HNBS 305 Management Accounting Report: Financial Analysis & Budgeting

This report provides a comprehensive analysis of management accounting principles, techniques, and their practical applications. It begins with an introduction to management accounting, exploring its importance in decision-making and organizational processes. The report delves into various costing methods, including absorption and marginal costing, with detailed calculations and income statement preparation. It examines different budgeting techniques such as zero-based and rolling budgeting, along with the preparation of various budget formats. Furthermore, the report analyzes financial reporting, including the interpretation of financial data and the use of planning tools to address financial problems and achieve success. The report also evaluates the use of management accounting systems to respond to financial problems and the planning tools used in management accounting to reduce financial problems. The content includes calculations, financial reports, and budget preparation, with a focus on applying accounting principles to real-world business scenarios and improving financial decision-making. The report also identifies different management accounting systems and their benefits and drawbacks. This assignment aims to provide a comprehensive understanding of management accounting concepts and their practical application.

Management Accounting
Contents
1

Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
1.1Explanation of managing accounting and give the essential requirements of various types
of managing accounting systems.................................................................................................3
1.2 Explanation of different techniques used for managing accounting reporting.....................4
1.3 Benefits of management accounting systems and their application within The London
College.........................................................................................................................................5
1.4Critically evaluation of how managing accounting system and managing accounting is
included within organisational processes....................................................................................6
PART 2............................................................................................................................................7
2.1. Calculation of the costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................7
2.2. Accurately apply a range of management accounting techniques and produce a financial
reporting document......................................................................................................................8
2.3 Financial reports that accurately apply and interpret data for a range of business activities.
...................................................................................................................................................12
TASK 3..........................................................................................................................................12
3.1 Explanation of the purpose of budget and prepare different budget (listed at the end) with
the given information for coming months.................................................................................12
TASK 4..........................................................................................................................................18
4.1 Uses of management accounting system to respond financial problems............................18
4.3. Evaluate the planning tools used in management accounting to reduce the financial
problems to achieve success......................................................................................................20
CONCLUSION..............................................................................................................................21
REFRENCES.................................................................................................................................22
From books and journals...............................................................................................................22
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INTRODUCTION
Management accounting , it is a procedure of representing accounting information in a way
through which manger able to take effect decision which help in generating gain and able
origination to solve all the problems suffering from past ear. To understand this concept, UCK
Furniture has been taken which is situated in UK and have proved effective furniture services to
their clients. In this report uses of effective planning tools to formulate policies and strategies has
been define briefly. This report also includes the way mangers solve financial pr by using
management accounting technique and system of management accounting in brief manner.
PART 1
1.1Explanation of managing accounting and give the essential requirements of various types of
managing accounting systems
Management accounting: This word play an important in accounting felid. Management
accounting is a way which helps in decision making procedure. Manager of the organization
record their financial transaction in systematic way, through which they interpreted
accounting information in front of internal customers of the business entity. It is a combined
processed of accounting and management activity in which organization record their
transaction by using effective management strategies which help in take better decision for
the organization (Maas, Schaltegger and Crutzen, 2016).
Job order costing system: This system of management accounting use in taking decision
regarding every job order. It will help in determining the stock order. With the use of job
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costing system manger will be able it identify the cost value of materials of business
organization.
Price optimization system: This system of management accounting is developed within the
business organization for take decision regarding the price value of product and serves of
offering by business entities. There will be many techniques of price optimization system,
price skimming, discounted price policy, price premium. In all these policies the value of
price are determine on different methods. It is the choice of mangers which policy they use
for their organization which issue able for them ((Qu, and et.al2017)).
Inventory management system: It is also known as stock management system. In this
system various tools of inventory management are used by organization through which they
can identify the level of stock, requirement of purchase material, number of operating cycle
required time taken during delivery of product . With the use of EOQ and JIT technologies
manger can calculate the cost of maintain inventory and reduce on reducing it by effective
management policies.
Cost management system: It is one of the most useful systems in management accounting
process. As the name suggest this system is apply by business organizations in order to
recognized cost of every element of production process. They use standard costing marginal
costing process costing method through which organization easily recognized the cost of
each business transitions. They identify the relation of profit and expenses the rate of
profitability and mange all the elements of cost in systematic way. This system is apply with
every types of business organization. The London College at this organization cost
management system is utilized to identifying the overall cost of each and every business
activity required to run the college.
1.2 Explanation of different techniques used for managing accounting reporting
In management accounting branch managers prepared various types of reporting which
help in recording transactions in effective way. Following are the types of management
accounting reports use by The London College
Account receivables report: With the use of account receivable report manger identify the
numbers of debtors which are not able to pay their liabilities. It is made by finance
department of the organization. It will help in financed nonperforming assets and provide
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direction to mangers through which they can able to collect their money in short period of
time.
Performance report: It is formatted n order to determine all the essential aspect
performance of the business cooperation. Managers formulate performance report for take
decision regarding incentives on the basis of evolution of performance of employers by using
this report.
Stock management report: Just lay other reports it is prepared for running specific function.
This report is build with the data collection from inventory management techniques.
Budget reports: Business Corporation’s use budget reports as it provides base for the
preparation of budget statement. This report proceeds information regarding future business
income and expenses and cost, time required to fulfil the target of business
1.3 Benefits of management accounting systems and their application within The London
College
Inventory management system This system is used for The London College to
collect information regarding material used in
the process of manufacturing and supplying
goods. In context with The London College it
is provides education facility and it is essential
to maintain data of each equipment, material
use during the process of providing services.
Job order system This system is applied by the mangers of the
London College to record all the order of
students admission, counselling, research
events organize within the college
Price optimization system It is most useful system, Manager of
The London College decide fee structure of
different department of students on the basis of
resources optimization system.
Cost accounting system With the use of cost accounting system
mangers able to adopt effective cost technique
to acquired the cost of every procedure started
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with purchasing of raw material to distinctive
of service and products by The London
College
1.4Critically evaluation of how managing accounting system and managing accounting is
included within organisational processes.
Management accounting system and reports of this accounting branch both used by mangers
in integrated way. With the adoption of cost, inventory system they record all the transaction
and manger of The London College use these record as a base to formulate account receive,
budgeting and performance report. These reports help in decision making process regarding
future business events conduct in The London College (Yu, 2015).
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PART 2
2.1. Calculation of the costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs.
7
Particular Descriptions Amount
(Pound) Particular Amount
(Pound)
a) Units produced 11000 9500
b) Cost of Direct Material
(4kilo-
gramx3Pound
/kilo-
gramx11000)
132000
(4kilo-
gramx3Pound/kilo-
gramx9500)
114000
c) Cost of Direct Labor
(4 hoursx
2pound/hours
x11000)
88000
(4 hoursx
2pound/hours
x9500)
76000
d) Cost of Variable Overhead (5pound/desk
x11000) 55000 (5pound/deskx950
0) 47500
e) Prime Cost 275000 237500
f) Production overhead 20000 20000
g) Cost of goods
produced 295000 257500
h) Variable revenues cost (1Pound/des
kx11000) 11000 (1Pound/deskx95
00) 9500
i) fixed selling cost 2000 2000
j) Cost of Goods sold 308000 269000
k) Profit= l-j 77000 63500
l) Sales
(35
POUND/des
kx11000)
385000
(35
POUND/deskx95
00)
332500
Cost Card by using absorption costing method
January February

