Management Accounting Report: Costing, Planning, and Analysis

This report provides a comprehensive overview of management accounting, focusing on its application within a small manufacturing company named Airdri. It begins by explaining the core concepts of Management Accounting (MA), detailing its role in monitoring, analyzing, and presenting financial information for effective decision-making. The report explores various management accounting systems, including job costing, cost management, inventory management, and price optimization systems, highlighting their importance in tracking transactions, controlling costs, and optimizing pricing strategies. It then delves into different approaches for MA reporting, such as accounts receivable summaries, budget studies, inventory management studies, and performance reports, emphasizing their use in planning, controlling expenses, and evaluating performance. The report further analyzes costing and profit calculation using marginal and absorption costing methods, demonstrating their impact on financial statements. Additionally, it briefly explains the advantages and disadvantages of planning tools and compares how MA is used to resolve financial problems within the company. The report also includes calculations of material variances and inventory valuation using LIFO and average cost methods, providing a practical perspective on the application of management accounting principles. This analysis offers valuable insights into how management accounting supports strategic planning, cost control, and financial performance improvement within a business context.

Management
Accounting

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Explanation of MAS and various system..............................................................................1
P2 Description of diverse approaches relate by union for MA reporting....................................3
TASK 2............................................................................................................................................4
P3 Calculation of cost & profit by using marginal and absorption costing.................................4
TASK 3............................................................................................................................................5
P4 Brief explanation of advantage & disadvantage of planning tools.........................................5
TASK 4............................................................................................................................................8
P5. Comparison of how MAS use to resolve the financial problem...........................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management Accounting is a mechanism that efficiently allows organisations to monitor,
analyse, compile, measure and present information to clients in order to determine their potential
corporate operations. Management accounting is really an expression which describes a method
to document on monetary data methods and rationale routinely in order to encourage important
business decisions for the individual role (Cooper, Ezzamel and Qu, 2017). Airdri a small
manufacturing of hand dryer company has been selected to grasp the importance of various
concepts of MA. This study explains how marginal and normal costing management accounting
methods are beneficial also with cost estimation this section also involves the use of multiple
strategies for budget preparation as well as how administrators address their money difficulties
through use of appropriate management accounting systems.
TASK 1
P1. Explanation of MAS and various system.
MA is consider being most common concept and practice of accounting managers, uses
this method to document analysis to gather intercontinental data in an easy manner, is a mixture
of profitability of listed with features of the computer strategy and strategic process (Quinn,
Strauss and Kristandl, 2014). MA is a central and important source for routinely moving
organisation records. This involves analysing and determining the funds or investments needed
by an organisation. The company's quarterly statements from the beginning of each month to
either the close are rendered through different accounting processes. These financial statements
allow a company to prepare successfully in line with organisational requirements. Any financial
year it uses its accounting sources to achieve its effort to increase performance, using the
methods necessary. Accounting also assesses cost-effective strategies that can reduce inventory
expenses and increase efficiency. Differences occur between Financial and management
accounts as pointed out below:
Management accounting Financial accounting
MA is used by the company in order to
achieve their ’s subsequent and to advise
appropriate stakeholders
The management uses financial accounting to
provide knowledge on external parties
This is regarded as a technological assistance All important budgets throughout the
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for corporate organisations which offers
potential business models
accounting information are based on past
reports
MA is found all partnerships and financial
transactions related to money on real
company.
From the other end, just cash exchange
financial accounting.
Every program's in management accounting system is split in many sections. The managerial
accounting Airdri are helpful in efficiently tracking transactions:
Job costing method: this is really an accounting system used by the company to determine the
cost needed to or reduction of the items as well as the time needed to invoice their clients to turn
this order into them of manufactured goods with using the job order costing system. They using
distribution pricing techniques only to turn to potential customers for goods and services. They
place orders for the different styles of furniture pieces in compliance with the business outcomes
and purchase order.
Cost management method: This has been the most important MAS used by a firm to achieve its
goal using a payback period norm and a particular type of business enterprise costing
methodology table for determining cost savings for adding or subtracting an additional unit for
just a business enterprise (McLaren, Appleyard and Mitchell, 2016). They identify the prices of
products, the costs of labour, and even more. This will help them to evaluate the price of
absorbing higher prices.
Inventory management system: Each feature and product necessary for the processing of material
was properly told by use of the stock processing system how a business company holds its
registers on the grounds how they can determine the maximum and minimum inventory levels
inside their warehouse, perhaps lifo, fifo and can effectively compute the maximum through JIT
technique which are used by the manager of Airdri. There in the aforesaid company it is possible
to determine on the grounds of any such financial statements any need for necessary natural
resources to produce more sections of furniture. They would know what sorts of items are stored
in inventory and what kinds of goods can be generated to meet customer needs.
