Management Accounting Report: Financial Problem Solving and Strategy

This report, prepared for Answer Lab, delves into the core principles of management accounting to aid in financial decision-making and strategic planning. It begins by defining management accounting and its various types, contrasting it with financial accounting. The report then outlines different methods of management accounting reporting, including inventory control, accounts receivable, and accounts payable reporting, as well as performance reporting. A significant portion is dedicated to cost analysis, differentiating between marginal and absorption costing and demonstrating their application in income statement preparation. The report further explores the advantages and disadvantages of budgetary control tools and examines how management accounting systems can respond to financial problems. The report emphasizes the importance of management accounting in enhancing efficiency, achieving organizational goals, providing management control, and enabling strategic investment decisions. The report concludes by summarizing the key findings and recommendations for Answer Lab, highlighting the practical applications of management accounting principles.

MANAGEMENT
ACCOUNTING

Table of Contents
Report...............................................................................................................................................1
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
P1 Management accounting and its different types....................................................................2
P2 Different methods of having reporting management accounts..............................................4
TASK 2............................................................................................................................................5
P3 Calculation of cost to make income statement with help of marginal and absorption cost...5
TASK 3............................................................................................................................................8
P4 Advantage and Disadvantage of different planning tool for budgetary control too. ............8
TASK 4 ...........................................................................................................................................9
P5 Management accounting system which respond to financial problem..................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

Report
From:- Management Accounting officer
To:- General manager of firm
Subject:- Preparing a management accounting system which does help company in making a
better decision and strategy in organisation.

INTRODUCTION
In today's scenario, the company is working hard to become successful in market and
management accounting is such which help company in preparing a financial information which
does support managers in effective manner, so that they can produce a better decision and
strategy for firm. Financial accounting do assist in making investment and from which place a
maximum revenue and money can be obtained and even in better manner as well (Albelda,
2011). Technology is another aid context in entity which store the needed facts data and
information for longer too. The report is based on Answer Lab, which provide effective solution
to corporate world in their hard times related to market and make them to overcome such
situation in better way. Firm is having a group of around 36 employees and cater methodologies
to firm for their betterment. Assignment include methods which make company in calculating
various cost and will help in building a income statement. Advantage and disadvantage is also
considered which help in controlling budget and management accounting for solving various
financial problem of firm.
TASK 1
P1 Management accounting and its different types.
Management accounting is that which help in preparing the report and accounts of
company after having a proper information and data about different statistics, thus it make
managers and top executives to make a better decision and strategy for firm so that they can earn
higher revenues as well. Moreover, report is that which is consist of transaction, cash flow,
revenues and account payable and receivable or information of raw material etc. (Arroyo, 2012).
Although such kind of information thus help in making a better strategy and decision which can
improve performance of firm and make them to earn higher revenues with achieving goals and
objectives of entity as well.
Answer lab is firm which provide effective solution related to their problem they are
facing in market and they take money from firms on the basis of work they are doing for them, it
can be said that enterprise in cost effective too. Generally, entity is having a having habit of
maintaining a balance sheet and profit/ loss account which normally make industry to know that
they have went through higher income or loss.
Therefore there are some ways of accounting system and it is be like:

 Cost Accounting system:- Cost accounting is that which is particularly also known with
the name as product costing system and costing system. This is a framework which is
related and used by manager to have estimation of cost with product and having a
purpose of profitability analysis and thus also make to have inventory valuation too
(Becker, Messner and Schäffer, 2010). This system is used to analyse and calculate the
profits of Answer Lab.
In this there are two methods which help in cost accounting and they are job order costing
and process Costing.
 Inventory management System:- Although, it is considered as stock of goods and
services. Management of inventory goods and thus it also make them to have
combination usage of software, barcode reader-scanner- and printer too etc. This is
something which is very much useful for those company who is having various material
and to make a stock of it.
 Job Costing System:- It is a process which help in collecting the information related to
the cost and also have a specific production of job. This is something that can be required
to have submission of cost with under the contract and in which costs are to compensated
in right context too (Bennett, Schaltegger and Zvezdov, 2013). Normally, cost is
something which also directly in different situation when the product and service of a
particular company is differs from another firm as well.
 Prize Optimization system:- This system is such which has mathematical programs in
great manner and thus also help in calculation of demand which also varies the things
with price level, and data is such which also help in combination with proper information
of costs with recommendation of various prices which will help in maximising profit too.
This also include the three pricing elements as well like:- pricing strategy, value of
product and although tactics which is adapted to have a better working, and also manages
several elements which has direct impact on profitability too.
Some of the importance of management accounting are as:
 Management accounting is such which help in increasing the efficient of company.
 This does also help in determining the aims for achieving goals and objectives too.
 This also help in providing the management control in better manner and thus also lead to
have planning and controlling of various activities in effective way.

