Detailed Analysis of Management Accounting for Swing Patrol UK Limited

This report analyzes the management accounting practices of Swing Patrol UK Limited. It begins by explaining management accounting, its systems (cost accounting, job costing, batch costing, inventory management, and price optimization), and their importance. The report then details the financial reporting methods used by Swing Patrol, including budget, income, sales, payroll, production, and overhead reports. Furthermore, it calculates costing and net profit using both marginal and absorption costing methods, comparing the results to assess the company's financial performance. The findings show the impact of each method on the net profit, providing insights into Swing Patrol's profitability and financial health. The report offers a comprehensive overview of the accounting tools and techniques used to manage the company's finances and make informed business decisions.

MANAGEMENT
ACCOUNTING

INTRODUCTION
Managing business is very and highly significant for every entrepreneur which helps to
achieve different agreed objectives as well as purposes. There are several kinds of tools,
methods, systems, techniques etc. Used by the firm in order to manage accounts and finance of
entity. In the current study there is Swing Patrol UK Limited company is to be selected which
provides its products and services in overall UK. The report helps to the reader for analysing
several systems which are used and adopted in business process for manage the accounts and
various non financial terms. In this context those reports which are supported to the management
accounting for prepare different accounts and statements of finance are to be analysed. Apart
from such all aspects the report evaluate planning techniques as well as tools which highly
helpful in budgetary control as well as run the Swing Patrol in industry in smooth manner.
Furthermore, there are two kinds of approaches used in costing which are like as marginal and
absorption which segregated in current case. At the last different techniques and systems are also
explained by which Swing Patrol able to manage and reduce financial shortfalls which occurs at
the workplace.
TASK 1
P1 Explaining management accounting along with its systems and their essential requirements
for Swing Patrol company
Management accounting is multidisciplinary approach that is helpful for managing all
business operations and making decisions regarding organization's implementation. In this
regard, various tools are used to present entity's performance and preparing strategies for better
quality services. Moreover, it involves costing, budgeting and different management accounting
components to set price of products and implementing various strategies for Swing Patrol and its
overall management. Including this, management accounting is related with effectiveness of
organization and enhancing efficiencies for business plan involving financial and non-monetary
performances. However, it is a technique in which several data are to be recorded and evaluated
by managers whether they are related to the finance aspect or non financial aspect. This is used
by the internal staff as well as employees and managers in order to take effective business
decisions. On the basis of such kind of accounting process the entrepreneur able to determine
that which type of growth is there within workplace. It highly supportive for make the business
plan and implement in firm by which Swing Patrol able to become highly financial sound in the
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overall segment. When it can know which kind of performance is there of firm within industry
then it able to frame those strategies which help to them to enhance performance (NEED AND
IMPORTANCE OF MANAGEMENT ACCOUNTING, 2016). Every businessman has specific
goal while establishing entity in the industry at where it operates.
Apart from above mentioned analysis and importance, the businessman able to control
over the business process and those constraints which hinder the smooth operating process.
When the firm easily control over the negative impacts and enhance those factors which lead to
create positive influence on business then level of profit and business performance both comes
higher. In addition to this, when such kind of condition comes into existence at the working
environment then firm become highly productive and efficient in its respective segment. There
are many types of systems are there on the basis of them Swing Patrol able to administer and run
the entity appropriately. Such management accounting approaches are like as forecasting, stock
valuation methods, budgeting, variance analysis, cost accounting etc (Rossi, 2014). Furthermore,
explanation of these all the accounting systems of management are given as below: Cost accounting system:- Cost accounting involves decisions on cost of product in
different stages of product. It includes pricing for manufacturing, production and
advertising goods. However, cost to be incurred for purchasing materials, labour and
additional expenditures. In this regard, planning is prepared on costing and setting price
leads to production and distribution of product services provided by entity. It is valuable
for optimum allocation of resources and fund that affects productivity and profitability.
However, cost accounting system involves cost control, profitability analysis, inventory
valuation and so on. It generates different ideas for proper costing and price
determination effectively. Job costing system:- It is system process for producing and supplementing services
provided by Swing Patrol. In this regard, different kinds of costs are incurred as well
decided to be implemented including material, labour and extra expenses. Therefore,
price and decisions on costs of products are made for further production and distribution
of services. It is useful for better quality services and proper management of all
operations.
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 Batch costing system:- Under this costing system, price on each process of production
and manufacturing is determined. However, for each step, cost related to material and
additional expenditures are evaluated. In this regard, for an individual process system, all
kinds to cost to be incurred for production and distribution of services are set as well
evaluated regarding Swing Patrol and its effectiveness. For example; stock and price
obtained in each process of production and advertising as well. Therefore, batch costing
is related with proper management and identifying price on product services. Inventory management system:- It is one of the best management accounting tool by
which inventories are managed. However, all kinds of inventories including resources
and different systems get arranged efficiently. Including this, inventory management
system is beneficial for optimum utilization of materials and fund for proper management
of all business operations.
