Analysis of Management Accounting System and Reporting for Zylla

This report provides a detailed analysis of management accounting, focusing on its importance for business development and decision-making. It covers essential requirements of different management accounting systems, including inventory, risk, cost, job costing, and price control. The report explores various reporting methods such as budgetary, inventory, job cost, and performance reports, along with investment appraisal techniques. Furthermore, it examines cost calculation using appropriate techniques, analyzes the use of planning tools in budgetary control, and discusses how organizations adapt management accounting systems to respond to financial problems. The report uses Zylla Company as a case study to illustrate the practical application of management accounting principles, emphasizing its role in achieving sustainable success through effective planning, control, and financial reporting.

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Management accounting and essential requirements of different types of management
accounting system..................................................................................................................1
P2. Different methods used for management accounting reporting.......................................3
M1. Benefits of management accounting system and their application within organisational
context....................................................................................................................................5
D1. Critical evaluation of the way management accounting system and reporting is integrated
within organisational process.................................................................................................5
TASK 2............................................................................................................................................5
P3. Calculating the cost using appropriate techniques of cost analysis to prepare income
statement.................................................................................................................................5
M2. Range of management accounting techniques and financial reporting documents........7
D2. Financial reports that accurately apply and interpret data for a range of business activities
................................................................................................................................................8
TASK 3............................................................................................................................................8
P4. Advantages and disadvantages of planning tools used in budgetary control...................8
M3. Analysing the use of different types of planning tools and their application for preparing
and forecasting budget..........................................................................................................10
TASK 4..........................................................................................................................................11
P5. The way organisations are adapting management accounting system to respond financial
problems...............................................................................................................................11
M4. how responding in financial problem, management accounting can lead organisation to
sustainable success...............................................................................................................12
D3. Critically evaluation of how planning tools help to respond financial problems to lead
organisation..........................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Effective management and control is the prime requirement of business and organisation
for sustainable growth and development (Bovens, Goodin and Schillemans, 2014). Management
accounting assist the business structure in terms of improving quality decisions for controlling
the business activities. Organising, planning, controlling and effective communication is one of
the key aspects considered in management accounting. This project produces brief understanding
of management accounting system and requirement in organisational context. Range of
accounting techniques are defined in respect of profit evaluation and effective management for
better control and management. Cost measurement techniques are also defined in this context
subject to evaluate profit also considered in this context. Use of planning tools in making budgets
and plans in order to make growth and development plans illustrated in this subject. Also, ways
are compared in respect of implementing management accounting system within the
organisation. Zylla company management accounting is considered in this context.
TASK 1
P1. Management accounting and essential requirements of different types of management
accounting system
Management Accounting
It is an important procedure that includes preparation of reports and accounts which aim
to render proper and accurate information to managers of company. It is an essential technique
that assists in performing planning, controlling, organising and forecasting functions. Every
business organisation in today's world adopt this system in order to carry out the overall function
effectively and efficiently (What is management accounting system, 2018). This system involves
many accounting concepts, tools, rules and regulations that are applied into organisational
system that lead to accomplishment of final goals and objectives. It is the responsibility of
accounting manager to control this section in a proper way. Managers held responsible for
managing accounting system that control all aspects associated with it in decorous mode.
Management accounting is also integrated with planning controlling and motivation. It
makes smooth the planing process which is very important for decision making process.
Formulation of plans and strategies can be implemented with the use of management accounting
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system. It not only helps to improve internal control and management but also motivates
managers and accountants.
Managerial accounting also helps to analyse the overall performance of organisation for
better and smooth operations. Managerial accounting not only used to analyse used for effective
management but also helps to analyse performance of operations. There are number of
management accounting systems that are adopted by the business firms that are discussed as
below: Inventory Management System: Every business firm has to maintain inventories of
different nature and types in a conducive manner. It includes all processes that consider
fluctuations that happen during inflow and outflow of stock or order quantities. It keeps
track on proper management of raw materials or inputs that is required in the processing
of final output. Therefore, manager has to keep record of handling the inventory in a
correct manner. Risk Management System: It is a necessary element under accounting system that
controls all risks and unfavourable factors that come into way while performing the work
process. There are number of issues that are needed to be taken into consideration while
managing financial risks (Brewer, Sorensen and Stout, 2014). It is a part and parcel of
business life that may hinder the performance of business organisational system.
Analysing financial risk which remain associated with financial growth and development
are considered in risk management system. Cost Accounting Management: There are number of costs that are incurred during
running business and hence, management accounting involves this process. The basic aim
of organisation involves carrying out operations while adopting cost effective methods.
