Detailed Management Accounting Report for Unit 5: Oshodi Plc

This report provides a comprehensive overview of management accounting, focusing on its application within Oshodi Plc, a company dealing in JOJO fruits. The introduction defines management accounting and highlights its importance in organizational decision-making. The report delves into various management accounting systems, including cost accounting, inventory management, and job costing, detailing their benefits and applications. Different methods for managing accounting reports, such as cost accounting reports, inventory reporting systems, and performance reports, are explained. The report then formulates income statements using both absorption and marginal costing techniques, providing detailed calculations for November and December. Furthermore, it explores the design of budgetary control tools and the significance of various planning tools for generating budgets. The report concludes by examining how accounting systems can address organizational problems and identifies key techniques for issue resolution. The report also includes tables and calculations to support the analysis.

Unit 5 – Management
Accounting L-4

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1 ............................................................................................................................................1
P1. Accounting system and its important requirement of various kind of accounting system1
P2 various method use for managing accounting report........................................................2
M1. Advantages of accounting system and its application....................................................3
D1 Evaluation of accounting method in company process....................................................5
TASK 2............................................................................................................................................5
P3.Formulate the budget of income statement different techniques......................................5
M2 Wide range in accounting system techniques and make financial report for the
organisation............................................................................................................................7
D2.Interpretation of income statements: ...............................................................................7
TASK 3............................................................................................................................................7
P4 Designing tools for budgetary control...............................................................................7
M3 The importance of different planning tools and their method for generating budgets. .10
D3 Various kind of planning tools for accounting to solve the issues.................................10
TASK 4..........................................................................................................................................10
P5. Accounting system to act upon problem of organisation..........................................10
M4 Take use of accounting system in identifying the hurdles and techniques to solve the issue
of organisation......................................................................................................................12
CONCLUSION ...........................................................................................................................13
REFRENCES ................................................................................................................................15

INTRODUCTION
Management accounting system is a process in which managers take effective decision so
that organisation can make effective judgements. MAS acts as a supporting pillar in financial
information but also help in managing information by implementation of different techniques
which enhances efficiency of business (Guo, 2019). For getting better insight of management
accounting system, Oshodi is taken in to account which deals in JOJO fruits for all age group.
This report covers management accounting definition and various kind of management
accounting system. Project also explain the different techniques such as marginal and absorption
costing to prepare the income statements for organisation. Numerous kinds of planning and tools
along with their pros ans cons that are helpful in making budgetary control also described in in
this report.
TASK1
P1. Accounting system and its important requirement of various kind of accounting system
Management accounting emphasis on both monetary system as well non monetary
system aspects of an company, it may be characterised as a demonstration of accounting
information in order to aid the organisation maintaining the different kinds of policies and
evaluating difference business operation. Management accounting assist the company in
performing all its activities such as managing, directing, and other operational activities going
during the production process. Management accounting can be also known as framework which
support the company in operating their business process in well defined manner and also keep
the track of resources. There are different kinds of management accounting system which are
discussed below in brief.
Cost accounting system: This in known as structure which help in company such as
Oshodi plc in maintaining the cost of the unit for analysing the net profit which include
production cost. Further it name as product costing system or cost management system. There
are two major elements which are job order costing and process costing. The main advantages of
cost accounting system is organisation can identify the right price of its product and their
respective services
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Inventory management system: Inventory management helps company to track down
all the inventory and raw material which is used in making process. It also provide information
regarding supply chain and logistic related operations. It provide ease for the company to
minimize the cost and through which organisation can make profit and also solve the inventory
related problems.
Job costing system: For company like Oshodi which gather information about cost
which incurred in production. The data is required in order develop the cost information system
for a customer under the signing contract where company have to reimburse the cost .(Ayhan,
2020). Job costing system is very important to company in distinguishing and measuring the
quality and quality of a particular job. The job costing system records serves as the subsidiary
ledger accounting system or documentation for the manufacturer cost of the operation process ,
finished goods and inventory. It is mainly used for determiner the accuracy of a company and
estimating system, which company should quotes price which allow to make more profit.
Price optimisation system: It is method of finding right price for company of a
commodity which organisation is offering to their customer's. In this case company use to charge
different prices for a single unit to understand the customers preferences. With the help of this
technique company set price a product which have maximum demand and customers get quality
product at right price.
P2 various method use for managing accounting report
There are various method present for management accounting reporting, a company may
choose any one which is best suitable to it as per the nature of its business surroundings. Here are
some methods which are associated with management accounting reports are explained in detail
down below.
