Management Accounting Report: SPA URBAN OASIS Financial Strategies

This report provides a comprehensive overview of management accounting principles and their application within the context of SPA URBAN OASIS, a hospitality business. It begins by defining management accounting and its systems, including price, inventory, job process, and cost management systems. The report then delves into various managerial accounting reports, such as budget, account receivable, job cost, performance, and manufacturing reports, highlighting their significance for organizational performance evaluation and decision-making. Furthermore, it explores key management accounting techniques, including marginal costing, standard costing, and absorption costing, demonstrating their use in cost analysis and profit calculation. The report also discusses the application of these techniques in financial reporting and the advantages and disadvantages of planning tools. Finally, it examines how managerial accounting systems are used to solve financial problems and contribute to organizational success, providing a detailed analysis of the strategies and techniques employed by SPA URBAN OASIS.

Management Accounting

Contents
Contents...........................................................................................................................................3
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Interpretation of management accounting and its systems.....................................................1
P2 Techniqoues of managerial accounting reporting..................................................................1
M1 Benefits of management accounting system.........................................................................1
TASK 2............................................................................................................................................1
P3 Management accounting techniques.......................................................................................1
M2 Application of management accounting technique and procedure of financial reporting....1
D2 Procedure of financial report and interpretation of its benefits.............................................1
TASK 3............................................................................................................................................1
P4 Explanation of advantage and disadvantage of planning tools..............................................1
M3Using of planning tools for forecasting..................................................................................1
TASK 4............................................................................................................................................1
P5 Uses of managerial accounting system to solve financial problem........................................1
M4 Explanation of how management accounting can lead organization success by resolve
financial problem.........................................................................................................................1
D3Explantion of uses of planning tools to solve financial problem............................................1
CONCLUSION................................................................................................................................1

REFRENCES...................................................................................................................................2
INTRODUCTION
Management accounting is essential part of the functional managerial process. It is a
framework through which business organization collated record, communicate and
interpreted accounting for taking mandatory decision regarding operating and future
activities of the business. In order to understand the concept of management accounting SPA
URBAN OASIS has been taken. It is a medium size organization which deals in hospitality
sector. It is situated within Hilton Hotel of Manchester. SPA URBAN OASIS provides
beauty, wellbeing, relaxing service lash skincare, s to their cutover. The organization
provides various beauty product which includes, Sothy skincare, s, eye lashes, remover and
other beauty product to their customers. In this report various management accounting
system has been described clearly with their importance in taking decision regarding
operation activities. This report also consider, managerial reports which help in
reorganization of performance of organization as well as it is consider how manager apply
tools and technique of management accounting in order to identify man causes of issue
arises related to financial problem and preparation of strategies to Sault out these problems.
TASK 1
P1 Interpretation of management accounting and its systems
Management accounting: It is a systematic process which is applied by organization to
increasing their efficiency as well as utilized the professional knowledge in order to make
polices and taking decision regarding future activities through which organization will be
able to achieve their goal. Management accounting also popular as he term managerial
accounting which directly means a process which use management financial and principle
in order to collect, recognize and interpret accounting information in front of internal
department of the organization (Messner, 2016 ). Different business communities use these
tools for achieving their different objective and solving out their problem. Manager of SPA
URBAN OASIS will be used these tools. They used various type of management
accounting system which describes below:

Price management system: This system has been applied in business organization to determine
price of each product and service they provide to their customers. It will help in earning profit as
base of the revenue is totally depend on the price
policy a manager decide to their services and products. It includes various types of pricing
strategies , price penetration, discount , price skimming , cost pricing all these strategies used by
management in order to determine price. Manager of Job process system will used price
penetration and skimming strategies as they deals with providing various services to their client
and each customer’s needs and different demand thus order to provide them profit and they
decide to choose price penetration strategy (Vosselman, 2014).
 Inventory management system: This system of management accounting used
various inventory mechanism technique though which manager can easily identify
current future and past record of inventory. On the basis of these data managerial
accounting reports are prepared which is the basis of performance analysis.
Manager of Job process system can be used ABC JIT analysis technique EOQ, in
order to identify maximum, minimum level of inventory system through which
they can formulate profit and control wastage of beauty product and services.
 Job process system: In this method of management accounting , each process of
operation activity are used to calculate . Job process costing system consider as
system through which management are able to reorganization the cost of each
activity incurred management procedure. It is one of the most useful system .
Manager of SPA URBAN OASIS Job process used this system to calculate cost of
each process of their services in order to achieve goal.
 Cost management system: In this system various types of cost mechanism are
applied which will help in utilized cost of organization. Standard, marginal, job,
and process costing are part of cost management system. Business organization
decide policies according to the availability of resource and objective of their
organization Manager of Job process system will be able to set up standard cost
and job cost management system in order to calculate their cost of manufacturing
and services provided to their client . This system also used all to formulate
strategies to control of cost.
 Principles of management accounting