Price optimization system: Price strategies used by managers to assess are fully dependent on
how successful pricing methods or practises are in place by companies to market their goods and
services success. This satisfies their client and will produce Airdri manager on the premise of an
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environmentally sustainable pricing plan that contributes to their profit. They classify or set
various prices per group of customers depending on the categorization of their customers. For
SMEs above, such reporting is necessary in order to track running costs used throughout the
manufacturing of doors and other soft furniture over duration or system revenue.
Job cost system Manager of Airdri uses a work pricing method to document all
customer details and identify each total amount of cost used on
different job related in producing a product.
Inventory management system The selected company manager applies inventory control
system to identify stock levels, and also to monitor additional
costs needed for stock servicing, which would allow an
efficient use of such a company inventory
Price management system By successful price strategic management, Airdri manager have
the advantage strategist will be using the pricing approach on
the based on market dynamics and conditions that lead to
retaining its location mostly on market for a long time.
Cost management system Airdri manager use this system for analysis cost per unit so that
actual cost included in producing the single product can be
determined and in case of excess usage of money valuable
steps can be made to reduce this cost.
P2 Description of diverse approaches relate by union for MA reporting
The study is structured to systematically gather knowledge that informs future business
processes.
Accounts receivable summary: The administration summary on non-performing resources and
amount Their agency's account debt holders, connected to company, helps find impairment
sections on the foundation around which the company develops strategies to reclaim their
amounts (Quinn, and Jackson, 2014). This way a company will plan its expense controls. The
prices influenced by the sale of various goods and services for profit. This expense can include
advertising charges, reduced costs or other promotions during retail sales. In delivering its
quality service only about one roof, Airdri prepares efficient cost management techniques to
easily meet customers. During sales or promotion, this reduces unnecessary and unnecessary
expenses.
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Budget Study: Department of strategy budget focused on data gathered from accounting records
gathering data again from Airdri event planner budget report prepared to provide input and
guidance on future market activities. This approach aims to plan budgets for all sectors of the
corporation. In order to control each department's planned expenditures plan in charge of
enforcing interventions based on the requirements. An appropriate budget schedule for each
platform and agency is equipped to expedite the commodity in efficient cost practises. In
addition, it meets all its price differentials both in manufacturing and in retail.
Inventory management study: The document is based on information obtained from some kind
of storage management platform centred on this financial statement considering the amount of
inventories present in a minimal and risky inventory, the expense of keeping any stock volume as
well as of requesting stocks throughout the future.
Performance report: It would be the most effective element that lets manager organisations
measure their success in terms of a known Performance Management system devise award-
winning measures and generate a results report prepared by the Airdri campaign manager that
allows us to understand effectively any group's output. This involves the efficiency of the
organization's workers when contrasting them to existing and previous performance. The study
acts as a roadmap, pushes individuals on the road of progress and achieves targeted targets that
are favourable to organisations. It is a crucial principle in all fields, since it increases the capacity
and ability of people on doing their job. The Airdri management produces this document on even
a regular stronger foundation on the necessary areas also for advancement of workers and for the
success of businesses.
Airdri Manager uses different accounting management frameworks for the formulation of
appropriate business plans that are helpful to meet targets and support efficiently decide on
business costs and choose the right solution for an organisation. Accountancy and business
reports are also a valuable instrument for gathering expense statistics, an inventory mechanism
capable of acquiring services to help in generating business records and a management of Airdri.
Both are effective in the provision of makes a major contribution for the creation of market plans
and budgets.
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TASK 2
P3 Calculation of cost & profit by using marginal and absorption costing
Marginal cost: This costing approach became known as contingent costs, as when the costing
method was only thought to be variable resources as well as to minimise income from these
measures.
Absorption costing: This framework is effective since all related transactions were taken into
account what company would effectively benefit from this costing method.