 Price optimization system:- In this management accounting system, price incurred on
operations are get utilized as well different tools are recognized for decision making
process. In this regard, price utilization system is useful for setting price and optimizing
best use of cost incurred on different systems for Swing Patrol. It generates different
ideas for optimizing price and improving financial position of entity efficiently.
P2 Explanation of those methods which are used by Swing Patrol for management accounting
reporting
While preparing various financial reports as well as accounts there are several kinds of
methods and small transactions are to be used by the Swing Patrol UK Limited. There are several
kinds of small small reports are to frame which relies with the financial and non monetary
informations. In the current case there are reports are to be prepared for the financial perspective
at where the management of entity has to know several data of the financials. When the Swing
Patrol know about the small and day to day transactions then able to segregate all expenses and
incomes in efficient and proper manner. In context to this, there are different reports are to be
prepared as well as generated within workplace and then final accounts are made (Strumickas
and Valanciene, 2015). There are different accounts and financial reports which are used by the
Swing Patrol firm within accounting process. Several kinds of reports are like as budget, sales,
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income, payroll, overhead, production and manufacture, costing etc. Most of the reports among
these all are to be analysed as below: Budget report: The report of the company in which different number and types of
financial as well as accounting data are to be analysed at the previous which will be
associate in upcoming FY. In this several incomes along with data are to be shown which
is the most supportive for the chosen entity. Apart from these things different expenses
are also predetermined within the workplace by undertaking process of the budget. On
the basis of report of the budget the management can make and frame future strategies
because it provides business performance. Income report: The report which is used by the Swing Patrol business in order to support
management accounting for preparing financial statements is income report. In this those
kinds of financial transactions are treated which are related to the income as well as
earning for the firm. When talking about only income report among all types of reports
then management wants that level and summation of respective report will higher (Ng,
Harrison and Akroyd, 2013). Higher the amount of income report describes that
management is more efficient and having strategies to enhance sales. In this mainly three
kinds of income or profit are to be determined which are such as gross, operating as well
as final or net. On the basis of net profit further decisions are take by the entrepreneur of
Swing Patrol organisation. Sales report: In this context, there are other type of management accounting report is
related to the sales as well as revenue. The respective report shows that company is how
much effective to attract customers for consuming its several products as well as services
offered and provided by Swing Patrol. Higher values of sales clearly indicate that
business entity sell more number of products in the market. Because when there are
higher sales then Swing Patrol can earn more profits at the end of an accounting year.
Furthermore, the sales report plays an integral role at the workplace because it is the base
of preparing financial statements. All kinds of expenses are to be subtracted and deducted
from the sales figure for assessing gross, net as well ass operating profit at the accounting
year ending.
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 Payroll report: Sum of money which are spent on the employees and organisational
members are to be recorded and transacted in a particular report which is called as payroll
report (Noreen, Garrison and Brewer, 2014). On the basis of such report of management
accounting Swing Patrol determine that on the workers and employees there are how
many expenses come into existence within working environment. Furthermore, different
types of costs which are transacted in the payroll report are such as compensation, salary
and wages, bonuses, financial or monetary rewards and appreciations, labour expenses,
allowances, benefits etc. Total amount of the payroll report is treated in the books of
profit and loss account. Production report: Within the operation and production process there are goods and
services are to be manufactured. In context to this, the report in which total number of
products are to be recorded along with the amount is known as production report. On the
basis of it Swing Patrol analyse that how many numbers of outputs are to produced using
raw materials as well as unprocessed items (Jacobs and Cuganesan, 2014).
 Overhead report: Apart from such above given reports other significant kind of report is
related to the overhead expenses which helps to the Swing Patrol to analyse about the
costing. There are mainly two types of overhead costs as well as expenses are to be
shown which are like as fixed and flexible or variables. By making summation of both
fixed and variable overhead expenditures the business determine cost of the total
production. Further, the total overhead expenses are treated in the financial statement
such as profit and loss or income.