 Effective management accounting principles are implementation for decision
making in companies. Managers follow above principles
 They follow principles of influences , nay their effective communication skills they
influence their subordinates
 They follow relevant principles on the basis of that they only provide relevant
information,.
 Value which improve performance of organization.
P2 Techniques of managerial accounting reporting
Reports are the prepared for managers to identify whatever heir organization performing well or
not. A comprehended management accounting report has been formulated by manager for
reviewing their organization performance. Following are the managerial report Murrill
Construction Limited can be apply in their business:
 Budget report: It is the most fundament managerial report. It is formulated to understand
and manage the cost across the business organization. Budget reports has been prepared
on the basis of past year performance, manager collected data and formulate report within
help in showing overall performance and income and profit statement of the business
organization. Manager of Murrill Construction Limited will be used this report in order to
identify their estimated profit and loss.
 Account receivable report: It is formulated to identify each section of customers
performance Account receivable report is a brief summery which collect information
regarding time taken by business organization to collect money, credit base of the
organization. By using data of this report manager can formulate strong credit policy go
their customers so that they can easily ay their debt amount to firm. Murrill Construction
Limited work for build highway, building, apartments thus their organization suffers
from heavy financial problem as they did not arrange money at the time they
required .Thus this report held in identify those debtor which will be not pay amount sue
of the organization

 Job cost report: It is formulated to provide a view of cost incurred in particular project.
This report help full for identifying cost incurred of each activity of project. Manager of
Murrill Construction Limited can b used this report to evaluate profitability of specific
their objective and optimize each level of operation of those activities by focusing n
business operations. This report help in cost reduction (Schaltegger, 2018).
 Performance report: It is essential part of management accounting report. This report is
prepared to identify performance of each department of he business organization. It is a
brief summary of all the report formatted in business organization. Performance report
useful for formulating strategies regarding incentive and bonus. Manager of Murrill
Construction Limited will use this report to analysis overall performance of internal
department of business organization. It will help in focusing on each part of the
organization
 Manufacturing report: This report is formulated to centralized data related to labor,
inventory cost, and manufacturing process cost of each activity . it is a brief summary of
each production process, this report is prepared to formulated policies regarding
controlling of wastage activity (Chiarini and Vagnoni, 2015).
M1 Benefits of management accounting system
Manager of SPA URBAN OASIS use various types of management accounting system in
order to increase performance of their organization as well as enhance the capabilities of their
work force. Their organization provides best service to their clients this it is essential for them to
change their capabilities and in order to maintain position in market use management accosting
system. By using price optimization system they will be able to decide correct price of their
services through which they can gain profit at high rate as well as their cost management system
help in deciding the cost mechanism study though which they can able to recognise cost incurred
in each activity . Inventory management system used to control their expenses regarding high
material skincare and beauty product it will help in increasing profit this reducing cost. This