There are different types of costs that include variable and fixed costs that have diverse
nature and role. Therefore, it has become important to examine the type of cost which is
present in organisational system. This cost basically helps to control the cost and
enhances profitability of organisation. It is one of the essential aspects of cost accounting
management system. Job Costing System: There are number of departments that are present in single business
system. This system aids in calculating the cost of these sections and provide proper
decisions regarding it. Under this, they have tracking order that helps in calculating the
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cost and profitability level of each section. Cost accountant plays an important role in this
system as they keep proper attention on this system. They work for reducing the overall
cost at a significant level so that there is loss in company institution. Comprising cost of
individual process and division and consolidate the profitability of each department and
process key functional area of this accounting system.
 Price Control System: It involves fluctuation ratios that may occur in between supply
and demand of products (Chiwamit, Modell and Yang, 2014). There are number of
resources that are available in the organisational system so that optimum utilisation can
be done. By applying management accounting system, managers and accountants can
conduct comparison of prices of various products with each other. There are numerous
elements that pose threat to organisation that involve factors like category goals, product
life cycle and pricing strategies. There are type of methods are used in this system such as
◦ Price skimming: these are the methods which is analysed to controlling price and
variation with effective plaining process.
◦ Economic pricing: this helps to mange the level of economic pricing strategy.
◦ Demand pricing: this method helps to manage the price of products and services on
the basis of demand and supply of products and services.
◦ Mark up pricing method: this method helps to analyse the price of product and
services by mark up additional expenses.
P2. Different methods used for management accounting reporting
Reporting is one of the essential tasks which is performed by managers and accountants
subject to defining financial and operational performance of organisation. Reports provides a
summaries overview in order to determine the financial and non-financial growth of
organisation. Management accounting reporting is one of the essential tasks subject to managing
the operations and control for smooth functioning of organisation. Accounting and financial
reports remain essential in respect of evaluating the performance of organisation and making
strategies for better growth and success. Accounting reports assist accountants and managers in
respect of analysing situation and forecasting information subject to better plan for boost the
structure of organisation. Various type of management accounting reporting methods are used
under management accounting system such as:
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Budgetary reports: These are the reports which indicates towards how much resources
are utilised last year and to be utilised for subsiding years (EBRAHIMI and
MOGHADASPOUR, 2015). Budgetary reports are prepared on the basis of last year’s records
and information which remain associated with financial planning and organisational structure for
better control and operation. Budgetary reports are summarised format which present the overall
information about income generated by incurred cost for further years. Budgetary reports are
presented a forecasted information which remain related to adjustment and appropriation of
financial growth and development of organisation. Actual expenditure and income details and
information used for preparing budgetary reports. These reports remain part of decision making
and forecasting process.
Inventory reports: These reports are prepared to analyse the economic order quantity
and helps managers to maintain the level inventories. In large business organisations level of
inventories is maintained by effective inventory management system. These reports contains
details and bureau about monthly and yearly consumption rate of inventories and stocks for
better operation and management. These reports are prepared with the help of stock register and
evaluating techniques. Stores managers, keepers and production managers are the person which
prepare inventory reports. With the help of inventory management reports, managers and
accountants would be able to maintain optimum amount of raw material stock to maintain sales
graph.
Various inventory management techniques are used by organisation such as annual stock
policies, preparation of inventories budgets, perpetual inventory system and ABC analysis are
some major techniques which are used for better management of inventories and stock. Product
demands and inventory turnover are some essential aspects which need to facilitate decision
making process.
Job cost reports: In large scale business organisations and entities manufacturing and
production process remain divided in multiple job centres and sections. These reports are
prepared on the basis of information and details received from various department and cost
centres. These reports basically helps to evaluate cost and profitability for each cost centre and
department. For example a chair manufacturer organisation operates three process which are
moulding, finishing and polishing. Income and expenditure which are incurred at individual
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process is calculated under job cost system. Job cost reports in respect of individual process
prepared by managers.
Performance reports: Analysing performance of organisation is one of the essential
aspects in organisational context. There is a proper track record prepared by organisations in
order to determine the performance of organisation. Individual records and details are prepared
and maintained by departmental manager. Performance of individual employee is recorded and
average performance is evaluated on the basis of effective management and operation.
Performance reports helps to analyse potential factors which prevent effective performance and
best efforts. It helps to find out required areas of improvement and assist managers to create
performance management plans.
Investment appraisal techniques
These techniques helps to understand and evaluate best investment options for
development and growth of organisation. These techniques assist business structure subject to
make more viable and credible. It makes smooth the planing process which is used in
determination of the firm's investment.
Net present value
this helps to analyse the net present value of investment with the help of net cash inflows
and outflows. the project which contains higher net present value is considered optimum.
Accounting rate of return
this method analyse the cost of investment on the basis of average net profit and initial
investment. It compares the net profits with the initial investment and the projects which gives
higher returns are adopted by organisation.
Payback period
This method helps to analyse the recovery period of initial investment which was
incurred at initial stage.
IRR: internal rate of return is known as a discount rate which provides a value of zero to net
present value. This basically helps to analyse the efficiency if the capital investment.
