Management Accounting Report: Analysis of Accounting Systems for Zylla

This report provides a comprehensive analysis of management accounting practices within Zylla Company. It begins with an introduction to management accounting, its core concepts, and essential requirements, followed by an examination of different reporting methods, including performance, a...Read More

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Concept of management accounting and its essential requirement.................................1
P2: Different methods of management accounting reporting.................................................3
M1: Benefits of using management accounting system.........................................................5
D1: Critical evaluation of reporting and accounting system..................................................6
TASK 2............................................................................................................................................6
P3: Various costing methods used for calculating net profits................................................6
M2: Different accounting techniques.....................................................................................8
D2: Critical evaluation of income statements........................................................................8
TASK 3............................................................................................................................................8
P4 Advantage and disadvantage of various types of planning tools......................................8
M3 Application of planning tool..........................................................................................10
D3 Evaluation of financial issue...........................................................................................10
TASK 4..........................................................................................................................................10
P5 comparing way show organisations are adapting management accounting system .......10
M4: Analysis of financial issues...........................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is one of the effective systems that can assist an organisation to
record, summarise various financial transaction that are done within the department. The primary
motive of accountant and finance managers to collect various necessary information out of
different sources so that availability of funds can be meet as per the requirement of the company.
It is done with the aim to attain short-term and long-term goals and objectives of an organisation.
There are various crucial aspects which would be useful in attaining maximum return in near
future time. This project module aims at providing necessary information about various types of
accounting systems those are helpful tools for the department in record of necessary transaction.
Apart for this, different types of accounting reporting method are taken into account for
evaluating its benefits to the Zylla company. Likewise, different types of costing methods are
being used to calculate net profit. Merit and demerit of using several planning tools those are
useful for budgetary control. Lastly, comparison with other organisation is done to examine how
management system can resolve financial issues those are arises in an organisation (Caglio, and
Ditillo, 2012).
TASK 1
P1: Concept of management accounting and its essential requirement
FROM: Management Accounting Officer
To,
General manager of Zylla company
Sub: Management Accounting System
In every business organisation, it has been found that manager is working effectively with
the department to record necessary information in effective manner. Nowadays, most of the
companies are operating with the aim to get maximum earning through selling various products
those are produced within an organisation. The motive behind using accounting system is to get
more reliable outcomes in near future. This would be helpful for “Zylla company” to make
planning for their next coming project, if they are having sufficient amount of capital with them.
The provision related with financial information and make advice to a company for using a
necessary information of an organisation and development of each sector. It seems to be utmost
important reports that accounts used to provide reliable and timely preparation of statistical
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information those are needed by manager to make day to day expenses so the future decision
making can be done (Albu and Albu, 2012).
Definition: Management accounting is known as effective profession that consists of
partnering in effective administration decision making, future planning and effective
performance management system to control various implications those are associated with the
department. It is often taken into account in wider sense, unlike accounting that is exclusively
related with providing the financial data on the basis of accomplishing business transactions in
effective manner. It is crucial aspect of management accounting that assist administration to
provide relevant and reliable data from different sources. The activity of management accounting
consists of compiling accounting information to the department for basing their decision on
reliable ways in near future.
Importance of management accounting:
It has been observed that the use of accounting can be done to controlled or reduce all
wastage that are arises in the department.
The role of management is to aim for reducing minimum cost of production and similar time can
increase efficiency of employee and staffs.
Various tools and techniques those are related with accounting can have future validity
and reliability in better administration of the company’s resources (Alleyne and Weekes-
Marshall, 2011).
Types of management accounting system: There are various types of accounting
system which would be helpful for the department in attaining maximum revenue for the
company. some of them are mentioned underneath:
Cost accounting system: It is said to be application of costing principals or techniques
which will be related with ascertainment of profitability as well as overall presentation of data
with the aim of effective decision making. It is important brand of accounting that is helpful for
Zylla company in using minimum cost while producing various product and services within an
organisation. The main objective of cost accounting is said to be effectively utilise various
resources of the department in order to attain maximum revenue within a short span of time.
