Management Accounting Report: Comprehensive Analysis of Lets Grow Ltd

This report provides a comprehensive analysis of management accounting systems and their application within Lets Grow Ltd. It begins with an introduction to management accounting, defining its role in decision-making and outlining various systems such as job costing, price optimization, cost accounting, and inventory management. The report then delves into different types of management accounting reporting systems including budgeting, accounts receivable, cost management, and performance reports, along with their uses and benefits. Furthermore, it includes a detailed analysis of an income statement using marginal and absorption costing. The report also covers planning tools used for budgetary control, evaluating their advantages and disadvantages, and explores how management accounting systems can be used to solve financial problems, leading organizations to sustainable success. Cash budget of Lets Grow Limited is also provided in the report.

Management Accounting
Report for Lets Grow Ltd.

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1 Explanation of management accounting systems...................................................................3
P2 Explanation of different types of management accounting reporting system........................1
M1 Evaluation of the benefits of management accounting systems...........................................2
D1 Integration of managed accounting system and....................................................................3
TASK2.............................................................................................................................................3
P3Income statement using marginal and absorption costing.......................................................3
M2 Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents.....................................................................................................5
D2 Produce financial reports that accurately apply and interpret data for a range of business
activities.......................................................................................................................................5
TASK 3............................................................................................................................................5
P4 Advantages and disadvantages of different types of planning tools used for budgetary
control..........................................................................................................................................5
M3 Use of different planning tools and their application............................................................7
TASK 4............................................................................................................................................7
P5 Uses of management accounting system to solve financial problem.....................................7
M4 Analyses how, in responding to financial problems, management accounting can lead
organisations to sustainable success............................................................................................9
D3Evaluate how planning tools use for solve financial problem................................................9
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................11

INTRODUCTION
It can be define as tool which represents accounting information in an effective way to manage
their daily activity. It collects, records, analyzes and interprets information in a systematic path
for the organization to use in its decision making process. This branch of accounting also famous
as managerial accounting. Lets Grow Limited has been taken to understand this concept better.
This report identifies managerial accounting and the use of various managerial accounting
systems for the decision making process. Importance of managerial accounting reports for
business organization, techniques of management accounting use for preparation of budget has
been described clearly. It also includes how financial problem arises within an entity and how
manger can overcome this issue by adopting management accounting tools has been explain
briefly.
TASK1
P1 Description of managing accounting systems
Definition: - It refers to the application of business information, technology and concept to
create accounting information in a way that helps the management of the organization to
make business plans and policies. This will help control the organization's operations,
make decisions, optimize resource utilization, disclose management, and protect assets.
Their objective is to provide detailed information about the company's operations by
analyzing each person's products, operational activity, facility. etc (Otley, 2016).
Types of managing Accounting system ---
Job Coasting System: It can be define as as job order costing. The system is an accounting
method used to track the costs that go into creating a unique product. To keep track of the
expenses associated with specific jobs, job costs help businesses work out whether the cost
of individual jobs can be reduced, and whether there may be customers. Billed for additional
costs.

Process: - 1. Enquiry - They are concerned about the quality and price of material and orders
and they also take time to complete.
2. Price - Depends on tastes and preferences.
3. Order : - when customer is satisfied with the price the order is placed.
4 . Production order: - For begging it.
5. Coat recording: - It recorded at every stage of the process
6. Completion of job:- When the production process complete ,report is given to account for the
final product of the cost.
Price optimising System: - In this system mathematical programs that calculate how demand
varies at different price levels and then combine that data with information on costs and
inventory levels to recommend prices that will improve profits. The system allows
companies to use pricing as a powerful profit lever, which often is underdeveloped. Price
Optimization system can be used to tailor pricing for customer segments by simulating how
targeted customers will respond to price changes with data-driven scenarios. Given the
complexity of pricing thousands of items in highly dynamic market conditions, modelling
results and insights helps to forecast demand, develop pricing and promotion strategies,
control inventory levels and improve customer satisfaction (Nitzl, 2016).
Cost accounting system: - A cost accounting system is a platform that is used by managerial
accountants to accumulate, track and report on costs associated with products or services for
sale. The system is important for a business to understand how to price products and
services to cover costs (fixed and variable) and provide an ample return to make a business
successful. Cost accountants always develop product pricing strategies and control costs
through various techniques like service costing, batch costing, ABC costing, marginal and
absorption costing Etc. Also cost Accounting is the systematic procedure of ascertaining the
cost of product being manufactured & services being rendered. Cost accounting provides
analysis & classification of expenditure and also helps to understand the true cost of raw
material that constitutes total cost of product so as to control and reduce its cost.
Inventory Management System: - It is a process which is responsible for managing, storing,
moving, sorting, arranging, counting and maintaining the inventory i.e. goods, components,
parts etc. Inventory management ensures that the right inventory is available as per the