TASK 2
P3 Management accounting techniques
Management accounting technique includes those methods through which manager will be
able to identify cost incurred during the manufacturing, sells and distribution business
activities. Following are the methods management accosting which are describe below
 Marginal Costing: This managerial accounting method also known as variable
costing method . In this method managers calcite only variable cost for calculating
of their profit. This method is also useful for considering the cost benefit analysis
as it will the basis of break even analysis. Marginal costing technique consider the
additional effect of adding and subtracting each particular product on costing and
profit. By using marginal costing method , operating and financial leverage can also
be find out. This technique help in calculating break even analysis, point of margin
safety ,ad relationship of profit with each line of income statement of business
organizing. Manager of SPA URBAN OASIS will used this method order to
recognize cost of their service (Kokubu and Kitada, 2015).
 Standards Costing: In this managerial accounting technique cost had been calcite
for performing evaluation. Standard costing can be calculated by identifying
material, labour and overhead variance of the organization. This variance help in
analysis actual cost incurred in during the process of manufacturing and selling
process of products and activites. Standard costing s the difference of actual cost
and standard cost decided by manager. By identifying difference between the actual
cost manager will be able to formulate policies regarding reducing of difference. It
will help in reducing expenditure incurred on unwanted business activities. These
are useful for Spa organization tougher which they able to generate gain.
 Absorption costing: In this method manager consider direct and indirect element
of business activities in order to formulate income statement. Absorption method of
costing included fixed as well as variable cost incurred during manufacturing
process. It will help in recognize, gross profit, operating profit and net profit of the
organization within particular time period. By using this technique manager of SPA
URBAN OASIS can be calculate and compare their net profit ratio, operating ratio
it will help in comparing relationship between each factor of business income
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statement. Manager of SPA URBAN OASIS will be used this method in order to
recognized the profit earn during given period of time by using their business
operation services.
M2 Application of management accounting technique and procedure of financial reporting
Management accounting technique used by business organization for calculating of their
profit and cost . Manger of SPA URBAN OASIS use standard costing and absorption costing
method to identity their fixed as well as variable cost and profit incurred in each quarter of
financial period. These tools help in formulating business report also.
D2 Procedure of financial report and interpretation of its benefits
Financial report is prepared by calculating data related to financial information, manager of
SPA URBAN OASIS collect the financial data by journals and accounting ledgers by
using theses data financial report are help in providing each and every short detail
regarding each activity of financial transaction as well as future position of financial
resource of the organization (Bobryshev and en.at 2015).
TASK
P4 Explanation of advantage and disadvantage of planning tools
Planning tools are used to provide brief description regarding each activity. It includes
those tools and technique which will help in controlling and supervising cost activites of
the organization. Manager of. SPA URBAN OASIS use following planning tools, theses
is mention below:
Activity based budgeting: Theses type of budgeting technique includes formatting budget plan
in a way which consider only allocation of cost related to each activity . Manager prepares their
budget n the basis of resource allocation.
Advantage
Activity based budgeting will help in allocation of resource in a systematic way.
This method is also beneficial for providing accurate information regarding future.
Disadvantage
Activity based budgeting needs time for allocation of each resource.
This method is not useful for each sector of economy.
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Rolling budgeting: In this type of budgeting technique, manager prepared short period
numerical statement which help in describing income and expenses of short period of time
mostly monthly or quarterly. Rolling budget is based on continuous basis. Manager use
this method to overcome past budget mistake.
Advantage
Rolling budget help in providing reliable information
This method is useful for minimizing errors and control cost of wastage
Disadvantage
Preparation of budget for continuously basis is time consuming process.
Conflicts arise due to changes of polices on continues basis between managers and workforce of
the business entity.
Zero based budgeting: by them in this planning tool manager build budget from data
collected in initial research program. In this method manager does not consider past
records they take each information from new research programme (Modell, 2014).
Advantage
It will help in providing accurate and correct information regarding future business
performance.
Zero base budgeting method help in increasing coordination among team members
Disadvantage
It is expensive process of budgeting.
This method is not applicable for each type of situation specially when organizations are
engaged in providing homogenous product and service from long time period
Pricing strategies: This is one of the most essential planning tools of management
accounting function. This tool is useful not for only identifying pricing rate for each
service but also for controlling cost and mitigates risk of future uncertainties. Various type
of pricing strategies are useful, pricing skimming, discounting pricing penetration.
Manager of . SPA URBAN OASIS use price skimming strategy for their customer. They
decide their rate on the basis of status of their customers and brand of their services.
Advantage
This tool of planning control helpful for maximizing revenue rate.
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Pricing strategies help in controlling cost of activities
Disadvantage
Prices are depending on the factors of demand and supply thus decision taken on the
basis for particular study does not give permanent result.
It require high qualities expertise which research the market condition and decided which
pricing strategies provides maximum benefit to the organization
Cost system : By using this system business entities will be able to mitigate their loss of
