Detailed Management Accounting Report for Williams Performance Tenders

This report examines management accounting principles and their application within Williams Performance Tenders, a boat manufacturing company based in the UK. The report begins with an introduction to management accounting, its essential requirements, and the benefits of using such a system. It then explores various management accounting systems, including cost accounting, inventory management, job costing, price optimization, and management information systems. The report delves into cost calculation using marginal and absorption costing to prepare income statements. Furthermore, it discusses different planning tools used in budgetary control, evaluating their advantages, disadvantages, and applications in forecasting. The report also assesses how organizations can adapt management accounting to respond to financial problems, offering a comprehensive overview of the topic. The report concludes with a summary of the key findings and provides references for further study.

Management Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P.1 Explain management accounting and essential requirements of management accounting1
M.1 Evaluate benefits of management accounting system and their application in organization
................................................................................................................................................3
D.1 Management accounting system and management accounting reporting ......................3
P.2 Various methods used for management accounting reporting ........................................3
TASK 2 ...........................................................................................................................................5
P.3 Calculation of cost by using two concepts for preparing income statement ...................6
M.2 Application of range of management accounting techniques and producing appropriate
financial reporting document..................................................................................................8
D.2 Producing financial reports that apply and interpret data for range of business ............9
TASK 3 ...........................................................................................................................................9
P.4 Advantages and disadvantages of different types of planning tool used in budgetary
control ....................................................................................................................................9
M.3 Evaluation of different planning tools and its application for forecasting ...................10
D.3 Evaluation of planning tools for responding to financial problems .............................10
TASK 4..........................................................................................................................................10
P.5 Compare the ways how companies are adapting management accounting ..................10
M.4 Evaluation of planning tools to deal with financial issues............................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is the technique in which managers use the accounting
information to take important decisions for the company (Zopiatis, Constanti and Theocharous,
2014). Employer evaluate the statements such as income statement and then calculate the net
profits or losses. It helps the company to create effective plans and policies related to various
activities and tasks in the organization. Hence firm can easily earn more revenues and they can
easily increase the market share. Assignment describes about the Williams Performance Tenders
which is a boat manufacturing company. It was established in U.K. Report describes about the
understanding of various management accounting systems. It also explains about calculating
costs using appropriate techniques of cost analysis to prepare income statement using marginal
and absorption costs. It also discusses about use of various planning tools used in management
accounting. It also explains about comparison of ways in which organizations can use
management accounting to respond to financial problems.
TASK 1
P.1 Explain management accounting and essential requirements of management accounting
Management accounting
Management accounting is a technique which contains various concepts, presentation of
information, Strategies, policies and management plans etc. Different types of business
transactions, events and events are happened in day to day business activities. Hence this process
is used so that company can manage all trans actions in effective manner. So organization can
easily accomplish the objectives. It also helps the organization to take important decisions.
Management accounting helps in increasing the knowledge and skills of company
regarding various operational activities. Hence they can easily create effective plans and policies
regrading the future activities. So firm collects important sources and data such as income
statement to calculate net profits or losses of the company. This also helps the company to create
rules and regulations such as non financial, financial, contracts , agreements so that they can
evaluate the transactions and can take appropriate decisions in time.
Management accounting provides a tool to managers and accountants to evaluate the
performance of employees and organization (Zainun Tuanmat and Smith, 2011). Hence they can
give corrective action to staff members so that the can easily accomplish the objectives. It also
helps the company to take important decisions related to business.
1

Different types of management accounting system used by Williams Performance Tenders are
(What are the Different Types of Management Accounting Systems, 2017).:
Cost accounting system: It is a technique through which company can easily determine
the cost of all activities and operations (Windolph and Moeller, 2012). Management can easily
reduce the expenses and can earn more revenues. This technique determine the cost in all
departments and hence company can calculate the manufacturing and operating costs. Firm can
also determine the cost of production, operations and administration. Hence it can create various
plans and policies to reduce the costs and they can enhance their profits. This also helps firm to
increase the market share. This method issued by manufacturing and production companies.
Hence firm can easily maintain positive image in minds of all people and they can also expand
their activities and operations.
Inventory management system: It is an accounting system which helps in calculating the
stock level and inventory which are used for manufacturing and producing goods. There are
different elements such as production management, supply chain management, evaluating the
economic order quantity. Company can also perform activities such as warehousing shipping,
movement of stock etc. Various types of inventory control methods are used to control level of
inventories such as EOQ method, ABC method to evaluate the performance. Market tracking,
recording, integration with ERP, inventory levels etc. Williams Performance Tenders can easily
manage the order the quantity of raw material used in manufacturing boat and monitor the
quantity required in minimum product line.
Job costing: It is a costing system which is used by the company to collect the
information and other details in determining the cost of all departments. Hence company can
easily calculate cost of various sections so that it can evaluate the cost and structure for
implementation and enforcement of cost from each department. It is associated with company in
terms of making an efficient structure and it enables the manufacturing costs and individual
products. Through cost structure company can monitor the cost of per product manufactured fir
particular time.
Price optimization system: It is an efficient system which is linked with optimizing costs
and identification of price of products and services (Turan, 2015). It also help the company to
make use of mathematical analysis and evaluate firm in terms of response of various users and
fixing an appropriate price of all products. It also helps the manager to determine the cost of all
2

