Management Accounting for Zylla Company: A Comprehensive Analysis

This report delves into the core aspects of management accounting, exploring its significance in decision-making and financial stability. It examines various costing methods used to calculate net profit, including cost-volume-profit analysis, marginal costing, and absorption costing, providing a comparative analysis of each. The report also covers management accounting reporting methods, such as performance reports, account receivable reports, and inventory management reports, evaluating their impact on organizational efficiency. Furthermore, it analyzes the advantages and disadvantages of different budgeting techniques and compares various management accounting approaches to address financial issues within an organization, offering a comprehensive understanding of its applications and benefits. The assignment concludes by highlighting the importance of management accounting tools and techniques in enhancing a company's financial health and achieving its objectives.

Management Accounting

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Discussion about management accounting and their essential needs..............................1
P2: Management accounting reporting methods and their types............................................3
TASK 2............................................................................................................................................5
P3: Different costing method uses for calculating net profit for the company......................5
TASK 3..........................................................................................................................................10
P4: Advantage and disadvantages of using various budget..................................................10
TASK 4..........................................................................................................................................13
P5: Comparison of various ways in management accounting uses to deal with financial issues
..............................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
In the present scenario, it has been seen that management accounting consider as most
valuable aspects for effective decision-making in near future time. An accountant is held
responsible for recording all financial transactions that are being done by the company within an
operating period of time. This project is all about evaluating various types of accounting and
reporting methods that are accurately helpful for an organisation to attain future aims and
objective of an organisation. Although various costing methods is being used by the accountant
is to computer net profit for Zylla company. Apart from this, by the help of advantages and
disadvantages of various types of budgets are also crucial sources to make future decision in
more effective manner. However, comparison of various ways through which management
accounting can be helpful to overcome financial issues those are arises in an organisation (Ward,
2012).
TASK 1
P1: Discussion about management accounting and their essential needs
It seems to be appropriate as well as systematic process for future planning and
controlling all essential operations of an organisation. It used to generate more reliable
information for determining effective plans and actions for effective system of setting reliable
standards in coming period of time. Targeting and reporting variances among strategies and
actual performance for corrective actions are needed to be examine in effective manner before
making any crucial decision making for the company to take corrective actions in near future
time. In this manner that part of management accounting system which facilities reliable process
of decision-making which is known as accurate growth and financial stability for an organisation
(Wickramasinghe and Alawattage, 2012). It consists of every accounting tools and techniques
that can be helpful to administration in discharging their function planning, organising and
controlling their every day operations that are incurred within an organisation.
Definition: It is known as utmost effective terms which is used to describe the accounting
methods, systems and tools that clubbed with particular knowledge and capability that assist
management in their task for increasing gains and reduce losses that are incurred during financial
period of time.
Important of management accounting:
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 Useful in cash forecasting: It has been seen that future forecasting would be done for the
purpose of making overall investments that are made by the company within an
organisation. All resources are needed to be implemented in effective manner by keeping
future in the mind.
 Assist in making or buying decision: This seems to be more economical process which
will be effective for an organisation to develop both operational and planning levels in
effective manner. In this the decision are based on all factors that are related with cost
and production (Pavlatos and Kostakis, 2015).
Comparison:
Basis Financial accounting Management accounting
Nature It is mainly associated with the
historical data as well as records
those are made by the company.
It is associated with overall estimation of
presented data at internal level.
Accounting
standards
This seems to be govern by
GAAP and various conventions.
There is no any bound to follow any kind
of accounting rules and regulations.
Subject matter It happens to be made for
businesses as a whole.
It is formulated for every units and
department at the same time.
Types of management accounting systems:
Cost accounting system: This seems to be appropriate branch of accounting data which
used to record, measure and report data regarding all those costs that are incurred during the time
of production process. The main aim of cost accounting is to ascertain and their use in decision-
making and valuation of performance. There are various types of cost which are to be taken into
consideration such as Standard, Normal and actual costing.
Investment accounting system: It is known as one of the effective assets management of
different securities such as bonds, shares and other securities in respect to meet out particular
investment aim in order to attain maximum benefit for the investors. The portfolios of an
organisation are needed to be taken into account to aid them in meeting their investment
objectives within an accounting period of time (Hall, 2016).
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 EOQ: It is known as one of the effective stock management systems which will be
optimum level of products can be purchased at the given period of time. It is used to
minimise the annual cost of ordering and carrying are taken into account.
 JIT: This seems to be more valuable management method which consists of material,
goods and labour that are schedule to arises or be replenished during production process.
