Management Accounting Report: RL Maynard's Financial Strategies

This report provides a comprehensive analysis of management accounting principles and their application within the context of RL Maynard, a construction company. The report begins with an introduction to management accounting, emphasizing its role in financial reporting, cost management, and strategic decision-making. Task 1 explores various management accounting systems, including price optimization, inventory management, cost accounting, and job costing, highlighting their benefits and essential requirements for RL Maynard. Task 2 delves into cost calculation techniques and different types of accounting reports, such as budget reports, cost managerial accounting, job costing reports, performance reporting approaches, account receivable reports, and inventory management reports. Task 3 examines the advantages and disadvantages of different planning tools and their applications, while Task 4 focuses on comparing RL Maynard with other organizations to overcome financial issues, evaluating the roles of management accounting in addressing financial problems, and assessing the effectiveness of planning tools. The report concludes with an overview of the key findings and recommendations for RL Maynard, emphasizing the importance of effective management accounting for sustainable financial performance and strategic growth.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Types of management accounting systems and its essential requirements......................1
P2: Types of management accounting reports and its importance to management...............3
M1: Benefits and application of management accounting systems........................................5
D1: Critical evaluation of various reporting and accounting system.....................................5
TASK 2............................................................................................................................................6
P3: Calculation of cost using an appropriate technique.........................................................6
M2: Various types of accounting techniques.........................................................................8
TASK 3............................................................................................................................................9
P4 Advantages and disadvantages of different types of planning tools.................................9
M3 Use of different planning tools and their applications...................................................11
TASK 4..........................................................................................................................................11
P5 Comparison with other organizations to overcome financial issues...............................11
M4: Roles of management accounting in evaluating financial problems............................12
D3: Evaluation of planning tools for respond financial issues.............................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting is one of the crucial aspects which is being used by the manager
to manage and evaluate transaction according to the set standards. It is said to be vital process
that involves formulating management reports and accounts that can deliver accurate and on time
financial information to an organisation. It would provide “RL Maynard” to manage their entire
business transaction in appropriate manner. This project module provides vital information
regarding various types of accounting and reporting system use by “RL Maynard”. In addition to
this, different planning tools which are used in controlling budget are mentioned in this report
along with their merits and demerits. Also, several costing methods such as marginal and
absorption costing methods are taken into account for evaluating Net profit. Further, various
financial tools which assist RL Maynard to resolve financial issues are briefly discussed in this
report along with their comparison with rival company in terms of using financial tools
(Baldvinsdottir, Mitchell and Nørreklit, 2010).
TASK 1
P1: Types of management accounting systems and its essential requirements
Most of the business organisation, it has essential to have effective management
accounting system so the proper record of information can be done by the company. this will
assist them in attain all essential data in various format. It can be further explaining by taking
innovative definition of the management accounting which is discussed underneath:
Definition (Management accounting): It is known as one of the valuable system that can
record, summarise and evaluate all the journal entries in their respective format. It states that
management accounting requires knowledge and professional skills to maintain accounting
records and reports to facilitate management in acquiring information related with current
financial position of company (Bedford, Malmi and Sandelin, 2016).
Meaning: Management accounting assist organisations to identify its actual financial
position or performance at present time through preparing various kinds of accounting reports
with the help of using accounting systems. Such reports include Profit & Loss a/c, Balance sheet,
Cash flow statement etc.
Therefore, management is considered as an integral part of an organisation which drives
an organisation to sustain in competitive market for longer period of time. For this, an

organisation is required to get sufficient support from accounting manager who are liable to
provide true and accurate information about company's financial position and performance in the
market at each accounting period. A manager is likely to attain this objective by using various
accounting systems such as price optimisation, cost accounting system, job costing system etc.
RL Maynard is a construction company due to which it is important for them to identify the cost
which are required to be incurred in future project activities. Along with this, availability of raw
materials used in construction activities, taking decisions according to the budget of their clients.
Therefore, it is essential for RL Maynard to maintain its actual financial performance so
that on the basis of which they can prepare budget and allocate resources to all project activities
which can be possible through management accounting systems (Cadez and Guilding, 2012).
Importance of using management accounting systems:
Increase in achieving loyalty of targeted customers: Price optimisation system brings
loyalty of clients towards an organisation as such system help in identifying their clients budget
due to which they perform further project activities. It motivates company to complete whole
project within client’s budget or even less than budget which help in gaining loyalty of
customers.