 Although this can also help in earning higher revenues and this can also convert firm to
invest their amount in different parts of fields.
P2 Different methods of having reporting management accounts.
Accounting reporting in organisation is much needed concept done in different firms like
Answer Lab. Management accounting reporting is that which is normally given and submitted by
accountant manager and to the top authorities of firm, and thus it also make them to have
accurate financial information with different situation too. It also help in controlling and
monitoring firm with more efficient and effective manner (Bodie, 2013). Various reporting
system are there which are discussed as below:-
Inventory control reporting:- Reporting with this system can help in executing the
quantity and also make them to have stocks present in warehouse of entity as well. It also include
identifying the different sections and needs to have further improvement in warehouses too. This
is something which also include the over stock and under stock with selling different activities
and also issues and it also related to delivery with product and services as well.
Application:- By executing such kind of accounting reporting in Answer lab can help in
managing to financial account of their inventory which help them to take better initiative related
to their warehouse in better manner.
Account receivable reporting:- This reporting system is that which help in monitoring
and managing a cash flow of company in accurate manner (Boyns and Edwards, 2013). Although
this report is such which also has detailed information about various debtors and people who has
taken money and it also help in knowing how much amount credit is taken or receive from
different commodity as well.
Application:- This also help company to know the exact information of debtors and also look
forward to have money which is being received from different customers. Although it also help
in noting down the complete information about time. Therefore, how much time, the day money
received and will pay every data is collected.
Account payable reporting:- This is strategy which also look forward to have managing
accounts and this is very much helpful in enterprises with relation to its suppliers as well with its
customers which also reflect the positive image of firm in the competition market. This help in
determining and monitoring as how much amount has to be paid to suppliers and parties in
systematic manner as well.

Application:- payable reporting is that which is being also implemented in entity. Although this
is something which also help in managing the details of different suppliers in format manner.
Although complete details has to be provided related to money and has to be paid to suppliers
and remaining amount can be sort out and conflict can be helpful in enhancing productivity and
maintain its goodwill too.
Performing reporting:- This criteria of reporting strategy is something which help in
identifying employees performance in organisation in various manner like structured and
systematic way as well (DRURY, 2013). Such criteria is that which also help in determining the
kind of problem is being faced by employees. Acknowledging such thing help company to earn
higher amount and increase productivity as well.
Application:- By implementing various strategy and decision in company with accounting
report for Answer Lab. With the help of such thing performance of every employee can be
known by firm it also help to identify different solution for having existing problems in
employee performance too. This is such which help to build motivation and enthusiasm in them
to work hard and to increase their performance level with productivity as well.
TASK 2
P3 Calculation of cost to make income statement with help of marginal and absorption cost.
Cost:- Cost is that which is invested by firm in producing the various product and
services in great manner to serve thousands of corporate industry to attain their own goal and
objectives. Generally, it can be said that there are various value which can have better effort in
like monetary and raw materials as well for various things in several goods as well.
This is that term which lead to have various concise form of submission and also estimate
in somewhere the total cost, which is somewhere also associated with some particular small
project and such thing help to convert the performance of company in better manner too. This is
that which also include the things like variable cost and absorption cost both and this is
considered as the fluctuation cost with few kinds of activities and it can be said that changes is
somewhere also done with some other factor as well (Harris and Durden, 2012). Moreover, the
Answer Lab is such which look forward towards their transaction and try to minimise or reduce
the expenses of company a because this is such which affected the decisional process as well.

Generally for calculate costing there are techniques to solve in better manner and thus to identify
the profit level of organisation and company in great way. Those techniques are as follows:
Absorption Cost:- Expenses and different things are such which is related to production
department which also include the different services and such thing is included in category only.
It is considered as the variable costing and also leads to have fixed too, although such thing help
them to earn and work in effective way too (Herzig and et. al. 2012). Therefore, entity is such
which also consider various type of tools which is being adopted by enterprise to have better
calculation of services and it also somewhere includes the overheads and direct prices too. All
thing help in making better decision and can be used to reduce the wastage in great manner as
well.
Marginal Costing:- Cost is that which can be occurred in organisation while production
of making a extra unit in better manner and such thing is also used to have a corrective working
decision as well. Moreover, if the cost is being charged according to the per unit then it will be
considered as marginal cost and it also help in producing different additional unit which can
make them to have effective working for the selected company (Answer Lab) and it also support
firm to manufacture one more unit in proper way. In this criteria, labour and raw material is also
related with, although this is also being considered to have a manufacturing the additional
product and services as well (Kihn, 2010).
Basis Marginal Cost Absorption Cost
Meaning Moreover, such kind of cost is
somewhere related with the
techniques and it also help in
total cost with production and
it is also called as marginal
costing.
According to this, the total
cost and cost centre as this is
something which will hep in
determining total cost of
production in perfect way and
this is also known as
absorption cost.
Cost recognition Variable cost is that which also
being considered as product
cost and it also fixed cost
which also known as period
This is very much different
from the marginal costing and
although fixed and variable
cost which also lead to