items and services by monitoring the demand and supply graph. It help the Williams
Performance Tenders to decide the cost of all products (Taylor, Doherty and McGraw, 2015).
Management information system: It is the most important concept and manager collects
information and data from different sources and store in the database. It is the technique in which
financial data and accounting information is stored. Main objective is to provide the feedback to
the manager regarding their performance and top management can also monitor the organization.
Hence they can give corrective actions to staff members so that they can improve their
performance and can give superior results. Hence company can easily expand their activities and
operations. They can also maintain good image in minds of people. This technique helps in
storing the data and it prevents data hacking. Through this method firm can also create plans to
increase their revenues.
M.1 Evaluate benefits of management accounting system and their application in organization
Management accounting plays a vital role in decision making and strategic planning
methods. Benefits are described below:
Price optimization method: This technique helps in deciding the price of products and
services and hence interpret the financial data so that company can identify the growth
opportunities.
Job costing method: It is linked with statistical and financial analysis for managers so that
they can determine the costs of services and products.
Inventory management system: This technique helps the company to create plans to manage the
level of inventory and this results in maintaining the optimum level of stock in firm.
D.1 Management accounting system and management accounting reporting
Management accounting reporting and accounting system evaluate the financial data so
that they can easily forecast the future. Hence management can create effective strategies.
Management system helps in consolidating important data and information and different
reporting methods helps the company to take effective decisions and they can also create plans
for their development (Springer and Gibbon, 2014).
P.2 Various methods used for management accounting reporting
Management accounting reporting is a framework of financial and non financial
information which is useful to manager and company. Organization has to evaluate the reports
and then take effective decisions. Through different reports, company can create various plans
3

and policies regarding future and they can also manage different activities and operations in an
effective and efficient manner (Schaltegger and Csutora, 2012). Hence they can earn more
revenues and they can also increase the market share. Proper evaluation of the report also help
the company to monitor the performance of staff members and the firm. Hence organization can
easily accomplish the objectives. Hence they can earn more revenues. This help the company to
increase the market share. Accounting reporting helps the company to determine the profits and
losses within a span of time. This is a effective method and company can easily create plans and
policies so that they can enhance their revenues.
Different accounting methods are important for every company. This also helps the company to
solve the problems and issues. Management evaluate the objectives and targets so that they can
be accomplished by staff members in time. Company can also evaluate the day to day operations
and can explain to staff members regarding the methods and procedure to earn more revenues.
Hence employees receive instruction and perform all activities in effective manner. Hence
organization can easily expand their activities and operations.
Organization can also evaluate the present position of company and they can create effective
strategies related to investment. Through this they can maintain competitive advantage over
other firms. It helps the company to evaluate the data and information in inside activities in
reliable manner by using detailed and systematic data. Through thus they can easily improve
their position and can earn more revenues. Various methods used for management accounting
reporting are described below:
 Inventory management report: This report helps in managing the physical stock or
manufacture goods. Hence company has to evaluate the information so that manufacture
process can run smoothly. It includes staff members cost, per unit overhead cost and cost
of inventory. Company can also give bonus or incentives to employees who perform best
in organization. This is a effective and efficient technique which is helpful in managing
the inventory level and this leads to reducing the wastage in company.
 Account receivable report: Sometimes it is difficult for the company to create cash flow
statement if organization is extending credit to buyers of company (Riisgaard and
Gibbon, 2014). There are different reports which include various columns for invoice that
are 30 days later, 60 and 90 days later. Manager use the report so that they can easily
4

determine the customers who have to make the payment. Hence they can make strict
polices and can recover the amount of users (Moser, 2012).
 Job cost report: This report helps in determining the expenses for the project which is
financed to small companies. It helps the company to determine the revenues by
evaluating the profits related to job. It is helpful to firm and company can focus on those
areas through which they can earn more revenues and they can easily reduce the extra
costs. It also helps in reducing the time and wastage of money. It results in increasing the
productivity of company. It is a important report which helps in evaluating the present
position with the past performance. Hence they can take corrective actions so that staff
members and firm can improve their performance. Hence staff members can give
superior results.
 Performance report: This reporting helps in evaluating the performance of company as
compared to past performance. Management has evaluated the expenses and revenues of
company of current year with past years. They give corrective actions to managers so that
they can create different policies and can easily improve the performance. Hence they can
easily earn more revenues and they can easily increase the market share. Organization
can also maintain unique position in minds of employees and users.
 Budget report: It is important for the manager to prepare the budget so that they can
evaluate expenses and revenues. There is a business firm which helps in determining the
expenses and costs. Hence all activities and tasks run smoothly and successfully. So
company can take corrective steps to increase their revenues. Through this report
management can also monitor the whole funds get invested in activities or not. Incentives
are give to staff members so that they can create the effective report. Hence company can
earn more revenues and they can give strong competition to other company.
These are some methods which can be applied by Williams Performance Tenders. It
results in improving the performance of staff members and organization. Hence they can easily
earn more revenues and can enhance the market share. Hence organization can expand the
operation and activities in minimum time (Mistry, Sharma and Low, 2014). It results in growth
and development of company.
5