Measurement of performance: Management accounting identifies the actual
performance of all department by comparing it with the standard performance. It helps in
identifying the deviations if any, which allow management to consider while making future plans
and strategies. For example, Cost accounting system help in preparing budget to allocate cost to
specific project activities which minimises the wastage and cost of construction process.
Effective management control: Management accounting system assist RL Maynard to
operate business activities more smoothly without any interruptions. For example, Inventory
management system help company in acquiring the present inventory position of company which
guide manager to make decision whether to order further inventory or not (Contrafatto and
Burns, 2013).
Different management accounting systems:
Price Optimisation system: Management are liable to set an effective pricing strategies
and plans which can be possible through determining the budget their clients have to execute
their project. For this, management is required to get support through using price optimisation
system within an organisation. RL Maynard is engaged in construction business due to which it
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is essential for them to first determine the funds the clients want to spend and accordingly make
plans to execute future project activities.
Inventory management system: It is essential for RL Maynard to have availability of
resources at the time of starting construction project of their clients. For this, the management are
required to first identify the current inventory position of company and thereafter make decision
regarding ordering raw materials whenever it required. It also required to maintain healthy
relation with their suppliers which are ready to avail them sufficient amount of inventory at right
time at right place at right price (Knežević, Stanković and Tepavac, 2012).
Cost accounting system: Cost factor determines the ratio of profitability of any project
activities due to which the management make decision more carefully regarding allocation of
cost with an objective of minimising the wastage. It can be possible by management through
adopting cost accounting system which helps in identifying the total expenses that to be incurred
in future project activities after analysing cost of previous projects. Such system guide the
management of RL Maynard to invest funds carefully after analysing future complexities and
contingencies.
Job costing system: RL Maynard is engaged in construction business due to which lots of
activities are done wither individually or in group. For this proper allocation of cost are must
required in order to minimises the wastage incurred in manufacturing process. This requires RL
Maynard to adopt Job Costing system within an organisation so as to identify the cost required to
be incurred in project activities and allocate them accordingly. Under the such accounting
system, there are various methods are required to be used such as Batch Costing, Process costing
and contract costing (Lee and Cobia, 2013).
P2: Types of management accounting reports and its importance to management
An organisation can survive in competitive market for longer period of time only if it has
attained strong financial position which can be identified through preparing different accounting
reports. It includes Profit & Loss a/c, Balance sheet, Cash flow statement etc. on timely basis.
Every transaction either made in monetary or monetary terms must required to be recorded at the
time of transactions. Thus, the same are required to be performed by RL Maynard in order to
identify their actual financial position in competitive market world. There are different reporting
systems such as cost accounting, job costing, inventory management system etc. which are
required to be prepared so as to manage all the business work in an effective and efficient
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manner. Preparation of accounting reports also useful for internal as well as external parties of an
organisation so that they further decide whether to invest more funds in company or not.
Reporting: It is known as one of the valuable documentation of various financial
statements that are prepared by the accounting within an accounting period of time. All those
statements those are taken into account are profit and loss, balance sheet and statement of equity.
Such type of management reporting systems is briefly described under below:
Budget Report: It is one of the basic and fundamental report that are been prepared and
maintained by RL Maynard for analyzing and managing its expenditure across its business
activities with its overall performance. A budget is formulated in order to understand major
scheme of the company that list down sources of funds that are available with company and
various expenses that are likely to be incurred in near future. RL Maynard always tries to attain
its vision, mission and objectives while staying within its pre-determined budget line. Thus
managers of RL Maynard by analyzing firm's previous year budgets tries to find out areas of
operations where in there is scope of cost cutting in order to save funds and utilize them in some
more functional and productive areas (Maher, Stickney and Weil, 2012).
Cost managerial accounting: It is basically related with the managerial accounting.
Management accountants required to determine cost and their concepts. These are more useful in
plenty of areas of operations that are done within an organization. R.L Maynard need to make all
the essential required those are associated with cost and record them into their respective sheets
or report (Ter Bogt and van Helden, 2012).
Job Costing reports: In job reports RL Maynard list down every business activity that is
been conducted by firm along with total expenditure incurred on each job in the previous
financial year. By doing so firm tries to match expenditures with estimated revenues earned by
firm in order to ascertain and maintain their profitability levels. Job costing reports includes
various methods like batch costing, process costing and contract costing. Thus, these reports help
RL Maynard to track down performance of its workforce along with work done by them in most
systematic manner.
