Icon College: Management Accounting Report on Zylla Company - Unit 5

This report provides a comprehensive overview of management accounting principles, focusing on the financial practices of the Zylla Company. It begins by exploring the essential requirements of management accounting systems, including cost accounting, price optimization, job costing, and inventory management systems. The report then delves into different types of management accounting reports, such as performance reports, operational budget reports, and job cost reports, highlighting their importance in decision-making and financial analysis. The core of the report examines various costing methods, including absorption costing and marginal costing, to determine net profitability. It also includes an analysis of planning tools in budgetary control, discussing their advantages and disadvantages. The report concludes with an examination of financial issues faced by companies and potential measures to overcome them, offering a critical evaluation of the accounting reporting system and financial issues. The report references key financial tools and techniques to provide a clear understanding of the subject.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems and its essential requirement...........................................1
P2: Different types of management accounting system reporting .............................................2
M1: Benefits of using management accounting system..............................................................4
D1: Critical evaluation of accounting reporting system.............................................................4
TASK 2............................................................................................................................................4
P3: Costing method which are use to determine net profitability...............................................4
M2: Analysis of accounting tools and techniques.......................................................................6
D2: Critical evaluation of income statements.............................................................................6
TASK 3............................................................................................................................................6
P4: Advantage and disadvantage of using planning tools in budgetary control.........................6
M3: Analysis of planning tools...................................................................................................7
D3: Critical analysis of financial issues......................................................................................7
TASK 4............................................................................................................................................8
P5: Different financial issues that are being faced by company and measure to overcome them
.....................................................................................................................................................8
M4: Analysis of financial issues.................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
In context to determine overall profitability of an organisation, it is essential for them to
make use of effective management accounting systems. This seems to be one of the most
important aspects of any business enterprises to record their everyday financial transactions in
their respective format of the company. The primary objectives of using such kind of systems is
to attain more reliable outcomes by using resources in more effective manner. This particular
report is providing crucial information about various management accounting system and
reporting use in “Zylla company”. Certain types of costing approaches use by managers to
evaluate net profit generate by company during the time. Advantages and disadvantages of using
planning tools in budgets are discuss under this project. Comparison about various organisation
those are adopting accounting systems to resolve their financial issues are mentioned in this
report (Hilton and Platt, 2013).
TASK 1
P1: Management accounting systems and its essential requirement
Nowadays, it has been seen that most of the business organisations are searching for an
effective accounting systems that can help in record financial transaction more accurately in their
respective accounts. The role of management is to evaluate performance of Zylla company
through using various types of accounting systems so that their current financial positions can be
determine easily. This will be helpful to analyse growth and sustainability in order to attain
overall aims and objectives of an organisation. There are various crucial activities are being
available with an organisation in resepct to determine whether such activities are done in more
accuate and reliable manner. To manager and control all valuable information, account managers
is held responsible for organising best cost controlling method in more effective ways
(Wickramasinghe and Alawattage, 2012).
Management accounting is an essential process to formulate finaning report and data
whcih consists of contrining more reliable and statistical information whcih are require to make
proper analysis of collected data for an organisation. Henceforth, in order to achieve positive
health of Zylla internal departments associated with entries, ledgers and budgets that are being
recorded in more respective manner. This seems to be more primary aspects of accounting data
by which managers that would get to determine vital information about total sales earnings,
account receivable and all payables done during the time. Effective management operations
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should be helpful in attracting most stakeholder to make capital invested in an organisation for
the purpose of increasing profit for the company.
Types of management accounting system:
In order to record all necessary information regarding financial transaction which will be
incur by company during an accounting period of time are summarise and recorded with the
help of below mentioned systems:
Cost accounting system: according to this particular accounting system, managers can
easily be able to analyse total costs a company has done during the period of time. These types of
cost are directly or indirectly related with production of product and services. The primary
motive of using this system is to examine overall costs of the company so that chances of
profitability can be enhanced (Parker, 2012).