There are various types of costing systems those are taken into consideration such as, Normal,
Standard and Actual costing.
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Price optimisation system: It is known as one of the effective numerical evaluation tools
that can be taken into account for the aim of analysing how client would react regarding various
prices for the products. This seems to be taken into consideration for determining which prices
would be suitable to meet their objectives in getting maximum operating profit in near future
time. Zylla company is effective prices which would be associated with finding all pricing and
increase prices as per the customer desire to pay for the products. The aim is just not to have
various pricing that is being set by the company in attain maximum revenue during the period of
time (Bodie, 2013).
Inventory management system: According to this particular system, managers of Zylla
company can easily be able to supervise various non-capitalised assets and inventory products. It
is considered as essential element of supply chain management. It is the combination of digital
technology and processes that looks overall monitoring and control overall stock item, whether
these products are related with company’s assets. There are various stocks management system
which will be used by management some of them are, ABC costing, FIFO, LIFO and AVCO
methods. These are reliable tools for the company to get maximum earning within an
organisation. This system would be related with tracking stock levels, orders and delivery related
majors.
Job costing system: It is said to be essential process which is related with allocating cost
to a particular job a business is associated with. It seems to be widely taken into used for mostly
construction sectors and refers appropriate allocation of cost to a given project of Zylla company.
This seems to be effective process of accumulating data regarding the cost which will be related
with a particular manufacturing or services job. There are various crucial aspects associated with
job costing. Some of them are Batch, Standard, process and contract costing. It has been found
that every job is having their individual data and time respectively.
P2: Different methods of management accounting reporting
From: Management Accounting OfficerTO,
General manager of Zylla company
Sub: Management Accounting System
In order to achieve competitive advantage and attain strong position in market, it is
important for an organisation irrespective of the size whether small, medium and large to utilise
information which are currently available with them. Such information can be obtained through
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preparing different types of reports such as performance report, account receivable report,
inventory management report etc. This enables management to make an effective an effective
and profitable decision and suitable plans in order to achieve desired goals and objectives within
pre-determined period of time (Caglio and Ditillo, 2012). It will be helpful for stakeholders and
other interest parties to make reliable decision regarding investment in upcoming years.
Therefore, it is important for an organisation to have skilled and experienced employees who are
more capable to prepare reports on timely basis. Such reports should contain reliable and
accurate information due to which the chances of making an effective decisions are more.
There are different types of departments in an organisation which contributes their
maximum support in bringing company ahead than their rivals. Thus, managers of every
departments of Zylla are reliable to maintain reports in order to give accurate information about
business activities operated by them so that the performance of each departments are easily
analysed and measured. With the help of reports, the management are able to make planning,
regulations, future measurements of company's performance (Dillard and Roslender, 2011).
Such reports consists of financial reports which includes balance sheet, profit & loss a/c, cash
flow statement etc. which gives actual financial position of Zylla. It help in grabbing an attention
of investors to make investment in such company with an expectation of getting maximum return
in near future. Such reporting systems are briefly described under the below:
Performance report: Such report help in identifying the actual performance of
departments as well as the employees working in an organisation. This will help management of
Zylla in determining whether an organisation can able to achieve its desired goals and objectives
within given time frame or not. Such report includes recording the project data, utilisation of
resources and the actual outcomes received from execution of different business activities. This
will enable management to make proper evaluation of performance through comparing actual
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Methods of Management Accounting Report
Accounts receivable
Aging Report
Inventory reports
Job costs Reports
Performancee report

with standard performance which help in identifying the deviations if any, which restrict
employees and departments to achieve their desired goals. This make easy for management to
make corrective decisions in order to eliminate identified deviations.
Account receivable report: It is essential for the management of Zylla to prepare such
report in order to identifying the list of unpaid debtors who made transactions with company but
still not make payment to company. Such reports contains the name of unpaid debtors, invoices
and various unused credit details as per the mentioned date. Such reports directs and forces an
organisation to make changes in their existing credit policies so as to protect from default debtors
(Fullerton, Kennedy and Widener, 2013).
