Management Accounting Report: Connect Catering Services - BTEC Unit 5

This report delves into the core concepts and techniques of management accounting, focusing on their application within Connect Catering Services. It begins with an introduction to management accounting, its objectives, and its importance in business decision-making. The report then examines essential management accounting systems, including price optimization, inventory management, cost accounting, and job costing, highlighting their requirements and advantages. Furthermore, it explores various management accounting reports, such as budget reports, performance reports, cost accounting reports, and accounts receivable aging reports, detailing their significance in evaluating financial performance. The report proceeds to analyze cost accounting techniques, including marginal costing and absorption costing, demonstrating their application through income statement calculations. It also provides an overview of budgetary control, its planning instruments, and its benefits and limitations. Finally, the report compares the impact of management accounting in situations of financial difficulty. Throughout the report, the focus is on providing insights into how management accounting supports informed decision-making and effective financial management within the context of the case study company.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1.................................................................................................................................................1
P2. ...............................................................................................................................................2
M1. ..............................................................................................................................................4
D1. ...............................................................................................................................................5
TASK 2............................................................................................................................................5
P3. ...............................................................................................................................................5
M2. ............................................................................................................................................10
D2. .............................................................................................................................................10
TASK 3..........................................................................................................................................11
P4...............................................................................................................................................11
M3..............................................................................................................................................12
TASK 4..........................................................................................................................................13
P5...............................................................................................................................................13
M4..............................................................................................................................................14
D3...............................................................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
According to institute of cost and chartered accountants defined as the utilization of
financial information and helps to take a business decision properly and assist the management to
formulate policies and planning control. (Abednazari, 2018). In this, managers settle their
financial information for internal members in enterprise so that they can make day to day
transactions easily. This report is based on pearl chartered accountant firm in UK and one of the
main client is connect catering services.
Various topics are covered in this report such as necessary requirements of different
kinds of management accounting schemes, various methods are used in management accounting
report, set up a income evidence for calculating marginal costing and absorption costing, various
kinds of planning instrument that are utilized in budgetary control and their benefits, limitations
comparing two organisations that are adjust of management accounting in state of financial
difficulty.
TASK 1
P1.
Management Accounting: As per view point of Barth (2018), management accounting
is process of analyzing, measuring, collecting and provides financial information in an
effectively and efficiently manner. Their purpose to help manager in decision making procedure
and provide all information related to firm for analyzing each and every products, activity and
service. Within Connect Catering Services, managers uses this type of accounting because it is
very effective procedure for company not only they helps mangers to take business decision but
help to achieve financial goals and objectives in enterprise.
Management Accounting System: The Concept of management accounting system
deals with internal system in organisation and evaluate result for internal members in enterprise.
To identify internal budgets, income and expenses, and recognize sales analysis. In case of
Connect Catering Services, this system help managers to make a decision on the basis of internal
members in organisation and achieve operational efficiency of entity. Various essential
requirements are used in management accounting system in case of Connect Catering Services
are as under:
1

Price Optimization System: According to this system, it determine price level of several
products and services that will impact on profits (Bauchadze, 2018). Within Connect Catering
Services, managers used this system because it helps to accomplish their goals and when they
maximize their profit then firm may increase their prices.
Essential requirements of price optimization system are used to decide their pricing
strategies like how targeted customers will react to changes in price level. To check market
conditions, promotional strategies and maintain customer satisfaction.
Inventory Management System: The concept of this system is said to be that storing of
some stocks and track those goods from manufacturer to vendors. Inventory management system
includes raw materials, work in progress and finished goods. With reference to Connect Catering
Services, firm maintain each and every stock so that they can recognize price of every product.
Transportation facility and inventory storage facility are there and customers want that item can
be delivered on time to time.
Essential requirements of inventory management system are that they meet customer
demand and it impact every firm include to provide accurate data and reach their goods from one
place to another place. They determine how much data are available in storage and placed at
right place and right people.
Cost Accounting System: In this, cost accounting recognize each and every cost are
associated to their product cost for profitability and provide a services of all expenses. There are
two kinds of accounting system are job order costing and process costing (Birt and et. al., 2018).
With context of Connect Catering Services, It is a record of all production activities that need to
be track the flow of stocks through several phase of production.
Essential requirements of cost accounting system are data should be in a accurate form,
it should ensure to give proper raw materials, direct labor and direct overheads. They can
identify proper cost are associated with each and every individual.
Job Costing System: According to this system, all accurate information related to each
and every cost are associated with a particular job. In case of Connect Catering Services, firms
used this cost because it determine how many cost are associated with various business activities
and maintain a customer accounts on a daily basis every day.
2