Price optimisation: By the help of this system, manager can be able to determine
effective prices which would increase total interest and overall satisfaction of customers by
offering economical prices for their products. This system assists in evaluation total perception
of customers regarding all those prices which are being set by Zylla Company for their products.
The project manager uses this system to make numerical analysis that would assist in
determining total attitude and behaviour of customers.
Job costing system: As per this accounting system, it will be helpful to determine total
costs which are related for the purpose of completing particular activity. This would be useful to
determine total cost to their customers that are required to implement effective plans for their
upcoming projects. These types of costs are incurred with production of an individual or group
of products manufacture in lot size.
Inventory management system: These accounting systems would be useful to track
overall movement of products that are being used in the business operations by which they can
attain their aims and objectives in more quick time. These systems used to record all necessary
information regarding stocks through preparing bills, stocks invoices and so on.
P2: Different types of management accounting system reporting
In every business organisation, whether related production of retail sectors need to have
perfect accounting reporting systems. This can assists managers to record all crucial information
that are valuable for making decision more effective in coming time. On the basis of various
reports that are prepared in Zylla Company, they can manage to record data as per their date of
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occurrence. These reports would be more valuable for the investors or other shareholders of the
company to make analysis of current position of the company. The primary purpose of using
reports is to examine total cash making ability and overall financial condition of the company.
The investors can use this information in order to make necessary decision about capital
investment. Every company required certain amount of capital to run their business so they need
to have maintained their financial stability in more accurate and balance manner.
As reports are said to be systematic information about all data and resources zylla
company is investing during the time. This seems to be utmost important aspect which includes
collection and disbursement of data during an accounting period of time. By the implementation
of reporting system would be having wide number of advantages to an organisation such as
planning for future management, allocation of resources, evaluation of employee performance
and to make improvement in upcoming decision making at internal level. There are various types
of accounting reporting systems are available with Zylla Company. Out of which some are
discuss underneath:
Performance report: According to this particular report which is based on recording of
companies’ performance about their overall financial situations. This can be analysing by using
actual or standard data which is being incur during the time. It is primary role of manager to
make sure that every information mentioned in the report must be accurate and reliable. By the
help of this report, proper coordination between various functions of the department can be
analysing more effectively (Renz and Herman, 2016).
Operational budget report: Such kind of report is prepared by an organisation to make
analysis of all expense and costs that are incur by the company during the period of time. This
report also consists of valuable procedure for formulating budgets so that organisation cannot get
any reduction of capital during the time. These reports provide complete shape of any crucial
decision making in order to attain maximum gains during the time.
Job cost report: According to this report, that consists of specific data about total costs
Zylla Company is incurring during the production of particular products. This kind of report
developed by accounting managers. This will help to gain adequate amount of funds to an
organisation.
Account receivable report: according to this particular report, managers would easily
able to understand total lists of unpaid customers invoices of various debtors. This type of report
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is helpful to an organisation to provide management to make valuable decision regarding making
modification about the recovery of amounts from the debtors. Hence, these types of report are
formulated to receive payment from the parties during the time.
Inventory management report: According to the Zylla company, they can get more
valuable outcomes in near future only in that condition, if they are having proper control of total
stocks that are being kept by the company. This report used to record all data regarding opening
and closing stock keep by company in their warehouses. There are various tools and techniques
which would be helpful for an organisation to control inventory. Some of them are inventory
turnover ratio, EOQ and ABC costing.
M1: Benefits of using management accounting system
According to the above mentioned accounting systems, it has been seen that Zylla
Company can only be become more effective in case they use to adopt accounting system in
more effective manner. This need to identify adoption of management accounting practices,
retain profit and make maximum emphasis on future targets. With the use of cost accounting
system all necessary data regarding costs and expenses should be analyse more effectively.
While, price optimisation is an essential systems to analyse overall perception of customers
regarding prices of products that are set by the company.