cot as well as it will also useful for optimum utilization of scare resource of organization.
Manager of SPA URBAN OASIS will be use the marginal costing as well as standard
costing method to identify cost of their services and inventories (Brandau , Endenich,
Trapper and Hoffjan, 2013).
Advantage
This system is used for environment scanning process
Disadvantage
It does not provides guarantee to provide accurate information regarding calculation of
cost
Calculation of cost is require a skilled accounted which has knowledge regarding all the
Variance analysis:
Variances deals with an analysis of deviations in the budgeted and actual finical
performance of an organization. Spa URBAN use this for recognized differences.
Advantages
It helps mangers in making effect detailed and forward looking budgetary division
Act as controlling mechanism.
Drawback
Based in financial results which are released much later.
Budgeting exercise may be loosely done which is bound to deviate from the actual
numbers.
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M3Using of planning tools for forecasting
Various tools of planning in management accounting process have been used for
forecasting process. Forecasting is an activity of predication of future income and
expenditure and business position. Manager of URBAN OASIS use activity based
budgeting method for forecasting as well as standard costing and marginal costing also
useful for estimation o cost and pricing strategies will be help in identifying future profit
rate per unit.
TASK 4
P5 Uses of managerial accounting system to solve financial problems
Financial Problem: It is a situation faces by organizations when they have lack of financial
resource. Financial problem is a phase where manages are unable to provides funds for
fulfilling day to day operations activities. This problem is a main reason of slow growth
rate of business organizations. SPA URBAN OASIS is now facing from financial problem
man reason of their money issue is that from the past few year sales rate has been decline
as well as cost incurred on purchasing wastage material, heavy stock of products had been
experience without their use. They also use effective financial management technique,
marginal costing and standard costing to solve financial problem.Manager this
organization will be overcome this problem by applying tools of managerial accounting in
their organization, which are describing below
Key Performance Indicator: It is a tool of managerial accounting mechanism which
manager has been apply to analysis performance of each sector of their organization.
Manager of SPA URBAN OASIS use this method to increases their sales for this purpose
they set fixed limit and compare their actual sales with past sales . KPIN also useful for
providing policies related to incentive (Spraakman, O'Grady, Askarany and Akroyd,
2015).
Benchmarking: In this method a benchmarking been decided and on the basis of
benchmark, manager recognized performance of each business activity. The benchmark
could be selected by past year perform of organization or their rival companies or
benchmarked selected by government for particular organizations. Manager of SPA
URBAN OASIS use benchmarking to control cost of wastage activites. Bt sung
benchmarking technique they will be able to identifying those products which are less
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necessary and not effect earning for their business operations. Benchmarking will be help
in reducing the cost of wastage and increase cash reserve of the organization.
Financial Governance: It is a policy manager use to track their overall business
operations. It will help in supervising whatever manager operate their activities in a
systematic and ethical manner or compile with law. Financial governance used for
controlling miscellaneous activites within organization. Manager of SPA URBAN OASIS
use financial governance policy t provide best quality of material to their customers
through which they increases and it will be help in increasing sales for upcoming year.
Particular SPA URBAN OASIS Sunshine Limited
Monetary issue The main reason of monetary issu is
that
This has been evaluated that
organisation issue is related to the
factor that finances are not properly
secured. This affect proper track and
assess of property value.
Techniques to
solve issues
Respective entity undertake use of
benchmarking in order to overcome
financial issues, by taking use of this
compare financial reports with other
entity and implement measures to solve
them in initial stage (Granlund and
Lukka, 2017).
It has been evaluated that entity
manager undertake use of main
success metrics, by taking assistance
of this method company can evaluate
financial consequences and further
resolve them in then define manner. If
possible, in this assets real worth get
calculated and compare with normal
interest.
M4 Explanation of how management accounting can lead organization success by resolve
financial problem
Management accounting tools used to recover organizations from their financial and other ethical
issue and help in build strong position within the economy. KPI , benchmarking tools help in
valuation of performance of the business by using data from threes tools manger formulate
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polices regarding controlling of cash out flow activities and invest in those operation through
which they can increase their net earnings (Hiebl, Duller, Feldbauer-Durstmüller and Ulrich,
2015).
D3Explantion of uses of planning tools to solve financial problem
Manager of SPA, URBAN OASIS use activity based budgeting method to evaluate future
earning as well as various pricing strategies hell the manager to control the wastage cash outflow
and increase cash inflow activities within the organization in order to solve the issue of financial
problem
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CONCLUSION
From the above analysis it has been identified that if an organization wants to maintain their
sustainability within the market then they need to used management accounting srtagy
within their organization. Cost, job and inventory management system help managers to
determine the cost incurred in operations activities as well as theses system useful for
understand price mechanism. On the other side various management report used for
environment scanning procedure which will help in analysing performance. Marginal
costing., standard costing technique used for calculation of cost and profit through which
manager can find out main causes of arising of financial problem. By sing KPI,
benchmarking and financial governance policy manager of the business entity will be
able to overcome the financial problem (Quinn and Jackson, 2014).
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