Cost accounting report:This kind of report help managers Oshodi Plc to figure out the
cost which is related to making process such as labour cost-based, production cost, fixed cost and
variable cost. It help organisation to minimize the cost and provide effective solution to make use
of resources properly. For instance, identifying the supplier who provide raw material at feasible
cost which cut down the cost for a commodity.
Inventory reporting system: Its is a kind of report which is necessary for company t
maintain the record of inventory in best possible way. It provide crucial information to the
manager of organisation to make quality decision regarding the cost of the Storage, holding cost
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and other important cost. To minimize these kinds of cost company can use kind of tools such as
closing inventory which is known as last in first out(LIFO) and (FIFO)first in first out method
and other tools are weighted average method.
Job costing report: This report provide detailed information about ongoing project and it
become easy for manager to find out the flaws in project and avoid such problems in future.
Right job costing report help organisation manager to identify the issues in business process and
also after the completion of process. There can be various issues which may include error in
system software, record keeping mistake , that are necessary to finish certain evaluation.
A/c receivable ageing report: Receivable ageing method provide essential data to the
company like Oshodi plc regarding the due payment from the clients so that amount can be
recovered. Receivable report help to analyse the various information which include the overall
cost for making product and the logistic cost, overdue, extra cost and miscellaneous expenses in
organisation. This kind of report help company to generate profit as well as expansion and
growth.
Performance report system: For the organisation like Oshodi Plc it is one of the crucial
reporting system which evaluate performance of workers in company and overall business
activity. It comes with detail information regarding staff appraisals, promotion of individual,
bonuses and incentives which help manager to take effective decision regarding performance. By
taking consideration of this reporting system, effective steps and measures can be taken in
developing report.
M1. Advantages of accounting system and its application
In the context of Oshodi Plc may take use of different benefits from management
accounting system and by their implementation of application in company. Some benefits are
explained below:
Different accounting system Benefits
Price optimisation system  According to this organisation can
figure out the activity of end consumers
if there is a change in price.
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 It help Oshodi Plc to categorized its
customers according the age and
gender. This will facilitate company
underrated customers taste and
preferences easily.
 Company can maintain sales and profit
Margin according the changing
environment of marketplace.
Inventory Management System  It is important for company to have
inventory system to keep track of every
every resources in which is used in
making final product.
 This system help in reducing the extra
cost which occur while keeping records
of inventory.
Cost accounting system  For Oshodi Plc, cost system help in
analysing the effective solution to make
business operation more smooth and
flexible.
 It figure out whether business is making
profit or loss. Effective measures are
taken to eliminate the non profit
activities.
 It covers classified information through
which company can take immediate
action in order to control cost in
business.
Job Costing System  Actual cost for the company is been
compared by current job to make
effective decision in reducing the cost.
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 It also help organisation to figure out
the the real cost of a single product and
also help in controlling excess cost.
D1 Evaluation of accounting method in company process
Management accounting system is required to implement in company like Oshodi Plc, it
is important to implement such system so that organisation can evaluate and make effective
accounting report. Integrated system of accounting will ease for manager to maintain authentic
report and can keep records in many forms. For instance, standard costing may be incorporate in
production system to help the running staff in improving the efficiency and effectiveness of
business operations related its production (Farokhi, Roghanian and Samimi, 2019).
TASK 2
P3.Formulate the budget of income statement different techniques
Absorption costing: It is techniques which provide information of cost associated with
applicable or irrelevant in accounting system. Therefore overall cost and absorption cost are
taken into account while making the report of company in a well defined manner.
Marginal costing: It is also known as relevant costing in which only relevant cost can is
taken in account fixed cost is also known as period cost due to which it is not a part of
production as well as fixes cost for the company.
Income statement by absorption method:
Particulars November (£)
Sales 50 500000
Less: Cost of sales -340000
Gross profit 160000
Variable selling overheads (10% sale value) 10000*5 -50000
Fixed selling expenses -14000
Fixed Administration Overhead -26000
Under/over absorbed production expenses 9000
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Net Profit 79000
Particulars December (£)
Sales 50 600000
Less: Cost of sales -408000
Gross profit 192000
Under/over absorbed production expenses -9000
Variable selling overheads (10% sale value) 12000*5 -60000
Fixed selling expenses -14000
Fixed Administration Overhead -26000
Net Profit 83000
Income statement by marginal method:
Particulars November (£)
Sales 50 500000
Less: Cost of sales
Direct Material Costs 18 -180000
Direct Labour costs 4 -40000
Variable Production Overheads 3 -30000
Contribution 250000
Less:
Variable selling overheads (10% sale value) 10000*5 -50000
Fixed selling expenses -14000
Fixed Administration Overhead -26000
Fixed production overheads -99000
Net Profit 61000
Particulars December (£)
Sales 50 600000
Less: cost of sale
Direct Material Costs 18 -216000
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Direct Labour costs 4 -48000
Variable Production Overheads 3 -36000
Contribution 300000
Less:
Variable selling overheads (10% sale value) 12000*5 -60000
Fixed selling expenses -14000
Fixed Administration Overhead -26000
Fixed production overheads -99000
Net Profit 101000
M2 Wide range in accounting system techniques and make financial report for the organisation
There are vast range of accounting methods by which Oshodi Plc may use for making
effective accounting system. It includes stander costing system, decision making process and
financial planning which are explained briefly down below:
Standards costing: In management accounting system standard costing have important
role which help Oshodi Plc to gain organisation objectives and later the actual result is compared
by with such standards to find any variances such as material cost variances, labour cost
variances and so on. If there is adverse difference then organization shall required to take
constructive action.