Job costing system: This happens to be one of the effective process of allocating overall
costs a company occurs to a particular job an individual or group of businesses get associated
with them. This is mainly used in the construction areas and it assist proper allocating costs to an
individual cost to a projects. Mainly the job costing system is used in only condition in case
products produces are sufficiently different from one another.
Price optimisation system: This seems to be appropriate finding that operating against
the customer’s willingness to pay. The pricing techniques can be effectively helpful to meet the
requirement as per the various companies such as B2B etc. This is used to examine the prices
that a company used to determine would be best reliable to attain future aims and objectives of
Zylla company.
Benefits of using management accounting system
In accordance with attaining maximum growth and sustainability in coming period of
time, the company need to make use of appropriate accounting systems. It assists an organisation
to increase efficiency of the company and simplifies the decision-making that are mentioned in
financial statements. All the above discussed accounting systems will have equal benefits to an
organisation. Such as cost accounting is reliable to analysing overall costs that are going to
incurred within an organisation. Whereas inventory management is essential for controlling all
important aspects those are beneficial in coming period of time.
P2: Management accounting reporting methods and their types
In business like retail or services sectors, they need to make collection of financial
information that are derived from accounting statements of a businesses. These can be related
with custom made reports those are intended for particular purposes. Financial accounting is
considering as systematic branch of accounting that is used to keep track of overall company’s
financial transactions that are made during the period of time. All transactions are recorded,
summaries and presented in a well organise report statements such as profit and loss and balance
sheet. The main aim of reporting is to deliver valuable information for effective decision-making
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in coming future. The significance to an economy for giving capital market with data that are
consider crucial in respect to overall company (Macinati and Anessi-Pessina, 2014).
There are various sources from which information can be gather and implemented in the
department. All the reports are presented in front of various investors and stakeholder for the
purpose of taking crucial analysing and after that sufficient amount of decision can be made in
coming period of time. There are various types of accounting reporting methods. Some of them
are mentioned underneath:
Performance report: It is considering as one of the primary activity in every project
communication administration. It consists of collecting and project evaluation, utilisation of
resources and forecasting overall progress and situation to different stakeholders. This reports are
considering more effective for actual and standard performance of an organisation. For this
purpose, managers of Zylla company used to prepared
Account receivable report: It is known as one of the primary report which will be use
by an organisation in order to determine total lists of unpaid customer invoices and credit
memos. This particular report is considering more effective tools by collection of personnel
evaluation that assist which invoice are overdue for payment. It is the capital that a company has
option to retain because they had provided customers with total product and services within an
organisation (Moorthy and et. al., 2012).
Inventory management report: This happens to be supervision of all inventory products
that are associated with the department. An elements of supply chain management guides
customers about the flow of products from producers to end customers. All the detail information
about opening and closing stock position of the company are recorded under this report.
Job cost report: It is known as starting place for all necessary information consists in
other report. This particular process of coding and allocating project expenditure used to track
all financial events and profitability that are occur within an accounting period. Overall costs of
each product are discussed effectively in this report. Such kind of accounting reports are largely
used in construction sectors and this would reliable to allocate costs to an individual construction
projects for the company.
Critical evaluation of various reporting methods
It has been discussed that all reports are valuable for the company. This will directly
make impacts on the overall performance and stability at internal level. All above mentioned
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reports are equally responsible for increase future efficiency for an organisation. Some of them
are performance report that are held responsible for analysing actual performance with that
actual one. Like account receivable report guide an accountant to examine actual date for
collecting overdue payments from debtors. Thus, all other reports are having their own benefits
those are helpful in future planning and dependencies.
TASK 2
P3: Different costing method uses for calculating net profit for the company
In every business organisation which are related with increasing overall cost of
production they need to consider appropriate costing methods. It is considering as an amount
which is to be paid or surrender up in order to get something. In business, cost is mainly related
with monetary valuation of material, resources and risk that are incurred within an organisation.
There are various types of costing valuation techniques which are responsible for increase future
benefits in more reliable and efficient manner (Amoako, 2013).
Cost volume and profit analysis: This seems to be appropriate evaluations that looks at
certain relationship among selling costs, sales volumes and profit within an organisation. It is
more reliable accounting system in which variable costs are changed to production of units and
fixed costs arises during the period get written off. It is happening to be effective position where
total earning would be equal to total costs. This assumes as one of the basic assumption that are
underlying CVP analysis during the time.