Total cost of production:
Direct materials 60
Direct labour 40
Variable production cost 20
Fixed production cost 20
Full production cost 140
Income statement:
Particulars May June
Sales 25000 18750
Less: Cost of sales
Direct materials 6000 4800
Direct labour 4000 3200
Variable production cost 2000 1600
Fixed production cost 2000 1600
Opening stock 0 0
Closing stock 0 700
Under/Over absorption 0 400
Gross profit 11000 7850
Less: Expenses
Variable sales commission 500 375
Fixed administration 3000 3000
Fixed selling 1000 1000
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Net profit 6500 3475
Marginal costing:
Total cost of production:
Direct materials 60
Direct labor 40
Variable production cost 20
Full production cost 120
Income statement:
Particulars May June
sales 25000 18750
Less: Variable cost
Direct materials 6000 4800
Direct labour 4000 3200
Variable production cost 2000 1600
Opening stock 0 0
Closing stock 0 600
Variable sales commission 500 375
Contribution 12500 9375
Less: Fixed cost
Fixed production 2000 2000
Fixed administration 3000 3000
Fixed selling 1000 1000
Net profit 6500 3375
Reconciliation statement:
Particulars May June
Net profit under absorption costing 6500 3475
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Add/Less: Closing stock 0 (100)
Net profit under marginal costing 6500 3375
Calculation of material
variances
Budgeted Actual Variances
Materials cost per unit £24 £18.67 £5.33
Inventory ledger record LIFO Method
Dat
e Description Sale/Purchases Balance
Unit
s
Cos
t Total
Unit
s
Tot
al
Jun
-01
Opening
Inventory 10 £35 £350 10
£35
0
Jun
-09 Purchases 15 £38 £570 25
£92
0
Jun
-15 Issued -12 £38 -£456 13
£46
4
Jun
-20 Purchases 10 £32 £320 23
£78
4
Jun
-23 Issued -10 £32 -£320 13
£46
4
Jun
-27 Issued -3 £38 -£114 10
£35
0
Jun
-30 Issued -2 £35 -£70 8
£28
0
Average cost methods
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Dat
e Purchases
Unit
s
Cos
t Total
Jun
-01
Opening
Inventory 10 £35 £350
Jun
-09 Purchases 15 £38 £570
Jun
-20 Purchases 10 £32 £320
Total 35
£1,24
0
Average cost of Inventory =
Total/Units
= 1240/35
= 35.42857143
By using Airdri manager this method marginal costing as well as absorption technology planner,
they can measure the efficiency of the expenses. Both are important for the quality and reliability
of business knowledge. In addition, uses costing method to measure the impact on benefit of
each business segment. As both are closely associated with the enterprise and can continue to
deliver effective outcomes for business. The outcome administrator of the company association
formulates their strategic agenda (Phan, Baird and Su, 2017).
TASK 3
P4 Brief explanation of advantage & disadvantage of planning tools
MA instruments that contribute to schedule preparation are recognized as planning tools and are
a variety of planning instruments used by Airdri are listed below. Plan is a document that
explains potential financial plans that acknowledge the possibility of benefit and loss for a given
amount of time called budgeting. Different forms of planning the budget are available:
Budgeting based on activity: the benefit and downside of this strategy is this way of planning
expenditure plan by the distribution of money on the basis of standard activity.
Benefit
This operation leads to a good outcome
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By way of activity-based budgeting company, their formidable origins can be allocated as per
market needs
Disadvantage
The time intensive approach is activity-based financial management.
Each workers is expected to plan an expenditure plan activity - based costing.
Rolling budget: this strategy is recognised because it is usually planned for much less that 1 year
and proceeds to be established by the planner, on the grounds of the recognition of the flaws of
prior Budget Adjustment Measures and Plans during the next Spending plan (Kokubu, and
Kitada, 2015).
Gain
Budget rolling to monitor and remove mistakes
The business corporation can quickly adapt its practises to the company's needs.
Disadvantage
It's time to consider why and embrace improvements to practises by workers, so it's impossible
to use technologies in a limited time.
Zero-based approach: it is typically helpful for new start-ups when both the details and budget
selected to obtain the relevant information is defined as ZBB, although the data is acquired at the
scratching level benefit and drawback, for this forecasting method is restricted.
Gain
This is a good place to launch new companies.
A budgeting assistance centred on zero includes detailed detail on accounting.
Disadvantage
Corporate companies need reasons which make because the use of expenses for testing and data
collection from inception was needed.
This approach is not beneficial for multinationals particularly if it is viewed as just a time-
consuming technique for a distributor in the very same town and faith at the moment.
Incremental budgets: Businesses use this budget to engage in strategic market benefits by
assessing and recognising the impact of expenses over a specific time. Manager keeps on
changing this budget as per the requirement to favour the company growth and profitability.
Gain
This methodology is valuable for industry techniques that are known as competitive or effective.
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Company enterprise will capture its potential business prospects with proper market analysis
Disadvantage
Needed environmental scan skills which is hard because nature is unpredictable
It was demonstrated that decisions surrounding strategy formulation tools use some resources.
Cash budget: When using this methods company can determine planning and execute plans to
help minimise costs and allot cash throughout their project to help manage cost waste using
different forms of common costing methods for this purpose (Pavlatos, and Kostakis, 2018).
Gain
Manager of Airdri uses regular costs to support the measurement of real and forecast costs.
