Management Accounting Report: Analysis of Capital Joinery Ltd.

This report provides a comprehensive analysis of management accounting practices within Capital Joinery Ltd. It begins with an introduction to management accounting systems, including cost accounting, inventory management, job costing, and price optimization. The report then explores the benefits of these systems and critically evaluates their application. Task 2 delves into cost calculation techniques, such as marginal costing, and emphasizes the importance of accurate application of management accounting techniques. Task 3 focuses on planning tools for budgetary control and analyzes their practical use. Task 4 compares different organizations' approaches to financial problem-solving and evaluates the effectiveness of various planning tools. The report concludes with an overview of the key findings and a discussion of the overall impact of effective management accounting on the financial performance of Capital Joinery Ltd.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Management accounting systems..........................................................................................1
P2: Management accounting reports............................................................................................3
M1: Benefits of Management accounting systems......................................................................4
D1: Critical evaluation of Management accounting systems......................................................4
TASK 2............................................................................................................................................4
P3: Calculation of costs...............................................................................................................4
M2: Accurate application of Management accounting techniques..............................................9
D2: Producing of financial reports...............................................................................................9
TASK 3............................................................................................................................................9
P4: Planning tools for budgetary control.....................................................................................9
M3: Analysis of the use of planning tools.................................................................................11
TASK 4..........................................................................................................................................11
P5: Comparison of organizations...............................................................................................11
M4: Analysis of response to financial problems........................................................................13
D3: Evaluation of planning tools...............................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting refers to a process under which the managers make the use of
analysis and interpretation techniques so that they are able to correctly use the given financial
data, facts and information so that the conclusions and recommendations can be effectively
derived (Ng and et.al., 2017). This is thus useful in the taking of short-term, medium-term and
long-term decisions in the future. This report is based on Capital Joinery Ltd. It makes Joinery,
made-to-measure doors and windows for different types of customers in the market. In this
assignment, focus will be made on demonstration of understanding of management accounting
systems, calculation of costs, explanation of the use of planning tools. Additionally, focus will be
made on comparison of ways in which organizations can make use of management accounting to
respond to financial problems as a part of this project.
TASK 1
P1: Management accounting systems
Management accounting is a decision-making tool which can be used internally by the
management. In it, the use of various types of systems can be made effectively and efficiently
(Macchia, 2019). The different systems which be used under it are as follows-
Cost accounting system- It is a system in which there is an estimation of different types
of costs which are incurred in an organization (Lee, Sim and Kim, 2018). Thus in it, the
organizations make sure that they are able to control the various types of costs in the right
manner. Thus in this way the management of Capital Joinery Ltd. Have to make the use of this
system so that they are able to assess and control the costs and overheads in the firm effectively
and efficiently. This will help them in the achievement of goals and objectives.
Essential requirements-
 In this system, there must be an use of appropriate methods as well as techniques like
Input Measurement System, Overheads Assessment and Segregation System so that the
companies are able to achieve their goals and objectives by reducing the costs. Thus in
this way Capital Joinery Ltd. Will be able to ensure that by making the use of this
techniques the company attain its goals and objectives effectively and efficiently.
 In this system, there has to be an use of methods for the purpose of cost control. This
helps the companies to be able to identify the excessive costs and control them in the
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right manner. In this way Capital Joinery Ltd. Will be able to identity its costs and
exercise a much-required control on them which will be quite helpful in the maximization
of profits.
Inventory management system- In this system, the use of appropriate methods and
techniques is made for assessing the stock level in the organization (Kumarasiri, 2017). In this
way the company will be able to make sure that the costs of maintaining inventory can be
reduced effectively and efficiently. Thus for Capital Joinery Ltd., the use of this system is
recommended so that it is able to assess the stock level and reduce the costs of maintaining it.
Essential requirements-
 This system must be useful for the firms in ensuring that the level of inventory is assessed
effectively and efficiently. Thus in this way it should make the use of methods and
techniques like LIFO, FIFO, Weighted Average Cost etc. so that the assessment of stock
level can be done. Therefore In the context of Capital Joinery Ltd. This system will help
the organizations as in this way it will manage its stock effectively.