demand at low costs. Inventory Management makes sure that the core processes of a
business keep running efficiently by optimizing the availability of inventory. It includes
managing and controlling raw materials, stocks, finished goods, warehousing, storage and
other aspects which help reach the product from production to distributor or retailer. Each
organization regularly strives on efficient inventory management to uphold optimum
inventory to be able to meet its necessities and avoid over or under inventory that can impact
the monetary statistics of the firm.

P2 Description of various types of managing accounting reporting system
Reports are prepared as a proof of activites run during an events, meetings and in
conferences, all the decision, taken suggestions, order taken by mangers and other
stakeholders has been clearly describe in report in a systematic way. Management
accounting reports are formulated by mangers for analysing overall business activites of
the enterprises. Following reports has been made in management accounting process:
Budgeting report: This report is use for internal department. Managers use this report for
comparing estimates, standard projection with actual target achieve within fixed period of
time. This reports are formulated on the basis of collection of past record data and most of
time mangers build it by analysis all cost, production, purchase, sales, and master budget of
the organization. Budget reports are the summery of overall budgets prepared by business
organizations. Theses describe the future goals, and process of achieving the goals,. Small,
medium and large each type of organization prepares budgeting report for estimate their
income and expenditure. This report is also useful for business to recognize amount of
incentives, bonus given to employers for their performance. Manager of Lets grow limited
can use it for identifying their future earning and on the basis of data collected in this
report they formulated future polices for the organization (Quattrone, 2016).
Account receivable report: This report is formulated to analysis condition of account
receivables of the company. If business organizations are suffers from heavy extending
credit problem then this report are useful for them to solve their issue of credit. Accounting
receivable report is a summary of all the customers of business organization, whose
payment has been due. By using this report manger can easily identify number of default
debtors. With the use of this report they can analysis main causes of extension of credits,
why their debtors are not given payment on time. They formulate strict debtor collection
policy through which they can get payment from their debtors and they also build future
policies for their customers so that they attract their customers in a way that they pay their
debt liability within the given period of time. This report is also use to find potentials
debtors so that manger provides them discount and attractive offers to their potential debtor
in order to retain them towards the organization and it will also help in maintain goodwill
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of the company. Manager of Lets Grow Limited use this policy to solve their account
receivable problem and implement effective policy for them.
Cost management accounting report: This report is prepared on the basis of collection
of data related to all cost incurred during manufacturing, processing, distribution,
packaging process. Cost accounting report is summery of all expenses incurred during a
particular period of time. Business organization use this report for providing information to
their internal department as well as it is use in audit process also. This report provide detail
summery of the methods, use in calculation of cost, their interpretation, activites are
highlighted on which high cost incurred. With the uses of cost management accounting
repost manger can easily evaluate business operations and transaction which are main
causes of high cost and they can also identify profit and cost ratio. Manager of Lets Grow
Limited use this report for recognizing their organization cost and implement policies to
reduces cost and also use it for analysing their profit ratio with cost.
Performance report: This is essential report for every business organization whatever
they are small, big or medium size. All business enterprises use performance report for
evaluate their organization performance. This report is prepared under the last step of
management process, which is known as controlling process. This report is summery of all
reports prepare by mangers, it is use for evaluate and compare business performance from
past years and from rivalry industries. It is used for performance evaluation process of each
department and every human resource of the organization. Manager of Lets Grow Limited
use performance report to take future decision regarding training for their week workforce
individuals and also use it for compare performance of their business, and build effective
policies to enhancing performance of their departments (Chiarini, and Vagnoni, 2015).
M1 M1 Estimation of the profit of managing accounting systems