Cost strategy to better formulate future corporate strategies.
Drawbacks
Process costing is not necessary to help achieve a timely and consistent outcome. Due to this
many time the important information get missed and it badly impact the company results and
performance.
All above discussed strategy tool Airdri will use or begin to create successful strategic plans
for its companies. Company uses an activities dependent budgeting process, which formulates its
budget, which really is helpful in good use within each resource of its organisation, in rendering
all these resources useful for decision-making in strong policies. Using an expense and financial
planning tool, the manager understands the trigger of increased costs and can have a clear effect
on the company's performance rate. Managers use these methods when they enable to search
company policy. In the context companies prepare their strategic targets and initiatives that lead
to meeting the targets. The topic above analyses the use of the finance manager as well as the
budgeting process towards control sample. Both instruments are important for fiscal monitoring,
since the major company has to implement all management accounting expenditures plan. It is
examined that the financial plan lets select the best alternative to purchase land, facilities and
infrastructure for industrial projects. In which the income statement covers both cash balances
including inflows as well as financial statements. It provides the firm's pre-determination and
estimation of revenue and output.
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TASK 4
P5. Comparison of how MAS use to resolve the financial problem
This form of dilemma typically occurs in small to medium-sized enterprises due to the
shortage of monetary capital in companies. Since the business and financial institutions are too
afraid to provide them with credit, companies are likely to suffer unlimitedly from that kind of
issue, they often struggle financially. The key factor behind their dilemma these times is that the
company will raise its profits and not receive debt collectors' money. Because of this, cash intake
activity would be utilised by administration accounts in contrast to their working capital
operations. Airdri's administrator willing to cover with financial issues that reduces the
performance and also de motivate the workers. Benchmarking including primary performance
metrics to solve the monetary challenge are usually used (Chiwamit, Modell, and Scapens,
2017).
KPI: This instrument is often used by the corporate organisation as per the grounds of
business measuring performance, to evaluate or determine the actual results. Managers create
productive organisational policy and plans that each department needs to follow or choose to
pursue on a time-limit basis. Managers evaluate the gap between the targets met and the goal set,
and can provide the company with rewards and prizes. Airdri is currently suffering from a
financial hardship because of its unattainable revenue target, based on its results. The sales
department achieves leverage by using main success metrics, in order to meet its fixed sales
target. They are encouraged to gain benefits by leveraging this organization's main success
metric to boost their revenue.
Benchmarking: This is also a common management accounting strategy in which this boss
judges on the grounds of the sector and sector adopted in his Competing industry. In Airdri, they
operate according this system to serve as a model in a given opportunity to bring currency from
some debtors. They often provide bondholders with such a prorated refund to make them make
donations in a limited period.
Financial governance: It promotes the legal application of the GAAP as well as the
International Economic Standard as a direction and guidance for the job. Pension division
constrained by the implementation of financial accounting strategies capable of sharing benefit
for financial responsibilities of business. It also helps hold society secure through the elimination
of illicit and internal trade practises (Horton and de Araujo Wanderley, 2018).
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Basis of
difference
Tesco Aldi
Monetary issue There are financial weaknesses in the
financial performance. Significant
decrease in market levels in Tesco
profits
Aldi is impaired by their resource
mismanagement. It is a cause of a
currency deficiency.
Techniques to
solve issues
The management team of Tesco will
use the main success metric to solve
the issue of the currency by offering
cash incentives to its workers.
They use benchmarking including
financial regulation so that they can
quickly solve fine issues. Since wealth
management without financial
management is difficult to handle
issues in Aldi.
Company organisation, due to a shortage of money capital, management accounting
techniques helpful in the distribution of information and control misuse of cash resources, which
allow administrators to effectively control over those challenges, struggles from a financial
crisis. Manager of Airdri gathers knowledge from forecasting resources in preparing budget by
using atmosphere scanning techniques that help inform business conditions. Managers create
techniques for controlling companies and evaluate pricing plans, on the framework of which they
incentivise and pay, as well as target workers. This financial and technology management
techniques are useful for meeting the corporate goal and can cover just about all the main
financial issues.
CONCLUSION
The review above indicates that any business organisation will have to use the accounting
methods and processes to handle all its operations. While using the expense inventory method
and even the price management solution organisation, value propositions can be described as a
rather critical way to determine how business costs are managed. They will consider benefit per
unit by adding marginal but normal costs. The budget that leads to risk control by removing the
organisational mistakes is beneficial to increase the profitability. In addition the powerful
primary success metric and bottom-line instrument for both the money issue to meet their
particular target by producing more working capital.
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REFERENCES
Books and journals
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