TASK 2
P3 Calculation of costing and net profit by using marginal and absorption method
Net profit is the income level of an entity at where all kinds of expenses associated with
production and operation process are subtracted from the sales and turnover generate by it. There
are different method by which level of costing used in different way and then analysed final
outcome in terms of monetary (Lambert and Sponem, 2012). In context to this, marginal and
absorption approaches are adopted by Swing Patrol management and then income statements are
to be prepared which are stated below:
Computation of net income under costing approach marginal:
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Computation of net income under costing approach absorption:
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Findings and analysis
It can be found from the above calculated net profit is that Swing Patrol is able to
perform well and profitable on the basis of marginal method. On the other side while talking
about the another method i.e. absorption profitability condition of Swing Patrol limited entity is
poor. Under the case of marginal method total and net profit is worth of 9100 GBP. Apart from
this under the absorption costing the company earns net income is worth of 5800 GBP which is
lower than previous method. According to this, it can be clearly stated that the Swing Patrol
needs to refer and continue with the absorption techniques of the costing process (Bebbington
and Thomson, 2013). The reason for using the respective method is that when net profit is lower,
then it will make more effort to achieve the goal of profit maximization. In addition to this, due
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to lower net profit the management needs to pay less amount of taxation which is profitable for
it. The absorption technique provide reliable, proper and actual condition or situation of the
business performance.
Difference of two approaches of costing such as marginal and absorption
Marginal approach Absorption approach
While using marginal approach to calculate
and assess net profit earned by Swing Patrol
the management needs to include only variable
and direct kinds of costs. Due to this reason,
the method is known as variable costing also
and supportive for taking internal business
decisions.
In opposite to that while determining level of
net income which is earned by firm in one year
all the costs are to taken into consideration
whether they are of any kind. In this there is
not matter that respective costs are associated
with the production process or non production
process (Chenhall and Moers, 2015).
Several kinds of expenses which are summed
as well as used in the method of marginal
costing are ascertained as below:
 Direct material purchase
 Direct labour expenses
 Variable or flexible costs
 Variable overheads etc.
Furthermore, under the absorption method of
the costing aspect, all manufacture and non
manufacture expenses are used and then
subtracted from sum of money of the revenue .
In this context expenses used are such as
follows:
 Direct material purchase
 Direct labour expenses
 Variable or flexible costs
 Variable overheads etc.
 Fixed overhead expenditures
 Expenses of selling and distribution
 Administration costs etc.
While assessing total cost of production there
are level is the lower as compare to another
Here total expenses of the production and
operation are higher while making comparison
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used method. In this case, the management
thinks that company is efficient and having
tactics for controlling the costing factor
(CPIM, 2014).
with the marginal method. The key reason
behind the respective condition is kind of costs.
When the management going to analyse
profitability ratios the in this condition
performance of Swing Patrol will be effective
and more sound. Further, outcome of the profit
is considered as contribution margin according
to the accounting rules.
Moreover, as per the absorption method
business performance in terms of profitability
ratios will be lower. Due to this, actual
condition in terms of profit and expenses is
clearly identified and further decisions are to
be framed.
TASK 3
P4 Merits and Disadvantages of various kinds of tools to make plan
Plan is the process and aspect at which company prepare all the activities and conditions
according to the step by step and then implement in business process for achieve agreed and
expected aims. In context to this, there are different plans and schedules are prepared related to
various aspects which are like as financial, production and operation, product launching,
marketing and advertising etc. In the current study, various plans related to the financial are to be
made where various tools are important for it. Moreover, such planning techniques are to be
explained as below:
Budget: It has the significant place within the working environment of any company and used
by the accounts and financial employees. On the basis of such tool they assess that in the future
accounting period Swing Patrol will be generate how much profit or loss (Ball, 2013). If it has
been determined that level of profit will be higher, then continue with strategies and plan with
some or little modifications. On the other side if it can be found that in the upcoming periods it
will make loss then strategies as well as plan is to be prepared to overcome such conditions.
Many kinds of budget are like as cash, sales, direct labour cost, overhead, production, material
purchase etc. Moreover, some merits and limitations of budget tool are given as below:
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The respective planning tool is helpful for Swing Patrol Limited company in order to
assess different future informations which are related to the cash receivables as well as cash
disposals. On the basis of this, decisions and strategies are to be framed which highly supportive
for reducing financial problems. By using the budget methodology the entrepreneur of the Swing
Patrol able to manage cash which it has within the business entity. Apart from such all budget is
helpful to know that in the upcoming year how many products needs to manufacture and sum of
money must generate.
On the other side, statement of budget is to be framed on the basis of various assumptions
and it is not necessary that all the assumptions will be appropriate and profitable. Further, due to
this condition Swing Patrol cannot determine the appropriate and effectual data which lead to
affect financial plan (Seal, 2012). In context to this, it is based on the historical data and in case
in the future FY year economic conditions of country reduce then it will unable to meet with the
agreed data.
Capital budgeting: In addition to this, by using capital budgeting there are different financial
plans are to be made for taking a project. It is a tool under which position of the sum of money
which is invested at the initial and first level. There are number of techniques and methods of
capital budgeting by which Swing Patrol make the decision for investing money in any criterias.