Inventory management report: Such report contains the information about the level of
inventory available with company at present. This enables management to place an order of
inventory from suppliers in order to maintain their stock level so as that the needs and
requirements of targeted customers are fulfilled. This help in retaining loyal customers with them
for longer period of time. For this purpose, there are various tools and techniques which can use
by management to maintain inventory such as EOQ, ABC Costing and inventory management
ratios.
Job cost report: Such report contains the details of total cost incurred in producing
specific product or group of products. This will help manager to make decision regarding
allocation of cost to specific production activities on the basis of their outcomes received in near
future. It can be done through tracking the cost already invested in production activity and future
allocation of cost.
Management Information System (MIS): MIS is an effective system which help
management to get useful information about target customers, rival's strategies, market trends
etc. due to which the chances of making an effective decision are more. In order to use such tool
in an effective and efficient manner, it is important for Zylla to attained skilled and
knowledgeable employees who are more capable to work on using such modern systems. This
will hep company in achieving competitive advantage and maintain their strong financial
position in competitive market for longer period of time (Gond and et. al., 2012).
M1: Benefits of using management accounting system
In order to get more reliable outcomes in near future time, Zylla company need to make
consideration of various advantage that are collected from different accounting system. The
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manager is playing an eminent role in effective management of getting better results in near
future time. All those above mentioned systems are having their own benefits and drawbacks that
make them separate from one another. Such as, cost accounting is more suitable tools that can
assist in better management of costs those are applicable with the cost of production. While,
Price optimisation systems would be effectively helpful in analysing perception of customer
regarding the prices that are being set by the company for their product. Likewise, inventory
management system will be helpful in overall management of various stock that are kept by
Zylla company with them.
D1: Critical evaluation of reporting and accounting system
According to the above mentioned various information about reporting, it has been found
that there is various accounting system that will be helpful in attaining maximum outcomes in
near future time. There is various system which would be taken into account in attaining
maximum benefits. Such as performance report used to major report that will be helpful in
making comparison of past data to that with present one (Macintosh, and Quattrone, 2010).
Account receivable reports are more effective responsible to determine total time of period
debtors are taking for retaining outstanding amount. Likewise, inventory management reports
used to record all information about opening and closing stock those are kept by the company.
job cost report used to track total cost they are paying for producing a single or group of products
during the period of time. The overall analysis would be helpful for attaining maximum growth
and financial stability in near future time.
TASK 2
P3: Various costing methods used for calculating net profits
Absorption costing: this is also one of the costing method which mainly associated with
calculating the cost at absorption rate. All the direct and indirect, fixed, variable and semi
variable cost are considered in this costing technique. This costing remains ineffective in terms
of decision making process. This is also considered as full costing method which not only
contains direct cost but also contains the indirect overheads by adjusting the absorption rate. This
costing build the structure of determining the cost and profit structure.
Marginal costing: This is the costing system which mainly associated with determining
the plans strategies for effective management subject to enhance profitability of organisation. It
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is considered one of the important costing method which contains the overall variable cost and
managing the operations and management with in the organisation. This costing method contains
the overall marginal cost which contains the direct material, direct cost, direct expenses and
factory expenses which remain associated with production and manufacturing process (Morales
and Lambert, 2013).
Difference between the absorption and marginal costing techniques
 Marginal costing only contains the variable cost whereas absorption costing contains only
fixed cost.
 Profit rate remains high in marginal costing technique whereas the profit rate remain low
in absorption costing.
 Profit mainly associated with defining the sale price and managing activities.
Calculation of marginal costing through using Income statements
Particulars Amount
Sales
35*500 17500
Less:
Production cost 6+5+2
- 7800
Closing stock: 100*13
- 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1
500
Fixed overhead
-1800
Selling and administrative cost expenses (800+400)
-1200 -3500
Total Profit / Loss 7500
Income statements through Absorption costing
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Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
M2: Different accounting techniques
There are various accounting techniques which are helpful for recording of financial
transactions some of them are related with historical cost as well as standard costing. Evaluation
of cost is measured by change in production units parallel to increase the cost aspects. This
costing techniques mainly associated with defining the cost plans, cost structure and objective
related to improving the profitability of organisation.
