Management Accounting: Cost Analysis and Reporting for R.L. Maynard

This report delves into the realm of management accounting, specifically focusing on the application of these principles within the R.L. Maynard organization. It begins by clarifying the core concepts of management accounting and outlining the essential requirements of various management accounting systems, including job costing, cost accounting, inventory management, price optimization, lean accounting, and throughput accounting. The report then explores the different methods used for managing accountancy reporting, such as sales documents, cost accounting, and budgetary documents, along with the advantages of each. Furthermore, the report analyzes the income statement, highlighting the calculation of value using appropriate cost analysis approaches, comparing and contrasting absorption costing and marginal costing methods. The document provides insights into how these tools and techniques contribute to effective financial decision-making, cost control, and overall business strategy within the context of the case study.

MANAGEMENT
ACCOUNTING

Unit 5 : Management and Accounting

INTRODUCTION
Administrative choices are exceptionally key for the association that gives the fresh
recruits to the association. It deals with every one of the assets, limiting cost, control spending
plans and arranging respect to business. It can be conceivable through the data that are given in
the administration bookkeeping that encourage them in to settling on budgetary choices respect
to back. The examination extend is setting to the R.L. Maynard organization in which it chief
receive different arranging devices, administration bookkeeping framework and detailing
(Burritt, Schaltegger and Zvezdov, 2011). There is an essential talk on the administration
bookkeeping and concentrate on the distinctive sorts of administration of bookkeeping
framework that effectively reacting money related issue. From there on, it there is dialog on
minor costing and assimilation costing procedures that are embraced by organization to arranged
net benefit. Further, there is an investigation on the clarification on focal points and
inconveniences of different sorts of arranging devices that can be utilized for budgetary control.
TASK 1
P1 Clarify administration bookkeeping and give the basic prerequisites of different sort of
administration bookkeeping framework
Administration bookkeeping is utilized by the directors keeping in mind the end goal to
settle on viable choices respect to firm. The data incorporates into it are useful for the chief to
maintain their everyday business operation in successful way. Therefore, it includes a
bookkeeping data that are helpful for the administration for the primary reason for execution
administration framework, concocting arranging and furthermore controlling in definition of
business' system. The primary point of this kind of bookkeeping is that to give legitimate
guidance to the administrators respect to money related results of firms choices, help in
controlling monetary viewpoints, additionally depict the impacts of the focused scene (Elbashir,
Collier and Sutton, 2011). In this way, it is unique in relation to the monetary bookkeeping as it
is continually searching for future as opposed to authentic information. organization utilized
administration bookkeeping and it gives necessities of various sort of administration
bookkeeping framework that are portrayed underneath.

Management Accounting: It is the process of examining financial as well as non-
financial performance of the company so as to devise plans, policies and strategies for the
successful and sustainable growth. It facilitates R.L. Maynard to make day to day decisions.
Job Costing System: It helps in recording of cost and revenues which can impact the
probability of Job. Moreover, it is used by the business to measure is profits and losses. It
comprises three major components of the organisation which are Material, labour and overhead.
Cost Accounting System: This helps R.L. Maynard in maintaining the record of all the
cost which can be minimized in order to improve the management system of the firm. The major
objective behind using this accounting system is to make business operations effective and
efficient.
Inventory Management system: It assists the business in tracking the inventory orders
and sales on order to make optimum utilisation of resources. Moreover, it is beneficial in
reducing time as it track the work order, bills of material and all the documents which are related
to production function of the R.L. Maynard.
Price Optimization system: This system is used by R.L. Maynard to forecast the prices of
its goods and services according to the customer demand because it is a mathematical program
which assists the organisation in calculating demand at different prices in order to make good
pricing decisions and enjoy good return.
 Lean accountancy – They are able to control, execution estimation strategies as well as
bookkeeping that is helping the assembling process of lean presentation. This is doesn't
bolster a lean assembling however utilized a lean techniques. This is primarily focuses
over limiting cost price from products sold-out instead of deciding net price which can be
acquire as a season of assembling operation. On the basis of that few capacities are
identified at bookkeeping which can be executed with the help of lean bookkeeping
which incorporates expelling non-esteem - include methodology in revealing and
bookkeeping. Further, give an unmistakable comprehension of likelihood in juxtaposition
to product offerings and it creates an on-going report on general premise. Along these
lines, disregard the months end and also chronicled weekly documentation.