Fixed cost: This is known as one of the that particular costs which remain unchanged
with the production of either one or more than one units.
Marginal costing: It is known as one of the appropriate methods that are more
effectively responsible for production of one additional units during the time. This seems to be
consider more reliable for making appropriate decision in coming future as results are more
profitable for the company (Klemstine and Maher, 2014).
Absorption costing: It is said to be all cost which are applicable with the production of
product and services. Because of this effective nature, it is known as full costing method. All
variable and fixed cost expenses are taken into account. But the primary limitation is that
manager would not be able to consider this cost more effective in future decision-making
(Absorption costing, 2018).
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Analysis of various accounting techniques
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This is wider and having diversify aims and objectives. It is considering more difficult to
define their scope in more dynamic in nature. There are various crucial techniques such as
historical cost accounting which enables to determine the actual costs invested by the company
during the time. Standard costing is laid down through experts those are compare with the
normal cost in respect to analyse all deviations. While marginal costing techniques are
categorising into two parts which assist in better decision-making in coming period of time.
Critical analysis of income statements
Reconciliation statements Amount
Profit under absorption -375
Closing stock 500*5 2500
Profit under marginal 2125
According to this particular reconciliation statements, it has been seen that two costing
methods are taken into account. A total profit of 2125 is taken into account.
TASK 3
P4: Advantage and disadvantages of using various budget
There is various budget which are essential for an organisation like Zylla company. Some
of them are:
Operational budget: It refers as annual budget prepared for analysing all activities those
are stated in respect of functional and cost accounts. It used to determine total cost and expenses
that are done in an accounting period of time.
Advantage: It used to provide appropriate overview about valuable operation by
estimating the planned operations mainly for coming period of time. It assists Is farming sales
planning so as to attain future targets of Zylla company (Youssef, 2013).
Disadvantage: It is more time required to formulate total cost and expenses that are
prepared by an organisation within an accounting period of time.
Capital budget: It is known as one of the effective planning process which is being used
to estimate, whether Zylla company investments like as new machinery or plant are worth the
funding of cash with maximum profit in near future.
Advantages: It will be helpful for an organisation to determine different types of risk that
are associated with investments opportunities of Zylla company.
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Disadvantages: Capital budget decision-making is used for the longer period of time as
per the nature of the company. In case wrong capital budgeting decision would take an effect for
longer durability of Zylla Ltd.
Rolling budget: It is regulating to include a new budget as the previous one gets
completed. Henceforth, rolling budget consists of incremental extension of current budget model.
In order to do so, a business always has been extending for more than one year of time.
Advantages: It is more flexible and get changes as per the last year performances. This
does not require any extensive investments of time and cots for future planning.
Disadvantage: It is more expensive to maintain in regular course of activities. As it is
revising on monthly or yearly basis (Fadzil and Rababah, 2012).
Planning tools: In every organisation such as, planning is one of the primary
administration process those are concern with determining aims for a company overall future
direction on overall mission and vision to attain those goals. There are some of the crucial
planning tools which are discussed underneath:
Forecasting tools: It is known as one of the important tools that can assist in forecasting
internal and external aspects those are affecting small business such as Zylla company. It is
mainly related with future estimated cost and expenses a company is going to incurred within an
accounting period of time are taken into account. Forecasting is an essential aspect for making
overall predication of future based on past and presented information by analysing current trend
of the company.
 Advantages: It has been seen that organisations are using wide amount of tools to assess
best possible results for the company. It used to provide more valuable information about
the company to make future decision in more effective manner.
 Disadvantage: This seems to be more accurate forecasting the future. For this reason,
Zylla company need to depend on total 100% on their forecasting methods.
Scenario tools: It is known as of the effective planning tools which used to interact with system
that are being followed at internal level of the department. It targets to design valuable efforts on
the users’ needs and demand. This thinks to deal with all important aspects which are related
with crucial impacts those are arises in any situation. This tools are all about the way company
used to deal with all kind of issue that turn out if certain trends continued and if some sort of
condition are met. It is necessary to determine overall problems that are arises in an organisation.
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Advantages: The primary idea about the best possible futures which can minimise
surprises and increase the ability of an individual to deal with all kind of situations which are
arises in an organization.
Disadvantage: In some kind of situation, it cannot be able to work in effective manner
because of limited resources available the users.
Contingency Tool: It is one of the main tool which is used by an organisation in case of
any urgency arises in an organisation as a backup plan. The main aim of the plan is to protect
data and minimise disruption and protect every individual to be remain at safe side.