D2: Critical evaluation of income statements
From the above calculation, it has been found that Zylla company is having two
important method which will be helpful in computing net income. Adsorption and marginal
costing are one of the vital component that can assist an organization to make future decision in
near future time. In case they are using marginal cost they are getting 7500 of total profit and
with using absorption they are getting a net profit of 7800. The major changes of 300 is being
seen because of fixed cost treatment.
TASK 3
P4 Advantage and disadvantage of various types of planning tools
Budgetary control is the procedure which develops budgets and manage them in order to
conduct future planning. These budgets includes determination of future costs and profitability
and for that it is important to use efficient planning tools so that organisation can predict near
accurate future events. Few of those budges are discussed below:
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 Sales budget: Sales budget is a document which predicts all future sales which are likely
to be occur in future, these predictions are based on past sales revenue, demand of
products and performances of the competitors.
 Cash budget: Cash budget is the estimations of all cash expenses and revenue which are
likely to be occurred in future financial period (Nixon and Burns, 2012).
Planning is the process which involves preparation of certain plans and policies which
helps in the process of decision making. To execute the process of planning there are specific
tools which helps in efficient future planning. These tools are described below:
Forecasting tool – Forecasting is a planning tool which predicts future events using
methods like trend analyses, competitors analyses and evaluating past experiences. The basic aim
of using this tool is to serve most accurate estimations about future. Small scale organisations
like Zylla use forecasting tool, so that they can estimate their various future events like future
demand, sales etc.
 Advantages: Forecasting helps in estimating future trends and customer's preferences
which helps Zylla in fulfilling all the needs of prospect buyers which helps in achieving
ultimate organisational goal which is customer satisfaction.
 Disadvantages: Forecasting involves concepts such as estimation and predictions which
are does not serve any accurate data and includes high risk.
Contingency tool – Contingency is a planning tool which helps Zylla in preparing
certain prevention measures for the future uncertainties. These uncertainties can be natural or
physical, few of these natural uncertainties are environmental disasters such as flood, fire etc.
and few of the physical uncertainties are theft, strike, lock out etc.
 Advantages: Contingency tool is based on preparing contingency plan which works as a
back plan, in case of any emergency this plan helps in reducing panic and chaos in the
organisation. This tool helps Zylla in managing the loss in the emergency situations.
 Disadvantages: Contingency planning requires a lot of time and money as this plan
needs to prepared by high skilled professionals, and if none of the emergency situations
occur than all the plans will be wasted.
Scenario tool – Under scenario tool, manager of organisations like Zylla hires a planning
team which develops multiple scenarios of future. This is a process of strategic planning, where
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organisation capture a whole range of possibilities. This process is done by trend analyses and
uncertainty analyses for the efficient process of decision making.
 Advantages: Scenario tool helps an organisation, to be prepared for any kind of future
emergencies and uncertainties as it involves multiple future possibilities. It reduces the
surprises for the organisation (Parker, 2012).
 Disadvantages: Scenario planning requires a lot of time and high skills due to which,
companies like Zylla has to bear high cost. Even after involving all these resources there
is no accurate results provided by this planning tool.
M3 Application of planning tool
Planning tools are the supporting instruments which helps almost every organisation
including Zylla in ascertaining future events. Forecasting is used to predict future events,
contingency planning helps in developing prevention measures and scenario planning helps in
capturing multiple possibilities of future. These tools are applied by an organisation in order to
determine what future uncertainties can occur in future. The most important application of these
tools are budgetary control, planning instruments helps in preparing several budgets like cash
budget and sales budget.
D3 Evaluation of financial issue
Organisations such as Zylla has to face certain financial issue which are cash availability,
finance management, quality maintenance etc. these problems can be solved and minimised by
using few techniques like benchmarking and KPI, which helps an organisation in setting few
standards by trend and competitor analyses and than comparing those standards with actual
performances.