 Traditional cost accountancy- This is be characterised as dispensing for generation
costs which can be created at the season about assembling merchandise. This can be
considered otherwise called an ordinary technique as it doling out the backhanded cost
brings about in industrial facility at the season of assembling a thing. It incorporates
chiefly in it are the creation machine hours, number of units delivered and coordinate
work hours and so forth. R.L. Maynard embraces the conventional costing strategy in
which it doles out the assembling expense and it bombs in designating the non-
fabricating. The principle focal points from it is that to produce the money related reports
as it helps them in giving an incentive to COGS. Aside from this, with the headway of PC
and machines now this framework ends up plainly obsolete. This can be considered as
terrible regarding administration through which choices process of making selection is
not implemented.
 Throughput accountancy - It depends on standard and it is new in the administration
bookkeeping. It is a bookkeeping through it recognizes factor that encourage them in
accomplish its objectives and targets in successful way. It for the most part focuses on
money exchange and overlooks the costing and also cost bookkeeping. It doesn't dole out
every one of the costs, for example, factor and settled cost and in addition it likewise
includes overheads identified with products which are being offered by organization
(Elbashir, Collier and Sutton, 2011). It is a hypothesis about imperatives by that
administrator from an organization is able to do without much of a stretch settle on
choices that are identify with development reason.
 Transfer pricing - It is that cost in which an administration defining the standards when
one ventures exchange any sort of products crosswise over fringes. Hence, it can be
utilized with the help of administration bookkeeper towards deciding costs which can be
cause over season about exchange between sections. Moreover, this costs can be
regularly implemented on the halfway merchandise that is provided by pitching into
purchasing separation. Primarily preferred standpoint for it can be gives precision and
additionally reasonableness for the organisation elements as it is consisting of different
control can be detailed for exchange cost.

P2 Various methods used for managing accountancy reporting.
The R.L. Maynard implemented various accountancy management approaches some of
them are mentioned below:
Sales document -It depends on business exercises which can be done through any single
business group into the specific era. This compressing various offers about items either
administrations towards clients, execution about sales representative as well as benefit from an
organization and so on. Besides, there is a likewise data of e-mail, customer meeting, discussion,
outbound calls that are made on every day and in addition week by week and month to month
premise. The principle favourable circumstances of offers study which is able to utilized through
organization with end goal about deliberating money related execution (Garrison and et.al.,
2010). It is conceivable by examination between previous money related execution on the basis
of present benefits. With the help of this they are able to make promoting arrangement as needs
be to convey the item or administrations according to the client's desire.
Cost accounting - It is valuable for the administration keeping in mind the end goal to
give a precise sum on money related explanations as it decided the cost of activities, process and
items and so on. It is additionally help the chief in taking choice in compelling way, controlling
the association capacities and so on. Subsequently, this is considered as best administration
accountancy framework which can be utilized over the vast majority for assembling
organizations for processing elementary price of product which can be produced (Ward, 2012).
With this end goal for reportage stock value over COGS and B/S for pay articulation. R.L.
Maynard utilized expenditure accountancy for deciding expenditure, controlling price in order to
provide future options identified with the values that are depend on chronicled cost information.
Budgetary document – This is considered as a nitty gritty data which are mostly
involved into two segments are the planned expenses and real. It encourages them in decide the
spending change among planned and real sum by an accountancy period of time. It is an inside
report in which it can without much of a stretch composed spending plan for a future through
correlation evaluated and examination planned. This report is distributed into two issues. Out of
which anyone can be considered while considering working environment respect towards back
which can be effortlessly evaluation done spending document. Besides, there are various other

reason through which they are undoubtedly sorted expectation including assessing an
organization's money related execution.
The methods of Management accounting reporting which are as follows:
Budget Report: It is used by R.L. Maynard to identify its performance; it is a reporting
which assists the manager of the organisation monitoring and controlling costs by the
comparison of actual and budgeted figures Moreover, it is specially used by the enterprise to
estimate budget of standard and actual expenses as per the performance of the company from
past 3 4 years.
Accounts Receivable Aging: This accounting reporting method is used by R.L. Maynard
to monitor over its credit policies like, management of Cash flow in order to extend credit period
to its buyers. It is beneficial of the company as it helps the enterprise on overlooking over its old
debts.
Job Cost Reports: This method is used by R.L. Maynard to estimate expenses for specific
project. Further, it assists the firm in time management, job and profit evaluation, and identifying
the low profit margin areas of business.
Inventory and Manufacturing: It is used by the organisations to making its production
process effective and efficient. Moreover, It is used by R.L. Maynard to measure and compare
the performance of operations in order to offer bonus for deserving department of the unit.
TASK 2
P3 Figure out value by considering an appropriate cost analysis approaches. Also explain
difference.
Salary articulations is considered as a monetary fund perspective for the organisation. It
can be partitioned into two units such as consumption and income. This is based on the money
related explanation about an organization which has been set up at particular accounting duration
which can be analysed by association's budgetary execution in view of net benefit or net
misfortune. The bookkeeper put every one of the exercises that are identified with working and
non-working exercises related to the charge as well as credit entry side (Zimmerman and Yahya-
Zadeh, 2011). This could be set up through organization's bookkeeper over receiving
administration costing procedures or negligible including ingestion expenditure. R.L Maynard
administration bookkeeper arranged pay proclamation by embracing the two procedures to

discovering the net benefit either failure of company. This can be analysed from the table as
well as 2. It is representing Gross benefit/misfortune arranged by both administration costing
methods are as per the following:
Absorption/full costing method
Particulars Absorption
Direct material 6
Direct labor 5
Variable production overheads 2
Fixed production overheads 3
Costs/unit 16
Income statement using Absorption costing
Particulars Amount
Sales (600*35) 21000
Minus: Costs of production
(16*700) 11200
Less: closing stock (100*16) 1600 9600
Less: over absorbed fixed overheads 100
Cost of production 9500
Gross profit (GP) 11500
Minus: Other costs
Administration costs 700
Selling costs (SC) 600
Sales overheads 600 1900
Net profit 9600
Marginal costing/variable costing method
Items Amount/unit
Direct material purchase 6

