managers in deciding estimate future spending that affect
objective of the business. On the other hand, sales remain constant but demand change over time
for gaining profitability as well as productivity in the future (Thomas, 2016). It help manager
decide on the price of product and identifying highest and lowest price that offer in relation to
the competition. From the above changes that will be taken place for providing effective change
in business operations. While evaluating cost volume profit only specified period is being
provided that are unreliable for adopting changes in business operations.
Advantages and disadvantages of pricing strategies
Customer base pricing provide target to consumers that will be paying for the product and
enhance business for the future course of action. In this cost that will be based allows
management as providing effective use of resources and considering pricing strategies for
evaluating changes that will be accepting cost and gross margins in business. For the purpose of
evaluating price it is important for enhancing changes that create various aspects that build
changes and evaluating various aspects that bring efficiency and effectiveness for conducting
effective use of resources. As there are different changes that will be providing for developing
changes in the future course of action. Demanding prices for the future provide optimize
management prices and provide loss of profits by not taking price of various changes that help in
evaluating price that enhance business (Alsharari, Dixon and Youssef, 2015). Penetration
pricing is being provided for evaluating various changes that create effective use of resources
that enhance business operations. It help in providing prices lower than profit and provide
customers to buy product that help in enhancing business operations.

Use of different planning tools and its application for preparing and forecasting budgets
These tools help in providing various aspects that help in gaining changes as various changes
occur for the purpose of achieving goals of business. There are different changes that will be
occurred in gaining different tools that enhance business for the future course of action and
evaluating changes that may create forecasting of business. It is important for evaluating
different aspect that enhances business operations. For the purpose of evaluating planning tools
that can be help in gaining changes that will be provide effective change in business for the
future aspects and through these tools. From different perspective that has been provided for
bringing changes in helping out different aspects for providing tool in calculating tools. It is
important for providing these tools help in changes that make sense for the purpose of changing
different scenario.
For the purpose of changing business scenario and help in getting more involved in business for
evaluating changes by adopting this chance for building effective tools and bringing out tools
that evaluate designing of segments and involving challenges that enhance business operations
for providing various changes that help in bringing out changes that enhance business for
evaluating various aspects that enhance business and there are different changes that help in
providing changes that enhance business operations for the future. As there are various aspects
that enhance business operations for the future. It is important in evaluating changes that provide
evaluating differ in enhancing business operations.
Adapting management accounting systems responding to financial problems
Involving in new business condition that will be evolved into various aspects that provide
effective change in information that is provided for evaluating various aspects in business. It is
important for measuring changes that provide effective change in business for the future.
Identifying financial problems that arises in the company lead to influence operational activity
that enhance business for the future. It lead to change in performance of business that enhance
organization for bringing out standardized set of performance that lead to create effective change
in business for adopting changes that enhance business for future perspective. It is important for
developing key performance indicator that create sustainability and increasing performance of
business in creating changes that provide budgetary control and planning business activities. By

using these planning and executive business activities that help in fulfilling objective of the
company. For the purpose of bringing out changes that provide in creating performance
indicators that provide effective use of resources in the organization. It is important for
extracting data and information for fulfilling desired objectives of the advanced research engine.
By applying different aspects that enhance business for the future course. It is important for
understanding concept that help in fulfilling getting changes that create difference and enhance
business operations. For analyzing performance of business various aspects that provide change
in ratios that lead to change in liquidity ratios and different ratios that provide financial
performance of the organization. It has lead down that enhance operations for enabling changes
that enhance business that convert changes that lead to provide satisfaction to customer and
bringing changes that enable in maintaining future business that converted it for enhancing
operations in business. For the purpose of implementing changes that create effective use in
resources and enhancing human resource management environment businesses for viewing staff
that are doing work in the company. As there are different changes that occurred for providing
effective implementation of service quality and revenue that earned from doing business
effectively and efficiently. There are different aspects that provide change in business operations
and bringing changes for the future. It is essential for bringing up effective utilization of
resources that enable in developing strategic and sustainable goals that help in developing
policies and procedures that are implemented. For the future development in business operations
for providing changing in different aspect that will be enhancing business operations. For
completing changes that enhance business operations for providing effective change in business
operations. It use in decision making process and enhancing development strategy that allow
reporting for the future (Taylor and Scapens, 2016). This lead in development for efficient
reports that provide information regarding production as well as understanding pricing and
strategic planning. In management accounting managers will support the strategies and goals of
the organization. The integration of sustainable matters into various decision-making processes
are helped by management accounting tools and techniques like marginal costing , standard
costing , break even analysis etc. It helps in the process of production of reports which have
information of sustainable impacts help in understanding price and budget decision and strategic
planning.
CONCLUSION

From the above study it can be concluded that management accounting plays an important role
that help in creating various aspects for providing an opportunity to enhance business for the
future course of action. It is an essential part that create change in business planning and
enhancing future perspective for understanding pricing budgeting decisions and making strategic
planning. For the purpose of developing reporting strategy that provide financial as well as non
financial information that cater business needs. There are different planning tools that help in
evaluating budgetary control in business. Integrating business operations lead in emphasizing
opportunities that enhance business for earning profitability.

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