TASK 4
P5 comparing way show organisations are adapting management accounting system
Management accounting has been crucial aspect in organisational context. There are type
of financial challenges and problems occurs in organisational context which affect the decision
making and strategic planning process. Management accounting is one of the important concept
in organisational context which helps to determine the key financial factors and problems which
remain associated with analysing the upcoming challenges and forecasting the financial
challenges are the main aspects which are considered in this context. There are type of strategies
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and plans are prepared by the managers and accountant by implementing management
accounting system with in the organisation (Renz, 2016).
Financial management and accounting is also a branch of management accounting which
mainly associated with managing the operations and management of business more effective
efficient manner. Optimum use of financial resources and management is the only key which led
the organisation towards the desired aim and objective of organisation. Zylla is one of the small
scale organisation and in small scale organisation requirement of financial resources also remain
limited at some point and also discussed in various forms.
There are also some rules and regulations are made in terms of effective management and
operations. It is one of the important part to manage and operate the financial resources in more
better manner. The essential goal of a chiefs is to make critical arrangement so as to increase
short or long haul productivity. The benefit of an association is influenced in light of money
related issues. Some of them are need money related assets, money failure and here and now
liabilities There are some issues related to financial management are defined below which are
managed by managers and accountants by implementing management accounting system
(Budgetary Control, 2017).
Issues regarding products and services: these are the issues which remain associated
with improve the quality of products and the increasing the capacity of productivity of
organisation. It is the legislature made manage and direction which each organization should be
taken after. It can assist them with making to examine strength and solidness of organization. It
is very important for association to utilise the financial resources with in production process in
better manner so that effective engagement and plans are adopted in more effective manner.
Some of financial techniques are also defined as follows:
KPI (Key performance Indicators): Key performance indicator mainly associated with
analysing and defining the key factors related to managing the financial performance of business
and getting the financial advantage. Key execution pointers are one of the imperative device
utilized to resolve budgetary issues in an association. It is the process in which performance of a
company is measured through comparing it with previous year of same organisation or different
company. The reason for utilizing this is to examine and assess execution of group and in
addition association amid the year. This is one the financial tool which defines the techniques
which operate the business operations in easy mode in financial perspective.
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Benchmarking: Setting target or benchmark help in bringing motivation among
employees to work hard and perform well so as to achieve within pre-determined time period.
This will increases the performance of employees as well as an organisation. This mainly
associated with analysing the values and managing the operations in strategical form and the
business mainly associated with overlooking the financial problems and best practices and
defining the role values related to finance department of organisation (Van der Steen, 2011).
Comparison between the organisations how organisations are adapting management accounting
4com plc Zylla company
This organization is little scale business
association managing in electronic devices. It
is working at a centre level.
It is a huge scale association which is related
with various items. They need viable
bookkeeping framework that can deal with
their day by day costs.
This organization is utilizing key execution
markers to assess their business and in addition
group exhibitions.
In this, money related administration and
benchmarking apparatuses are utilized to deal
with their budgetary issues.
M4: Analysis of financial issues
As per above analysis there is an analysis done which define that financial issues and
management are also defined in this context. As it is decided that the profitability and efficiency
are also some financial aspects which remain associated with defining the plans and objectives of
organisation. To control and screen every one of these issues organization utilizes different
devices and strategies which can make their business more gainful and safe from getting hamper.
It has been seen that organization can not accomplish positive result in the event that they are
utilizing obsolete framework. It has been discovered that the vast majority of the organization is
confronting the issues of impeccable bookkeeping framework. It will have immense effect on the
benefit of the organization. By utilizing monetary administration and key execution markers one
can deal with their day by day business dangers (Management Accounting, 2016).
CONCLUSION
It has been concluded from the above project report that management accounting is
valuable part of an organisation whose decisions and planning decide the growth and success in
competitive market world. Such decision are made with the help of getting valuable information
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using various management accounting and reporting systems. There are several tools which are
also required to be taken into account in order to control budget due to which the chances of
getting profitable result are more. Financial tools such as KPI, benchmarking, corporate
governance etc. which supports an organisation in eliminating the financial issues and problems
due to which investors are easily attracted towards an organisation.
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