Direct labor’s wages 5
Variable manufacturing overheads 2
Cost/unit 13.00
Income statement using marginal costing
Particulars Amount
Sales (600*35) 21000
Minus: Variable cost of sales
(13*700) 9100
Minus: closing stock (100*13) 1300 7800
Gross profit (GP) 13200
Minus: Other costs
Fixed production overheads 2000
Administration costs 700
Selling costs (SC) 600
Sales overheads 600 3900
Net Gains (Profit) 9300
Computing of overhead absorption rate for fixed production overhead
= Budgeted fixed production overheads or Number of units
= 1800/600
= 3
Income argument based on marginal costing and absorption costing
Retention valuation, it is consisting of all the cost that are imposed at various units. There
is an alternative work for this process, in which the value of merchandise sold-out incorporate

material, work and other variable are considered. In this manner, it helps in determining the
overall cost which has been eluded in the retention costing. According to the calculation, it can
be evaluated that proclaimed that value of merchandise sold out is approx. £21000. From that
point, it denotes that it includes several deductions and addition to reach net profit which is 9600.
It can be analysed that total benefit over negligible costing is higher than the assimilation which
looks like the settled costs. Moreover, the net profit in absorption costing is 9600 at a per unit
cost of 16 higher than that of marginal cost in which per unit cost is 13 because it includes fixed
overhead's production of 3 per unit. . Thus, the income statement of absorption and marginal
costing also have as difference of 300 in its net profit as the absorption costing includes fixed
overheads of 2000. Therefore, the ultimate cost of sales is 96000 and 7800 which demonstrated
the profits of 9400 and 11300.
Very few are reasoned which are retention valuation can be considered as one of the
suitable procedures which leads at end goal about figuring overall benefit. This can be expected
towards in light of the fact that it takes both kind of costs, for example, settled as well as
changeable price up to season for processing total success/failure about an organization around
monetary year. During this process vital element is one which is figuring benefit related to the
costs which should be approve as well as solid information. Moreover, the greater part of the
assembling association receives assimilation costing techniques in readiness of pay
proclamation.
Comparison between absorption and marginal costing
Comparability parameters Marginal value Absorption value
Explanation  It provides increasing
and decreasing
possibilities at the time
of manufacturing of
products.
 This is represented as
While considering this
approach chances of increasing
and decreasing is not possible.
All the variables are provided
with fixed values for variables
(Modell, 2010).

managed accountancy
approach which is
based on the fixed
value for uncertain cost
for generating net
profit by sold products.
 While considering
computation variable
is take variable values
can be considered. In
this process cost is
represented as a fixed
parameter. In this profit
and loss statements
depends.
Cost acknowledgement It is considering changeable
expenses for the product cost
including fixed cost.
Absorption is provided with
both variable and fixed value
for the products.
Division of expenditure It can be distributed into
variable and fixed cost
(Macintosh and Quattrone,
2010).
In this approach data is
segmented into various units
such as distribution,
manufacturing, sales etc.
Net profit With the help of profit-
volume ratio, profitability of
the company can be measured.
Intuitionism in fixed pricing
creates huge impact on the
profit.
Per unit price It is not creating huge impact
on the opening and closing
inventory.
The cost is highly get
influenced while making any
variation into the opening and
closing stack values.
Purpose The purpose of implementing Through this approach

marginal approach is to
provide sense of effective
decision to their internal
members of the organisation.
information about internal and
external bodies of the firm can
be managed effectively.
Highlighting Share per unit ( CPU) Net income( NPU)
TASK 3
P4 Advantages and disadvantages of implementing different planning approaches for controlling
budget.
Monetary fund controlling is considered as a procedure that helps in demonstrating the
genuine result by make examination among standard spending plan along with real spending
plan all over a bookkeeping period. This helps in determining the spending difference because of
which they can without much of a stretch discovering the inadequacy because it can undoubtedly
take healing activities. They can without much of a stretch control with the assistance of different
arranging instruments which has been received by the R.L. Maynard that are mentioned below:
• Deviation examination – This is considered as an approach thorough which variation
among expectation and reality can be determined for the organisations. With the help of this
approach forbidding difference between process can be analysed. There are few favourable
circumstances and disservice that are portrayed beneath:
 Advantages  Disadvantages
 The biggest of advantaged of considering
this approach is identified as it helps the
company in order to implement
improvisation measures on time.
 It will facilitate them in minimization of
commercial enterprise jeopardy (Lukka
and Modell, 2010).
 Through this approaches' relationship
between various element of the company
can be determined. It helps in analysing
the risk factors.
 With the help of elaborated analysis
 The main demerit of implementing this
method is calculation process is time taking
and complex.
 The organisation required to spend large
amount of finance along with this
professionals are also required for
generating effective outcome.