Performance reporting approach: This approach involves preparation of reports
regarding performance of employees on the basis of pre-determined performance standards so
that fair and authentic judgment could be taken by making comparison between past and current
year data. RL Maynard implements this technique for ascertaining its financial statements so as
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to make estimation about company's actual level of performance in market in context to its
leading rivals.
Account receivable report: This is the report which is prepared to identify the cash
inflow of an organization which will be collected in future. It contains all the information related
with list of debtors whose payments are due to the company. It facilitates management to make
an effective decisions regarding recovery of pending payment which strong their financial
position. It forces management to re-think their existing credit policies so that the company will
not faces any type of bad debts (Noreen, Brewer and Garrison, 2014).
Inventory management report: This report helps RL Maynard to maintain sufficient
stock levels and to identify re order quantity and time. As company deals in construction
business where there is high requirement of raw materials and inventory level is required to be
sufficient so that there is no hindrance in business operations. Thus, for ensuring this managers
of RL Maynard collects information from these reports so as to place order of inventory at right
time. Without any delay. It involves EOQ, ABC costing techniques that facilitate managers to
formulate inventory report (Quinn, 2014).
M1: Benefits and application of management accounting systems
RL Maynard receives various advantages by implementing several management
accounting systems. Mentioned below are certain benefits:
Management accounting systems Benefits
Cost accounting systems It assists in reducing wastage of cost by allocating
cost and resources by ascertaining probable future
outcomes.
Inventory management system It helps RL Maynard to maintain optimum stock
levels so as to meet market requirement and
demands.
Price optimisation system It assist in attaining and maximizing customer's
satisfaction level by undertaking an effective pricing
strategy
Job costing system It enables firm to determine its total cost that is spend
on manufacturing individual product or bulk
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products.
D1: Critical evaluation of various reporting and accounting system
There are various types of accounting and reporting systems that facilitate effective
decision making and formulation of suitable plans by providing relevant and authentic
information to the managers. For instance, performance report contains essential information
related to the performance levels of firm along with areas of operations that requires critical
attention and needs more funds to be invested and more monitoring to enhance its performance
so as to improve overall profitability of firm.
TASK 2
P3: Calculation of cost using an appropriate technique
Cost: It can be describing as the amount which is spent on the production or in acquiring
something for attaining profitable outcomes. More briefly it could be taken as the valuation of
efforts, time resources, risks etc. that are taken by an owner for undertaking various business
operations. There are various types of cost that are mentioned below:
Fixed cost: It is said to be that cost that remain unchanged in case any increase or
decrease in the production of addition units. Such as factory rent or insurances etc.
Variable cost: It is known as one of the effective cost those are changes with the
production of addition product (Soin and Collier, 2013). There are certain examples such as
carriage and fuels charges.
RL Maynard is a construction company thus it is essential to allocate and manage cost
incurred in particular construction activities in more effective and efficient manner so that the
chances of having wastage will be minimum. It directly makes positive impact on the
profitability and sustainability. For the management to calculate net profitability, there are two
methods such as marginal and absorption costing method which are briefly described under the
below:
Marginal costing:
It is such a method including only variable costs while making calculations of net
profitability. It is considered as useful method which are adopted when one extra unit of output
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are produced other than main output. It either increase or decrease the total production cost
which depends on the level of output produces (Renz, 2016).
Absorption costing:
It is such a method which includes both variable and fixed cost. Due to this, the net
profitability of company is much affected. It is required to Generally Accepted Accounting
Principles (GAAP) external reporting. For example, Direct cost includes labour cost, material
costs etc. Inclusion of variable cost decreases the net profitability of company thus less adopted
by most of the organisations.