Essential requirements of job costing system is help to find out whether its a profit or
loss of each job and compare actual cost versus standard cost. In this, job costing also build their
cost and maintain their daily expenses.
P2.
Management Accounting Report: This kind of report is said to be that it gives a clear
and true picture of performance of enterprise. It shows financial position of firm to a specific
period of time and help managers to make a proper business decisions (Caruana and et. al.,
2019). In case of Connect Catering Services, Firm used this report because it create revenues and
sales, maintain cash which is usually used for the internal purpose in organisation and conflicting
to financial statements. In Connect Catering Services, several methods are used in management
accounting report are as mentioned below:
Budget Report: In this, it defines to compare actual budget with standard budget and
helps to identify upcoming growth sale in enterprise. Within Connect Catering Services,
managers need to identify expenditure level and shows upcoming designing in enterprise like
how firm can meet their expense and how they achieve their target customers. It helps to
determine expenses and income for a very short period of time.
Performance Report: It is a report that determines performance of each and every
employee in enterprise and collecting those information related to employee work performance.
It helps to identify communication between employee and managers to provide all necessary
information by shareholder (Cho and et. al., 2020). It doesn't mean that it only shows employee
performance but as well as each and every department performance must be include in these
report. In case of Connect Catering Services, managers need to analyze financial data related to
employee performance check whether they performing well or not and helps managers to
achieve the future goals and objectives.
Cost Accounting Report: These report examine firm's cost structures and include
several firm's product and services that affect the enterprise. If company's cost structures is good
then they can make a better decisions and improve net profit in enterprise. With context of
Connect Catering Services, it is helpful to identify where a firm spend its money or where it
earns a lot, both costs are involved in this are variable costs and fixed costs. It also helps to plan
for future expenditures.
3

Account Receivables Aging Report: It is a procedure that determines unpaid balance of
customers and it is based on length of time which has been due. Due dates are 30 days, 60 days
and 90 days and it also determine financial health of enterprise. In case of Connect Catering
Services, this report helps to identify invoices when firm provides goods and services on a credit
basis. This report also helps to identify firm to effectiveness of credit function and some
customers do not pay their invoices in time to time then firm may decide to stop their business
with clients who do not pay their invoices.
M1.
Systems Advantages Application
Price Optimisation Method Connect Catering Services
used in price optimisation
system because firm make a
quicker decision so that clients
can attract more towards their
prices of product and services.
Managers used Price
optimization in Connect
Catering Services because they
help to reach their goals for
maximise their profits.
Inventory Management
Method
With reference to Connect
Catering Services, (Di Vaio
and Varriale, 2018) inventory
management system helps in
time saving that has impact to
increase their profits and
higher demand is there.
This system are used in
Connect Catering Services,
helps manager to tracking of
goods on timely basis so that
they easily know their price of
every product.
Cost Accounting System Cost accounting system in case
Connect Catering Services, it
improves efficiency of each
and every cost in regard to
time, cost saving and many
more.
Managers used cost accounting
system with context to
Connect Catering Services
because they determine flow of
costs to decide the production
activities.
Job Costing System In case of job costing system With context of Connect
4

with reference to Connect
Catering Services, it provide
all information affiliated to
each cost of a particular job
which determine increase or
decrease of profit.
Catering Services, manager
used job costing because to
accumulate information about
cost related to different
different products.
D1.
It is recognize that management accounting is a procedure to determining, analyzing and
measuring financial information with help of managers to taking a business decisions (Hoque,
2018). Management accounting system handle interior system of organization and to check out
internal financial reports, employees of firm and collecting various information of different
different reports. Mangers uses Price optimization system because to determine various price
level of several different products to maximization of profits. With help of management
accounting report it display financial position of firm for a particular period of time. Managers
uses performance report to check performance of each and every employee of firm and analyze
data with each and every employee. Various reports are used in such as budget report, cost
accounting and account receivables aging report are integrated.
TASK 2
P3.
Cost: It is define expenditure of business that has been produce or spend something on a
daily basis (Jamal, Tayles and Grant, 2019). Within Connect Catering Services, it helps firm to
identify all costs that are related to internal management in enterprise and cost are also involved
in business decision making procedures. It provide for calculation of portion of cost for products
and services. Several cost analysis techniques which are used in Connect Catering Services are
as under:
Marginal Costing: It is a technique that determines increased or decreased of one or
more additional unit of output. In case of Connect Catering Services, manager used marginal
costing to understand profitability of enterprise and it helps management to set prices of
products.
5

Absorption Costing: It is a method that defines cost are associated to individual
products in production procedures. It includes direct cost, indirect cost, direct materials, direct
labor and direct overheads. Within reference to Connect Catering Services, it helps firm to
evaluate firm's products and determine to maximize their profitability. It used for company to
maintain and prepare a final accounts and less changes in profits in case of fixed cost.
Calculation of income statements with the help of marginal and absorption costing techniques
of Connect Catering Services:
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