Management accounting systems are play vital role for successfully run an enterprises.
Manager of Lets Grow limited can use theses system as it will provides more benefits and
facilities for them. Cost management system help in identifying cost and controlling extra
cost increased during procedure, inventory system is help full n maximize use of resource
and mange sustainability within the organization. With the uses of job costing system they
can easily analysis which job and activity provides them more benefits and price
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optimization system help in taking essential decision regarding price and also use for
maximizing profit. All the management accounting systems wil be use for enhancing
performance of this business organization.
D1 Integration of managed accounting system
For run business organization in an efficient way integration of management accounting
system and reporting are necessary as both are depends on each other and both are vital part of
managerial accounting process. Management reports are prepared on the basis of data collected
by cost, inventory, job and price system. Reports Managers build their future policies and
strategies on the basis of management reports. By using both tools of management accounting
Lets grow limited can manage their business operations and make policies to control cost and
increase cash inflow activites within organization (Dekker, 2016.).
TASK2
P3Income statement using marginal and absorption costing
Cash budget: This budget is prepared for identifying future transaction of cash inflow and cash
out flow activites. It will help in recognize profitability rate of an organization and it also uses
for calculating various cost for company. With the use of this budget mangers can identify
relationship between cash and factors effect their outflows. This is also useful for determining
performance of a particular time period and with the use of cash budgets, mangers can make
policies related to risk management. Cash budget also use for environment scanning process.
Cash Budget of Lets Grow Limited
Particular March April May June July August
Opening
balance
20000 12000 43000 63000 23000 3000
A)Revenue 30000 36000 24000 28000 32000 34000
Sales 96000 120000 144000 96000 112000 128000
Total 146000 168000 211000 187000 167000 165000
B)Expenditure
Purchase 50000 50000 70000 80000 90000 100000
Wages 30000 30000 30000 30000 30000 30000
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Rent 12000 12000
Fixed expense 30000 30000 30000 30000 30000 30000
Variable
expense
12000 15000 18000 12000 14000 16000
Total 134000 125000 148000 164000 164000 176000
A - B 12000 43000 63000 23000 3000 (9000)
 Note: It has been assumed that loan negotiable from bank has been used for purchasing
fixed assets for the business organization.
 Depreciation is non cash items thus it is not considered while preparing cash budget
Marginal Costing: It refers to the cost of marginal or final product. It is defined as the cost of
one or more units produced in excess of the current level of production. Marginal cost varies
directly with production or sales volume. It includes principal cost, does not include any element
of fixed cost which is fixed marginal cost. (Kokubu and Kitada, 2015).technique.
Prime Furniture Income Statement (Marginal costing)
Particular March April May June July August
Sales 150,000 180,000 120,000 140,000 160,000 170,000
- Variable
cost
12000 15000 18000 12000 14000 16000
Contribution 138000 165000 102000 128000 146000 154000
- Fixed cost 72000 60000 60000 72000 60000 60000
Profit 66000 105000 42000 56000 86000 94000
Absorption costing: This means that all manufacturing costs are absorbed by production units.
In another way the cost of a finished unit in inventory would include variables, material, labor
and overhead as well as fixed ones.
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M2 Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents
The report used for evaluation performance of company on the basis of their monetary
outcomes. These reports show inflow and out flow of cash for a particular period of time.
Manager of Lets Grow Limited can use financial reposts to identifying their performance.
They can use it for formulating their future policies and also find error and problems in
cash inflow activites. Financial report document use as proof fir auditing prices and theses
are beneficial for achieving vision of the enterprises (Jamil, Zuriana, Mohamed,
Muhammad, and Ali, 2015).
D2 accurately apply a series of managing accounting technique and manufacture proper financial
reporting papers
Financial reports are the summery of each activity which is cash flow activates and financial
transactions like, inve4smnt in securities, loan, etc. These reports are help full in
determining effect of formal polices and reports mangers build polices on the basis of
analyzing this reports it will use in interpretation of data and also provides necessary
information both the factors..
TASK 3
P4 Advantages and disadvantages of different types of planning tools used for budgetary control
Budgetary control- Its managing the monetary and anti-financial efficiency in several