Calculation of net profit by using marginal costing method:
Marginal costing method -
Particulars Amount
Sales revenue 33000
COGS 9600
Production 800*16
128
00
closing stock = 200*16
320
0
Contribution 23400
Fixed cost ( 3200+1200+1500 ) 5900
Net profit 17500
Computation of net income by using absorption costing method:
Absorption costing method –
Particulars Amount
Sales revenue 600*55 33000
COGS 14025
Gross profit 18975
Selling & Administrative expenses 1 * 600 +
2700 3300
Net profit/ operating income 15675
(a): BEP: Fixed cost / contribution
: 6000/12=500
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(b): PV ratio: Contribution / sales *100
: 12/40*100=30%
BEP in sales= 500*40
= 20000
(c): The number of products that need to be sold to make profit of 10,000
Desire profit= contribution / contribution per unit
= 16000/12
= 1333.33
(d): The margin of safety if 800 products are sold
Actual sales: 800
BEP sales: 500
MOS: 800-500 /800 * 100: 37.5%
M2: Various types of accounting techniques
There are mainly two methods of accounting techniques which includes:
Standard costing: It is a useful method which help in calculating future profitability by
considering various elements including future sales revenue, costs and demand. Such method is
most preferable by most of the companies in order to ascertain future outcomes.
Marginal costing: It is adopted by almost every organization including RL Maynard So as to
ascertain net profits through considering only variable costs.
D2: Data interpretation
As according to the above calculation, using marginal costing method, the profit is 17500
whereas using marginal costing method the profit is 15675. Such difference of 9600 are found
due to inclusion of variable cost. In Break even, total number of units sold are 500 and total
amount of sales revenue to achieve breakeven is 20000. To earn minimum profit of 1000, RL
Maynard required to achieve sales revenue of 1333.33. The safety margin is 37.5 when 800
products are sold.
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TASK 3
P4 Advantages and disadvantages of different types of planning tools
It is vital for an organisation to make future plan so that total investment related with
production process can easily be determine in current period. For this purpose, it is crucial for
them to known about the budget which are decided by the R.l Mayand.
Budget is basically an estimation of future cost and expenses that a company is going to
invest in near future. There are various budget which are required to taken into account. some of
them are discussed underneath:
Zero based budget: It is one of the effective method of budgeting which all expenses are
justified during the period of time. The process of each new period is taken into account for the
overall calculation of the budget period.
 Advantage: It is more ineffective or obsolete operations which can be determine and
discontinued in near future.
 Disadvantage: It is entirely give focus on the short-term benefits to the detriment of
future goals that are set by the company.
Budgetary control: It is a technique in which company can control the expenses and can
create strategies to enhance the revenues. This helps in controlling the budget and this technique
is called as budgetary-control. It is important so that company can reduce the expenses and
company can focus on important activities so that company can generate huge revenues. Main
objectives are to reduce the wastage and to enhance the market share of firm. This helps the
organization to enhance the market share (Vaivio and Sirén, 2010). Different planning tools used
by R.L. Maynard are described below: Forecasting tool: It is a tool in which company can evaluate the past and current
performance. It helps the organization to evaluate the internal and external elements
which can affect the company. Advantages and disadvantages are described below:
Advantages Disadvantages
It helps the administration in getting relevant
data and information which helps them in
setting viable choice. It also helps the company
to give superior results. This helps the firm to
It depends on the assumption so it is not better
to anticipate future. If situations are not
according to assumptions, then there are not
good results.
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earn huge revenues.
Scenario tool: It is a technique which help the company to implement business activities
in proper manner. This helps I guiding and helps administration to perform distinctive capacities.
Advantages Disadvantages
It helps in collecting the data and information
in proper manner. This helps the company to
perform activities in proper manner.
This technique takes more time in recognizing
different activities and it affects the results in
drastic manner.
Advantages Disadvantages
It helps administration in reducing cost and this
helps the organization to increase their
revenues.
This tool is very complex. Due to this reason,
company cannot easily solve issues and
problems of all people.
Contingency tool: It is the tool which is used by company so that they can accomplish
the objectives in minimum time. This tool helps in solving all issues and problems of company.
Advantages and disadvantage are described below:
Unique process is followed by the company so that company can control the budget and
it is a tool which assists the company in generation of huge revenues. Process is described below:
Consult with the manager: It is the step in which manager has to communicate with the
employees so that all activities and tasks can be managed in proper manner. This assists the
organization to earn huge revenues and they can enhance the market share.
Do assumptions: After collection of data and information, company can discuss the
activities and tasks with the so that company can gain different advantages. This assist the
organization to maintain positive image in minds of all customer's. This also helps the
organization to accomplish the objectives (Windolph and Moeller, 2012).
Fix data to attain business targets: In this stage, data collect from all departments is
relevant and administration of company has to ficus on cost control so that they can generate
huge revenues. This assists the organization in performing all activities and tasks in better
manner.
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