Communicating the plan to everyone in an organisation is more reliable tasks for every mangers
of the concern department. Information must be deliver to various people of their roles and
responsibility that are related with the plan.
Advantages: It assist an organisation to control all losses that help in controlling overall
losses of manufacturing products and services.
Disadvantage: In some situations, it cannot be able to operate in effective manner as the
risk are uncertain for the company. Because of this it gets fail to resolve any critical situations.
Analysis of various planning tools
The most important aspect assists them to make appropriate results to an organisation.
SWOT analysis is one of the effective tools which assist company to control and evaluate
internal department of Zylla company. There are various tools which are responsible for
controlling budget that are prepared during an accounting period of time. Such as forecasting
tool which is related with resolving various problems which are related with overall cost and
expenses incur by company within an accounting time. Contingency tools are associated with
risk analysis which will assist an organisation to increase overall growth in near future period of
time (Leitner, 2013).
Critical evaluation of financial issues
It is a kind of situation which assist an organisation to deal with serious stress. Most of
the people are facing difficult financial period and impacts on financial health of the company.
These issues would be seeming to be impossible to deal with various steps and situations that are
arises during the time. Some financial issues like product and service quality can be deal with
using certain tools such as key performance indicators and benchmarking etc.
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TASK 4
P5: Comparison of various ways in management accounting uses to deal with financial issues
In every business concern, there is always be the chances that company need to deal with
various kind of issues which are affecting the profitability position. An issues would be taken as
appropriate process that attempts to raise capital. Companies need to face various problems
related with stock to an investors as primary method of financing the business in effective
manner. In case company need sufficient amount of capital to operate their operations they need
to secure their capital through selling inventory or by issuing bonds within an accounting period
of time. There are various financial issues which are related with Zylla company. Some of them
are mentioned underneath:
 Not enough cash flow: The most important issue is associated with an organisation is
calculated by deducting total expenses from overall earnings. In case company is not
having sufficient amount of capital they are not able to attain maximum growth within an
organisation (Bryer, 2013).
 Poor financial management: In case the company is not having sufficient amount of
administration to control and manage their financial implication they are not able to attain
future profitability for the company.
 Product and service quality: There are various issues which are related with bad quality
of products which are effectively responsible for making huge impacts on overall growth
for the company.
In order to resolve all above issues they need to make use of below mentioned financial
tools. Some of them are:
Key performance indicators: It is known as one of the crucial and measurable value that
used to determine how position of a company is able to attain their key aims and objectives for
an organisation. They need to make use of past data in order to analyse their success to reach at
certain level of targets.
Financial governance: It consist of certain rules and regulations that are issued by an
legal bodies to ensure that financial processes that are governed in effective manner. By using
this tools, Zylla company will be able to operate their business in more effective manner
(Senftlechner and Hiebl, 2015). There are various governance techniques such as, audit
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committee which is responsible enough to make analysis of all financial issues that related with
various statements of the company. It consist of internal or external audit of the statements.
Benchmarking: This seems to be utmost important aspects to determine quality of
company’s policies and products that are related with set standards. It will assist an organisation
to get more reliable growth and sustainability in coming period of time.
Management accounting skill set: The financial accountant need to look after a
company’s overall accounts. They need to make appropriate advices regarding financial
impacts of business decision to assist sufficient amount of profit and growth in coming
period of time.
Zylla company Tech (UK) limited
It is one of the effective company which is
operating at small level. It uses key
performance indicators to deal with all issues
those are arises in an organisation.
This seems to be utmost important company
which is operating in electronic products. They
uses to consider financial governances to
resolve various issues of the company.
Analysis of financial issues
In business like Zylla company to deal with all issues those are affecting the profitability
for an organization. It deals with common problems that will assist an organization to avoid their
mistakes those are affecting the overall growth and stability within an accounting period of time.
The main financial issues a small business owner deal with is associated with profitability level.
To deal with this, they need to make use of financial governance and benchmarking tools that are
crucial for the company.
CONCLUSION
According to the above project report, it has been concluded that management accounting
is consider as one of the major tools which will assist them to get more reliable outcomes in
coming period of time. For this purpose, various accounting and reporting methods are being
used. However, advantages and disadvantage of using planning tools can lead to control budgets
for Zylla company. All the analysis is done to get more reliable growth opportunities in coming
period of time.
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REFERENCES
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Absorption costing. 2018.[Online]. Available through:
<https://www.accountingtools.com/articles/what-is-absorption-costing.html>.
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