budgets. In this aspect of the budgetary feature, the executives of companies conduct corrective
action to generate more outcomes by implies of such financial plans. There are various kinds of
budgets and some of them are mentioned below in such manner:
 Operational budget -It is a type of budget that is linked to do the projection over a
certain period of time with income and expenses. With the assistance of this budget,
management can anticipate the volume of information needed to perform various
activities more efficiently. The operating budget is a prediction for future periods of
revenue and expenses. A management team usually formulates an operating budget just
before the start of the year and displays projected levels of activity for the whole year.
Throughout, the Lets Grow limited their managers take corrective action to cope with
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many organizational types. Within this program, for example, different techniques are
used:
Variance analysis- It can be defined as a type in which actual figures and estimates are
differentiated.
Standard costing- This is a mechanism which is connected and used as a reference to
compute incremental costs.
Benefit- This budget is useful for businesses to track their actual daily expenditure.
Drawbacks- There is some drawbacks also along with advantages of this budget. This
budget, for example, requires so much time and resources that small firms cannot bear.
 Flexible budget- It can be defined as a budget that fluctuates with production and shift in
quantity. This plan is constructed like the above business to potentially fluctuate
corporate finance operations. A flexible budget is a budget which adjustments or adjusts
with output or activity changes. A more advanced and valuable budget than a static
budget. This budget is much easier to use among different types of budgets.
Benefits- The budget is so convenient to use because clients can supervise their daily
expenses and income (Bobryshev, and en.at. 2015).
Drawbacks- It enhances data theft, as users may reveal real data each day by altering it.
 Capital budget- This is a form of spending plan related to the estimation of the
performance of long-term investments such as machinery, plants etc. Based on this
estimate, the Office of Financial services makes major lengthy-term investment choices.
In other words, Capital budgeting and expenditure appraisal is the preparation method
used to decide if the funding of cash via the capitalization structure of the company is
worth a long-term commitment of an entity Across the Lets Grow limited mentioned
below, their finance department has regularly used this fund for disciplinary measures to
realistically simulate financial capital. They often make savings by carrying out a
thorough evaluation of projects. Different methods are used here, such as:
Net present value- This is a method concerned with the assessment and alternative
decisions based on the current significance of the project.
Payback period- This technique calculates the average period of time to recover the
project costs.
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Accounting rate of return- The projected expense of a project return is calculated in this
process.
Internal rate of return- The return rate for a project is calculated in this method.
Advantage- This spending plan helps companies to determine more on the choice of
project plans.
Drawback- The main downside of this spending plan is that it is fully on the premise that
company cannot depend on its expectations.
M3 Use of different planning tools and their application
Many types of budgets are used by companies to make rational financial decisions. All these
predictions enable to track their cash flow efficiently and correctly predict specific projects
and events. The funds make vital forecasts in the context above Lets Grow limited, such as
the functioning budget, the adjustable budget. In determining basic income and expenditure,
both are relevant. This is likely because the company's management evaluates the evidence
to estimate future activities from previous years. It can be claimed that prediction
approaches for budgetary management are too relevant to be precisely forecast for various
types of financial activities (Modell, 2014).
TASK 4
P5 Uses of managing accounting system to solve financial problem
Monetary issues- In the current business environment, competition increases which gives
rise to a variety of financial problems. These problems arise from inadequate planning and policy
implementation. Essentially, due to lack of capital reserves firms are not conducting those
activities, financial problems arise. In this regard, the following are clarified about some of the
financial challenges that most businesses face: Errors in accounting records - This can be defined
as a type of financial problem related to data intentionally or unintentionally due to incorrect
coverage. This financial problem makes it impossible for companies to raise direct revenue,
management and more. He is struggling with this problem which has had an impact on his
financial reports in the above company Let's Grow Limited.
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