2.2. Accurately apply a range of management accounting techniques and produce a financial
reporting document
FOR THE PERIOD ENDING
FEBRUARY
SALES
NET SALE FOR JANUARY 385000
NET SALE FOR FEBRUARY 332500
TOTAL SALE (A) 717500
COST OF GOODS SOLD
COST FOR THE MONTH OF JANUARY 308000
COST FOR THE MONTH OF FEBRUARY 269000
TOTAL COST OF GOODS SOLD (B) 577000
NET INCOME(C= A-B) 140500
WORKINGS-
COST OF
FINISHED
GOODS
JANUARY FEBRUARY
PARTICULAR DESCRIPTIONS AMOU
NT
DESCRIPTIONS AMOU
NT
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(GBP) (GBP)
UNITS
PRODUCED
11000 9500
A
)
DIRECT
MATERIAL
(4KILO-
GRAMX3POUND/KILO-
GRAMX11000)
132000 (4KILO-
GRAMX3POUND/
KILO-GRAMX9500)
114000
B
)
VALUE OF
DIRECT
LABOUR
(4 HOURS X
2POUND/HOURS
X11000)
88000 (4 HOURS X
2POUND/HOURS
X9500)
76000
C
)
VALUE OF
VARIABLE
OVERHEAD
(5GBP/DESKX11000) 55000 (5GBP/DESKX9500) 47500
D
)
PRIME COST 275000 237500
E
)
VALUE OF
PRODUCTIO
N OVERHEAD
20000 20000
F
)
COST OF
GOODS
PRODUCED
295000 257500
G
)
VALUE OF
VARIABLE
REVENUES
COST
(1POUND/DESKX11000) 11000 (1POUND/
DESKX9500)
9500
H
)
FIXED
SELLING
COST
2000 2000
I) COST OF
GOODS SOLD
308000 269000
MONTH HOURS EXPENS
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SPENT ES
JANUARY 630 7960
FEBRUARY 505 7410
MAR 705 8285
APRIL 555 7535
MAY 780 9110
JUNE 795 9820
HIGHEST NUMBER OF HOURS =
JUNE = 795
LOWEST NUMBER OF HOURS =
FEBRUARY = 505
VARIABLE COST=
(9820-7410)/(795-505)
VARIABLE COST= 8.310345 GBP PER
UNIT
FIXED COST= 9820 - (795X8.31)
FIXED COST= 3213.55 GBP
EXPENSES FOR JULY= 3213.55 +
(650X8.31)
EXPENSES FOR JULY= 8615.05 GBP
EXPENSES FOR AUGUST=
3213.55 + (750X8.31)
EXPENSES FOR AUGUST= 9446.05 GBP
OPENING INVENTORIES 0
PURCHASE 100 10 1000
10

UNITS
200
UNITS 11 2200
130
UNITS 13.84615 1800
LIFO
130 13.84615 143.85
200 11 2200
70 10 700
COST
OF
GOODS
SOLD
3043.85
VALUE
OF
CLOSIN
G
STOCK
(30 X 10)
300
FIFO
100 10 110
200 11 2200
100 13.84615 1384.615
COST
OF
GOODS
SOLD
3694.615
VALUE
OF
CLOSIN
415.3845
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G
STOCK
(30 X
13.84615
)
AVCO 100 10 1000
200 11 2200
130 13.84615 1800
AVERA
GE
COST
(13.8461
5 + 11
+10)/3
11.61538
COST OF GOODS
SOLD
4646.154
(400X11.61538)
CLOSING STOCK 348.4615
2.3 Financial reports that accurately apply and interpret data for a range of business activities.
Financial reports are prepared with the collection of data which is calculated and record with the
use of management accounting technique. Various types of costing technique is used
marginal costing in which variable cost is determine and absorption costing in which all
the factors of manufacturing and selling are added the calculate cost and determine
profits .They also use standard costing in which variance are calculated to find out
deviation and calculation of profit margin analysis through which the relation between
profit and sales has been identify (Schratzenstaller, Krenek, Nerudová and Dobranschi,
M2017).
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