D1: Critical evaluation of accounting reporting system
According to the all above reporting systems that are discuss above are needed to be use
in more effective manner so that chance of errors can be controlled up to an extent. The primary
role of managers is to make use of best alternatives that are related with the company. As per the
mentioned reports such as performance report which is more reliable in analysis overall
performance of Zylla company during an accounting period of time. While account receivable
report can provide benefits by evaluating total time required to analyse recover overdue amounts
from debtors.
TASK 2
P3: Costing method which are use to determine net profitability
Cost is anything that is related with the production of product and delivery services to an
organisation. As it is said to be value of money which will be paid by the company for getting
something. The costs can be categorising into various parts either directly or indirectly. Every
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cost is having specific relationship among each other. It is an essential part of an organisation
which is use in manufacturing process by the company. It encourage in production of effective
products and services to respective customers. This seems to be utmost important aspects for
attaining desire outcomes by using more reliable costs (Soin and Collier, 2013). It is monetary
valuation of efforts, raw material and utility that are essential for the growth of an organization.
Costing is said to be an essential process of cost management in an organisation with using
specific tools and techniques. It consists of all those variable costs that are helpful for increase
profitability of an organisation. There are various types of costing methods which are use as
primary tools to calculate net profit of an organisation. Some of them are discuss underneath:
Absorption costing: According to this particular costing method which is applicable to
all manufacturing costs (Absorption costing, 2012). It included both variable and fixed costs
because of that its is said to be full costing approaches.
Marginal costing: It refers as those particular costing tools which is charges with the
additional units of production. It only considered variable costs as fixed costs are apportion at the
time of production.
Comparison:
Absorption costing Marginal costing
Under this particular costs, managers use to
consider both variable and fixed costs
expenses.
In this, only variable costs are taken for the
calculation of contribution per unit.
The main motive behind using this costs is
to analyse per unit cost on total investment
done by the company during the time.
Under this, per unit costs are evaluated by
using overall impacts which are seen over
extra units production done by company.
This is not taken effective methods for
future decision making.
It is consider as more reliable for making
future decision by any project managers.
Computation of Net profit by using absorption costing
Income statements
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500 8000
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8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Calculation through using Marginal costing 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
M2: Analysis of accounting tools and techniques
It has been seen that organisation can only attain their valuable aims and objective if they
are having sufficient amount of ability and cash to deal with all kind of issues that are arises in
an organisation. For this purpose certain kind of accounting tools are also helpful to determine
net profit a company is generating during the time. By the help of marginal costing more reliable
results can be attain because it consider only variable costs. Standard costing is an important tool
that assists in betterment of an organisation (Merchant, 2012).
D2: Critical evaluation of income statements
According to the above calculation done by using both effective costing methods. It has
been found that results are different from either of the methods. If using absorption costing they
are able to get 7800, whether as with the use of marginal costing they are able to earn total of
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7500. The difference of 300 is only arises because of fixed costs treatment. From the above table,
absorption is more accurate and providing more positive results in terms of profit. Thus, it will
be more reliable for the company.
TASK 3
P4: Advantage and disadvantage of using planning tools in budgetary control
In any profit motive business, it is necessary to have proper planning which will be
helpful to generate more positive results in coming time with the use of resources in more
effective manner. There are various planning tools that are helpful for an organisation to manage
their performance and future costs and expenses. Some of them are discuss underneath:
Forecasting tools: This seems to be one of the more effective tools which are effective in
future planning of an organization resources. By the use of these particular tools Zylla Company
can be able to estimate total earning and losses done by the company and measures to control
them (Van der Stede, 2011).
 Advantage: This is taken into accounts as utmost important techniques for the firms to
evaluate pre-determine overall vision of an organization. By the help of this, managers
can easily be able to estimate future costs and expenses.
 Disadvantage: As it is seen that future are unpredicted so the chance of mistakes can be
more in some kind of situations.