Such capital budgeting or investment appraisal ways and methods are such as net present value
(NPV), internal rate of return (IRR), profitability index, average rate of return (ARR), payback
period, discounted payback period etc. Some advantages and demerits are analysed as below:
The capital budgeting method is significant for the Swing Patrol for taking decision in
order to adopt and undertake the most profitable project for making investment or put money.
Through this the company and managers of chosen business entity determine that among all the
projects which one is the best profitable and will give more amount of return after completion of
it (Ward, 2012). Among all tools there is net present value is the best and reliable technique of
capital budgeting under which all the aspects associated with the projects are to be analysed.
Such all aspects are like as time value of money, project years, cash flows of all years, cost of
capital or discounting factor etc. Hence, it can be clearly said that it supports to the Swing Patrol
for undertaking and assessing one project by comparing all which are available with it.
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On the opposite side there are several limitations also available by which the Swing
Patrol cannot make the effectual business plan as well as financial plan. For calculating and
evaluating project cost of capital is one of the important and significant aspect which is
sometimes given and in some situation manager has to assume. At this condition if the manager
not able to assume proper percentage of the cost of capital then overall plan will not become
successful. Apart from this, it considers same discounting factor at every year and then determine
future value of the initial investment. Moreover, in case in the economy if inflation rate increases
then agreed and calculated return cannot achieved which lead to hamper profitability. Further,
such these ways the capital budgeting influence to the business entity (Parker, 2012).
TASK 4
P5 Comparing those systems which are adopted by Swing Patrol to resolve financial problems
Within the firm there are various number of the constraints as well as problems are
occurs which impact on the smooth process of overall entity. Such problems can be related with
the financial perspective, production, costing, efficiency, productivity and many more. The
current study is based on the financial data and then here also problems will be assessed and
resolved which are relating to the financial and accounts. When there are such obstacles comes
into existence then company used different techniques, systems as well as approaches for
resolving them. In the Swing Patrol company when financial problems arises then it uses various
kinds of management accounting systems which are analysed as below: Financial governance: The authority or regulatory body which frames different kinds of
rules and regulations for the companies in terms of financial is identified or called
financial governance. It highly supportive for the business of Swing Patrol in order to
resolve and overcome financial problems which comes into existence within working
environment (Arroyo, 2012). For example: if the company makes rules that the
management of Swing Patrol must keep reserve specific sum of money from the capital.
In this case, the entity must keep reserve which used will use at the situation of financial
problems. Forecasting: Other kind of management accounting system is forecasting which is highly
significant and supportive for the business entity to overcome financial problems. Under
the respective system the Swing Patrol forecast or estimate the future data by which the
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management can determine current and future financial obstacles which will comes into
consideration at the firm. When entrepreneur know previously about the any problems
then can easily resolve it by preparing and framing relevant strategies. For instance: in
case by forecasting the manager assess that in the future cost will be increase and
incomes will go down. Furthermore, it able to manage costing and then frame techniques
to attract customers which lead to reduce and eliminate the respective financial problem.
 Balanced scorecard: The system and approach which supports to the Swing Patrol in
order to determine and analyse business performance which is related to the internal or
external. It is one of the important aspect of key performance indicator which indicates
performance of Swing Patrol in terms of four types of the business perspectives
(Chenhall, 2012). In the balanced scorecard four perspectives which are analysed and
determined are like as learning and growth, financial, internal process of business as well
as consumers or customers. In the financial perspective the Swing Patrol easily know that
how it performing in the industry and achieve all the goals and purposes which are
agreed. Furthermore, it can know that due to which reasons such constraints are arises
and then smoothly resolved and make Swing Patrol healthier in form of financially.
CONCLUSION
From the current report of management accounting it can be articulated that several
systems or methods are used and adopted by the company in order to manage overall entity in
smooth way. There are various management accounting systems which are adopted by the Swing
Patrol UK Limited company are like as cost accounting, stock valuation methods, forecasting or
estimation, variance analysis, budgeting etc. These all the systems are highly required for the
company to assess business performance and frame further strategies. It can be concluded from
the report that many types of reports are prepared and framed by the Swing Patrol for the
management accounting which are such as budget, sales, payroll, income, overhead, manufacture
or production etc. It can be analysed that on when manager of the company determine net profit
of at the accounting year ending then uses marginal and absorption costing which provides
different outcomes. Apart from this, there are budget as well as capital budgeting both are the
planning tools which supports to the selected small business entity in order to make profitable
financial schedule or plan. At the last, it can be analysed that several systems such as financial
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governance, forecasting, benchmarking, balanced scorecard, variance analysis etc. support to
Swing Patrol for resolving financial constraints.
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