Decision making: Decision-making is important for company to make effective decision for
Oshodi Plc. If there is more than one condition company can use alternative courses of action
which ever is suitable for company. In this scenario company can make decision which can be
helpful in future (Zhong and Yip, 2019).
In the context of Oshodi Plc may develop financial reporting system and with the help of
this company can manage company accounting in best possible way. By using this techniques,
income statements are maintain with the help of absorption and marginal techniques.
D2.Interpretation of income statements:
After identifying the given statement of the company Oshodi plc which provide the
information that in month of November(79000) which comes under absorption techniques is
larger than the marginal cost based accounting (61000) and in the month of December the
company make profit of (83000) under the surveillance of absorption cost-based method ans less
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profitable (101000) under the marginal costing. It occur due to various kind of fixed an
production overhead cost which is used in both the techniques. Due to this various amount is
calculated for the company closing and opening stock. Hence it has been figure out that marginal
cost is the best option in for making effective income statement.
TASK 3
P4 Designing tools for budgetary control
Budget: It can be refer to the organisation process which facilitate the different list of
which include income as well as expenditure statements occur while operational activities. They
are the most important planning tools and techniques which is used by the accountant of the
company which help in using the resources effectively so that organisation can make profit. They
also provide estimation of momentary fund to be used the company in the given time frame.
Budget are used to compare between standard as well as actual outcomes to performs the
business activity effectively.
Budgetary control: It is a method which is used for measure stranded budget with actual
result so that difference can be analysed in the budget report of the company. With help of this
manager of Oshodi plc set their goals and objectives with aim to make profitability in future.
They also provide the path which shows how to use the allocated resources effectively so that
company can expand their operation easily.
Sales Budget: Sales budget help in estimating the future sales and also help in managing
the company financial year. Company manager use this budget to set divisional targets, figure
out the required target and predict manufacture demand. It also help provide comparison between
former and actual performance of the division. Although these budget are most useful feature for
sales department but it have also other useful advantages. It is one of the several operational
sales budget which contribute to the master budgets for the company. There are some pros and
cons of sales budget which are explained briefly down below.
Advantages: With the help of this budget,company can achieved high performance and
organisation can gain huge profit rapidly.
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Disadvantages: It is an expensive process and time consuming and budget is not easily
accepted by employees.
Master Budget:
As the name suggests, it is an combination of overall budget which are prepared during
the operational activities of business. Further it include various kind of budget such as financial,
cash flow, subsidiary budget which help in identifying the revenue and expenses for the
company. Managerial accountant of a particular organisation pre pare master budget for clients
in order to set objectives and allocate funds as per the requirement. The company takes major
advantages and it also have some disadvantages which are explained below.
Advantages: Accountants cannot influence the master budget and it also reflect the
functional budget because it is a part of estimated budget.
Disadvantages: Management needs to expert in reading and evaluating information from
budgets as it very complicated to understand.
Capital Budget:
In this kind of budget, resources are allocated as per the requirement of purchasing fixed
assets, reconstruction and repair of fixed assets. Capital budget is used for research and
development process to make better estimation resource in future. The present company is using
this budget method to set targets and ensure the profitability. Some aspect of capital budgeting
used by organisation use to determine which project to use through the process. The main aspects
of budgeting help in discontinuing cash flow and payback analysis. It also Here are some points
which shows reward and failure of capital budget.
Advantages: Capital budget help in analysis the extra cost and help in taking effective
measures which help in expansion ans growth.
Disadvantages: Well qualifies and experts individual are required to prepare this budget
and involve very complicated process.
Incremental budget:
This is a budget which is maintain by the management of Oshodi Plc on the basis of
previous result and making some modification in previous result as per the current requirement
for business activities (Zheng, 2019). Therefore, this kind of budgetary called incremental budget
because previous records get incremented according the current budget. This kind of budgeting
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