Contingency planning tool: This seems to be one of the primary tools which are use by
managers to frame effective objectives in order to develop firms in any critical situations. This
technique is more valuable in case problem is harder to manager. In this company use to make
prior planning to control their upcoming implications that can affect performance of an
organisation.
 Advantage: This planning tool is more accurate and reliable for small and medium size
organisation because they operations are quite small and chances of mistakes can be high
too. In that particular situation it will work more effectively.
 Disadvantage: In some kind of situation, it does not take as more reliable as because of
their complex and dynamic nature (Kotas, 2014).
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M3: Analysis of planning tools
In accordance to increase overall productivity for an organisation, managers need to
make use of planning tools in more effectively. There are various kinds of tools such as
forecasting tools which is responsible for increasing overall profitability through controlling
costs and expenses for the company. Another one is scenario tools which are helpful for the
company in any kind of situation to control risks in more effective manner.
D3: Critical analysis of financial issues
In every business there are certain kinds of issues that are related with an organisation.
These are related with the company directly or indirectly to control huge implication on overall
productive of an organisation. These are needed to be resolve by using key performance
indicators and benchmarking tools.
TASK 4
P5: Different financial issues that are being faced by company and measure to overcome them
It has been noticed that in every organisation various kind of issues are arises those are
related either with finance or non-finance. All these issues are affective overall profitability of an
organisation. Some of them are mentioned underneath:
 Profit level issue: If the company is lacking behind of cash shortage they cannot be able
to generate more profit during the time (Banerjee, 2012).
 Product and quality issues: There are certain aspects those are related with quality and
services provided to customer are not effective. This can only be determining by lack of
financial supports.
In context to remove these issues, manager needs to make use of certain tools that are
helpful in increasing productivity and efficiency at the same point of time. Some of them are:
 KPI (key performance indicators): According to these particular tools, all those issues
related with financial stability of the company can easily be resolved.
 Financial governance: These types of tools are made on the basis of rule and regulations
that are made by government to regulate business in more effective manner (Lavia López
and Hiebl, 2014).
Comparison of two companies
Zylla company Sainsbury
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As this company is working as small level
so they do have lot of financial transaction
during the time. To control all of them they
need to use cost accounting system.
This particular company is one of the
largest supermarket chains which are
having various issues related with
management of stock. This can be resolve
by using stock turnover ratios.
M4: Analysis of financial issues
From the above mentioned various financial issues that are related with business is
having great chance of making certain kind of impacts on overall productivity. This can be
higher, if certain measure cannot be taken into consideration. This can be resolve by using
various financial tools such as KPI, Benchmarking and operational budget techniques.
CONCLUSION
From the above project report, it has been concluded that management accounting is an
essential aspects for every business. This can assist in controlling overall performance of an
organization by using accounting systems and reporting at the same time. With the use of best
costing method net profit for company can easily be identified. To control budgets, role of
planning tools are more helpful for the managers. Further, by effective utilisation of financial
tools all any of financial issues can easily be resolved.
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REFERENCES
Books and Journals:
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Parker, L.D., 2012. Qualitative management accounting research: Assessing deliverables and
relevance. Critical perspectives on accounting. 23(1). pp.54-70.
Renz, D. O. and Herman, R. D. Eds., 2016. The Jossey-Bass handbook of nonprofit leadership
and management. John Wiley & Sons.
Soin, K. and Collier, P., 2013. Risk and risk management in management accounting and
control.
Van der Stede, W.A., 2011. Management accounting research in the wake of the crisis: some
reflections. European Accounting Review. 20(4). pp.605-623.
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt. Ltd..
Lavia López, O. and Hiebl, M. R., 2014. Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of
Management Accounting Research. 27(1). pp.81-119.
Kotas, R., 2014. Management accounting for hotels and restaurants. Routledge.
Merchant, K. A., 2012. Making management accounting research more useful. Pacific
Accounting Review. 24(3). pp.334-356.
Online
Absorption costing. 2012.[Online]. Available through:
<http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Marginal%20and
%20absorption%20costing.aspx>.
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