 In this system, the use of methods and techniques for the purpose of forecasting of stock
items can be done. Therefore in this way an appropriate forecast of the inventory-related
requirements can be made effectively and efficiently. For Capital Joinery Ltd. The use of
this system will help the organizations in ensuring that it can a proper record of the level
of inventory can be kept.
Job costing system- In this system, there is an use of methods and techniques for assessing the
various types of job costs effectively and efficiently (Hyndman, 2016). In the context of Capital
Joinery Ltd. It becomes highly important that it uses this system because it is a manufacturing
company and therefore it has to control its job costs and earn higher-level of profits.
Essential requirements-
 This system must help in ensuring that the job orders are fulfilled on time. It thus uses
different types of job costing methods for the assessment of job orders to be fulfilled. In
the context of Capital Joinery Ltd. It will help in proper tracking and management of job
orders.
 This system must ensure that the job costs are identified and reduced in the right manner.
This will be thus helpful in enhancing the level of profits. For the managers of Capital
Joinery Ltd. This will be useful in the estimation as well as reduction of the job costs.
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Price optimization system- It is a system in which the various techniques and methods of price
determination are used (Gomez-Conde and Lopez-Valeiras, 2018). Thus in this way it is quite
helpful for the different types of organizations. In the context of Capital Joinery Ltd. It can be
used so that appropriate prices are set for enhancing the level of profits.
Essential requirements-
 In this system, the use of forecasting techniques is made so that the forecast of different
types of prices can be made. Therefore this can help in setting the right price. Capital
Joinery Ltd. Has to ensure by using these techniques an appropriate forecast of these
methods can be made effectively and efficiently.
 In this system, the statistical and mathematical methods must be used which can allow for
ensuring that the prices can be determined effectively and efficiently. In the context of
Capital Joinery Ltd. This will help a lot in setting a price which will help in the
maximization of the available profits.
P2: Management accounting reports
These reports can be used effectively and efficiently by the organizations so that they are
able to ensure that they perform the analysis and interpretation in a highly effective manner to
derive conclusions and recommendations which can be useful in the future (Gnawali, 2017). The
various types of reports which can be used by the management of Capital Joinery Ltd. Are as
follows-
Budget reports- In these reports the managers make use of approaches and techniques to
summarise the various budgets which are prepared (Clerkin, 2017). Thus in this way a detailed
report of these budgets can be prepared which can create an advantage for the firms effectively
and efficiently. In the context of Capital Joinery Ltd. It is quite important that they are framed to
identify the deviations and variances which are being incurred so that corrective steps can be
taken to remove them and achieve a higher-level of efficiency and effectiveness in the
functioning.
Inventory management reports- These reports are useful for the purpose of assessing
the level of inventory in the right manner. By using them problems and issues in the dealing of
stock can be reduced. Techniques like LIFO, FIFO, Weighted Average Cost can be used so that
a fair assessment of the costs of inventory can be made. For Capital Joinery Ltd. These are
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helpful in ensuring that the assessment of the level of stock can be done properly. This will
therefore help in reducing the costs of maintaining inventory and maximizing the level of profits.
Departmental reports- In these reports a thorough assessment of the work done by the
different departments of the organizations is made. Different departments like Production, HR,
Finance, Marketing and Sales have to ensure that they submit their overall performance which
they have made during a certain period of time. In the context of Capital Joinery Ltd. They are
therefore useful in ensuring that the efficiency and effectiveness level of the departments can be
enhanced which will thus be helpful in the enhancing the overall level of profits.
Performance reports- In these, appropriate assessment of the performance is made by
the firms. This helps the firms in raising the performance and thereby achieving the goals and
objectives. Thus in this way the different standards can be set for comparison of performance and
identifying deviations and variances if any. Therefore, for Capital Joinery Ltd. It is important
that these reports are used to facilitate an enhancement in the level of performance in the future.