Profitability Index: this capital investment technique basically based on calculation of value per
unit of investment. Value investment ratios and profit investments rations are calculated in this
context.
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So as to accomplish money related security and proficiency in execution of Zylla
organization, the administration bookkeeping framework is essentially required with the
assistance of which they can record consistent exchanges in proper way. Through playing out
this, the possibility of getting beneficial outcome will be more. Along these lines recording and
dissecting bookkeeping data through utilizing bookkeeping framework instruments, them
administrator of Zylla has in solid position to take compelling choice with a specific end goal to
better gainful outcome.
M1. Benefits of management accounting system and their application within organisational
context
Managerial aspects, principle and concepts provides a path to organise departments and
division of organisation in effective manner (Klychova, Faskhutdinova and Sadrieva, 2014).
Implication of management accounting principle depends upon organisational type and nature.
For perfect forecast and estimation management accounting helps managers in order to assign
responsibilities and roles for better utilisation of skills. With the help of management accounting
system helps to determine the dimensions of functions and operations of business.
D1. Critical evaluation of the way management accounting system and reporting is integrated
within organisational process
As per my perspective it is required that management accounting system provides a
function of recording transactions and events on periodic basis. With effective management
system, management reporting is not possible and imagined. I thing job costing system is the
main effective management accounting which will assist job cost reports, inventory management
system helps in managing inventory reports. This is how management accounting system is
integrated with management accounting reporting. I thing management reports will help to
provides a summarised vision in order to examine the effectiveness and core competence within
the organisation. Controlling the cost and forecasting future events and circumstances are
essential aspects which are considered for better forecasting and prediction (Nørreklit, 2014).
This is one of the essential method in terms of analysing the performance of organisation.
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TASK 2
P3. Calculating the cost using appropriate techniques of cost analysis to prepare income
statement
An amount which incurred for performing task and projects in effective manner known as
cost. This is one of the essential aspects in organisational context. Controlling cost and maintain
optimum level of profit is the prime objective of organisation. Cost is basically evaluated in
monetary terms such as material, labour, resources and utilities. To control cost and maximise
profit, organisations use various costing techniques for maintain profitability. Major costing
techniques are defined in respect of evaluate cost and profitability of organisation.
Cost control
this is a concept which is used in organisation context in terms of reducing cost of
operations and manufacturing and enhancing profitability graph. This concept contains
procedure of detecting variance of actual cost from budgets costs. With the help of cost control
potential ways are tried to find to reduce cost. Inventory allocation method is also one of the
essential method which is used to control the flow of operations and control.
There are two major techniques are defined subject to evaluate cost such as:
Marginal costing technique: this is one of the costing technique which helps to analyse
the cost of operation and management in respect of evaluating profit of manufacturing process.
Variable cost plays vital role in respect of evaluating profitability and profit for organisation.
Complete variable cost such as direct material, direct expenses and direct labour are main aspects
which remain associated with production and manufacturing process. Fixed cost which do not
remain the part of manufacturing process is not considered in marginal costing. For management
and decision making perspective marginal costing is considered more effective and important for
better plan and strategic plan (Quinn, 2014).
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Absorption costing technique: absorption costing is one of the essential technique
which helps to analyse overall cost of manufacturing and non-manufacturing process. All the
variable and fixed cost are considered while calculating cost of manufacturing and production.
This costing do not remain the part of decision making and strategic planning. This costing is
also known as full costing system in order to determine cost of per product. As per GAAP
(Generally Accepted Accounting Principles) provides rules related to financial performance and
cost of product (Renz and Herman, 2016).
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M2. Range of management accounting techniques and financial reporting documents
Various types of management accounting techniques are used to evaluate the financial
performance of organisation. Marginal and absorption costing techniques are two main
techniques which are used by the organisation. Job costing techniques and standard costing are
also range of techniques by which financial reports are prepared. Job cost reports, divisional
reports and departmental reports are the type of reports prepared under management accounting
(Williams, 2014).
D2 Financial reports that accurately apply and interpret data for a range of business activities
As per availed essential option, Zylla organization is utilizing two of the valuable costing
strategies, for example, minimal and ingestion costing. Both of these are compelling in
producing net benefit for the organization. With the utilization of negligible cost they are getting
benefit of 7500 while, in the event that they are thinking about retention costing they are bring
about 7800. The distinction of 300 is emerges as a result of settled cost. With the end goal of
future basic leadership they have to run with minor expenses as it is more successful as contrast
with ingestion.
TASK 3
P4. Advantages and disadvantages of planning tools used in budgetary control
Budgetary control is a process which helps to analyse the cost of operations and
management in effective manner. Budgetary control is one of the management accounting tool
which also plays vital and important role in decision making process. There are types of
budgetary control found in terms for the enterprise for the future period and standards in terms of
comparing the actual results and budgeted figures.
Incremental budgeting
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