cost too. consider the product cost too.
Overheads This is such which include the
variable and fixed cost as well.
Therefore, administration and
selling distribution is also
considered.
Profitability Marginal costing is that which
is used to measure the profit
volume ratio.
Fixed cost is that which also
include the different things
like it has been affected with
bad manner too.
Cost data. It has to look present in total
contribution and it is be like
product too.
This is something which is
used to conventional way and
it is be like in perfect way as
well.
Figuring of Gross profit by adopting absorption costing
Income statements
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
Calculation with the use of 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
This is something which also help company to make proper strategies and decision in
firm to attain their goals and objectives in better manner. Although income statement is such
which also make them to have proper working as well.
TASK 3
P4 Advantage and Disadvantage of different planning tool for budgetary control too.
Budget:- Document is such which is looking forward to consider the financial
information and thus it has specific time period which is also used to have a inclusion of facts
and figures in better manner too (Kotas, 2014). Generally, it is like determine or too identify the
cost with organisation which also make investment at time of production with qualitative product
and services as well.
Basically it is like which is prepared for the single year and also being followed by
management of firm and having a shareholder too, also make some changes if result is
somewhere not achieved in better manner as well. Some of budgetary control are as:
Budgetary control:- This is that which is being considered as tool with which is also
make management in better manner and thus it also make business operation in and as planning,
assessment and having cooperation as well in right context too. Mainly, different things are there

which also linked and classified too have several changes which leads to known of budget centre
(Lukka and Vinnari, 2014).
 Acquiring suggestion from managers:- This is such which help company to analyse the
data and information in better manner and it also include the several data which also
handle cost in better format as well.
 Implement effective suggestion:- Although, feedback is something which has some
managerial team and thus it looks forward to have a responsible thing and it also look for
designing the accurate scenario and also look for the prevention of company which losses
and such thing can also can occur with organisation as well.
 Determine fixed enterprise for budget:- According to such only, process in something
which should has efficient list of various things with relevant evidences, it also evidences
with assembled with several operational department as well (Lukka and Vinnari, 2014).
Apart from such, managers are such which bring effectiveness in plans and it also make
design with accordance to various standards of company in perfect way as well.
 Planning tools:- This is that which can also look forward to determine the enterprise in
future direction and in order to attain their organisational goals and objectives too.
◦ Forecasting: Although this is being considered as assumption and it also look
somewhere to have management skills, learning different thing also include decision
making process in proper manner too.
▪ Advantages:- Answer Lab is something which looks to identify the goals. As a
result something is there which also support managerial team in great way and it
also look for knowing cost and sales as well which also looks to have acquire for
coming in time period as well.
▪ Disadvantages:- Absence is that which look forward to have concise form
estimation of expenses and it also make them to acquire organisation within time
period in great way as well.
◦ Scenario tools: This is that which also supervise company and it also evaluate the
close substitute in great way and thus even in better manner and it is be like done
according to the situational demand as well.

▪ Advantage:- Management of company can acquire the different thing which also
look for necessary ideas about the selection, opportunity and having a better
implementation of various thing as well.
▪ Disadvantage:- Accuracy is something like somewhere this can be suitable for the
selected firms and this is done because it leads to have consumption of time
period as well with different tools as wells.
TASK 4
P5 Management accounting system which respond to financial problem.
Management accounting system is such which also help in solving the various problem in
company and thus it convert them to earn higher profit as well. Some of those are as follows:
Price:- The price should be set according to the market requirement and thus it also make
Answer Lab to perform in better manner and thus price has to be set at reasonable so that they
can make it done in proper way and thus it also make them to earn higher profit as well
(Macintosh and Quattrone, 2010).
Performance appraisal: It is required by company to motivate their employee in better
manner and thus it make them to increase their working in great way and thus it also help in
gaining productivity of company as well. Performance appraisal can be done in form of rewards
and bonus with incentives etc.
Benchmarking:- Moreover, benchmarking is something which is being set up by top
executive of organisation and thus it also make them to work according to such only (Otley and
Emmanuel, 2013). Benchmarking is that which also help in increasing performance of company
and also make firm to have effective working as well.
CONCLUSION
From the above report it can be stated that, management accounting is that which include
the tools which support the small and large firm enterprise which also look forward to have
various things with day to day operation of business operation. Under such the assignment and
number of things can also be determined by the proper decision which can make in right context
too. Therefore, various things are there with tool which is used for controlling the additional
expenses as well which also moves forward to have incurred in enterprise as well which also
help in accomplishing the goal and objective. At last, Answer Lab is such company which follow

the proper procedure of working also looks forward to have a remove of extra wastage and make
firm to have a succeed with higher profit with accomplishment of aims and targets.

REFERENCES
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