Cost accounting reports- These reports are useful in the overall estimation of the overall
level of costs. Therefore in this way its use can be made by the management of Capital Joinery
Ltd. so that it is able to estimate the overall level of costs effectively and efficiently.
Inventory management reports- With the use of these reports the level of inventory can
be assessed highly effectively. Therefore in this way the management of Capital Joinery Ltd.
Will be able to ensure that the costs of inventory can be reduced effectively and efficiently.
Job costing reports- The use of these reports must be made so that the overall
assessment of the job costs can be made in the organizations. Thus in this way Capital Joinery
Ltd. Will be able to find out the job costs and can reduce them effectively and efficiently.
M1: Benefits of Management accounting systems
Cost accounting system is helpful in the determination of costs. Also it benefits the firms
by identifying techniques for reducing the costs. Inventory management system is helpful in the
management and tracking of stock level. Also it can benefit the organizations by reducing the
costs of stock maintenance. Job costing system can be helpful in the assessment of job costs
effectively and efficiently. Also it can help a lot in the taking of decisions which can result in
maximizing the profits through reduction in job costs. Price optimization system is useful in
ascertaining the prices to be set. Also it can be helpful in forecasting the price changes. Therefore
all of these systems are very useful for Capital Joinery Ltd.
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D1: Critical evaluation of Management accounting systems
The Management accounting systems are very important for being applied in the
organizations. Thus in the firms their use is crucial to analyse and interpret the given financial
data, facts and information so that crucial decisions can be taken. In Capital Joinery Ltd. These
systems can be helpful in evaluation and finding out the problems and issues which are being
faced. The managers have to make sure that the integration of these systems is done in the
overall processes and functioning of the company which can thus lead towards bringing of
improvements and maximizing the level of profits.
TASK 2
P3: Calculation of costs
In Management accounting, the use of different types of techniques can be made so that
the determination of costs can be made (Bisogno and Vaia, 2017). These techniques are not only
helpful in the assessment of profits but are useful in deriving conclusions and recommendations
which the management can use for the benefit of the company. The following techniques can be
used by the management of Capital Joinery Ltd.-
Marginal costing-
In this technique, there is an assessment of the level of profits and also the Break-Even
Point. Break-Even point is a point at which an organization neither earns profits nor incurs
losses. Therefore, In the context of Capital Joinery Ltd. It is very important that this technique is
used for a fair assessment of the level of profits in the right manner.
Advantages-
 This technique is quite simple to understand as well as use. Thus, Capital Joinery Ltd.
Has an advantage in making the use of this technique.
 This technique is helpful in the determination of Break-Even Point. Thus in this way an
advantage can be created for Capital Joinery Ltd.
Disadvantages-
 This technique is not helpful in the assessment and segregation of the overheads.
Therefore this leads towards a disadvantage for the management of Capital Joinery Ltd.
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 There is no guarantee of accuracy of this technique as it is based on certain types of
assumptions. Thus this can create a disadvantage for the management of Capital Joinery
Ltd.
Absorption costing-
In this method, a thorough assessment of the overall costs is made in the organization (Aouni,
McGillis and Abdulkarim, 2017). In it the costs, whether variable for fixed are charged to the
operations, processes and products. Also the use of this technique is made so that the
identification and segregation of the level of overheads can be done in the firm by allocating the
overheads to the different departments as per their expenses. For Capital Joinery Ltd. It is
important that the use of this technique is made so that the control over the expenses can be made
in the right manner.
Advantages-
 This method is useful for the organizations for identifying the overheads and thus
segregating them effectively and efficiently. In the context of Capital Joinery Ltd. This
can lead towards an advantage.
 Using this technique, the managers are in a position to take certain types of decisions in
the right manner. Therefore for Capital Joinery Ltd. This can create an advantage.
Disadvantages-
 This method is not simple to use and understand. Thus its usage requires the application
of skills and techniques. For Capital Joinery Ltd. A disadvantage can be created due to
this reason.
 The use of this technique is not helpful for the managers to take the decisions. Thus in
this way the managers of Capital Joinery Ltd. Face a disadvantage here.
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