TASK 2
P.3 Calculation of cost by using two concepts for preparing income statement
Cost analysis is the determination of costs in the business (Klychova, Faskhutdinova,
and Sadrieva, 2014). It is related to manufacturing, production etc. Hence company has to
determine extra cost so that they can create various plans and policies to reduce the extra cost in
the business. Management accounting reports are created on basis of every week, month and
year. This helps in generating more revenues and firm can enhance the market share. Different
types of costs are described below:
Fixed cost: It is a uncontrollable cost. It is related to fixed factors and it can influence the
plans and procedures. Factory rent, interest, depreciation (straight line method) are types of fixed
cost. It is fixed and do not vary with the output.
Variable cost: This is the cost which is linked with production units. This cost is
associated with evaluating the cost by performing changes in per production and incremental in
marginal units. This cost changes with change in per unit by making changes in fixed expenses.
Cost varies with level of output.
Semi variable cost: It is a cost which is fixed at some level and become change after
variations in variable portion of company. It is a mixture of both fixed and variable cost.
Marginal costing: It is the cost which is linked with marginal cost by taking into
consideration the variable cost charged to units of cost. Fixed cost for a particular period that are
written against contribution. Marginal cost is combination of direct labour, direct material, direct
expenses and variable overheads. It helps in distributing the variable cost, fixed cost and
valuation of stock, profitability and determination of the prices. There are marginal and cost
ascertainment considered in marginal costing etc. Various methods and decision making
techniques are used under marginal costing (Johnson, 2013). It play an important role in decision
making process.
It help the manager in taking different business decisions as replacement decisions. It also helps
management in determining the levels of activity.
Calculation of net profit by using marginal costing method:
Particulars Amount
Sales revenue = (selling price * no. of goods sold = 55 * 600) 33000
Marginal Cost of goods sold: 9600
Production = (units produced * marginal cost per unit = 800 * 16) 12800
6

closing stock = (closing stock units * marginal cost per unit = 200 * 16) 3200
Contribution 23400
Fixed cost ( 3200+1200+1500 ) 5900
Net profit 17500
Absorption costing: It contains the method which helps in determining the profits or
losses. This helps in consolidating the data to review the performance of company (Granlund,
2011). It contains cost in different structure form which evaluate the cost of activities and
operations. It is considered as costing system and evaluate the cost of activities by considering
the important elements for monitoring and effectiveness.
Computation of net income by using absorption costing method:
Particulars Amount
Sales = (selling price * no. of units sold = 55 * 600) 33000
Cost of goods sold = (total expenses per unit * actual sales = 23.375 * 600) 14025
Gross profit 18975
Selling & Administrative expenses = (variable sales overhead * actual sales +
selling and administrative cost = 1 * 600 + 2700) 3300
Net profit/ operating income 15675
Break-even analysis: It is an important technique which is used to evaluate the the situation
where cost is equal to income. It is an important strategy and consolidate the profits of company
in single format. It is a graphical description which is created to elaborate the important aspects
of break even analysis. It is a technique generally used by production manager and management
accountants. It helps in categorising the production costs between the variable and fixed costs.
Total variable and fixed cost are compared with revenues of sales so that company can easily
determine the sakes volume or value. In this situation there are no losses or profits.
 Total number of product sold
Sales per unit 40
Variable costs VC = DM + DL 28
Contribution 12
Fixed costs 6000
BEP in units 500
7

b. Calculation of break even point in accordance to sales revenue
Sales per unit 40
Variable costs VC = DM + DL 28
Contribution 12
Fixed costs 6000
Profit volume ratio PVR = Contribution / sales * 100 30.00%
BEP in sales 20000
c. Calculation for getting desire profit of 10,000
Profit 10000
Fixed costs 6000
Contribution 16000
Contribution per unit 12
Sales 1333.33
Margin of safety: It is the effective and efficient technique in which company determine the
difference between actual and break even sales. There is a difference which is calculated using
these methods. It is the principle in which investor purchases securities when the market price is
below the intrinsic value.
d. The margin of safety, if 800 products are sold
Actual sales in units 800
Break even sales in units 500
M.2 Application of range of management accounting techniques and producing appropriate
financial reporting document
Both the marginal and absorption costing helps in evaluating the cost of all activities and
cost of departments in different forms (Christ and Burritt, 2017). Two types of accounting
techniques are used to calculate profitability of company which is described below:
Marginal costing tools: It is the tool which help in consolidating the data and information and its
is associated with exploring the business techniques and evaluating the competitiveness of
business.
8

Absorption costing: This is the method which evaluate cost by considering variations and
changes in over all cost.
Historical cost: It helps in determining the expenses and cost which are incurred towards
evaluating the historical costs in terms notional cost rather than original cost (Barth, and et. al.,
2012).
D.2 Producing financial reports that apply and interpret data for range of business
It is easier that company use these tools and it give various benefits to company. In regard to use
of marginal costing, the company used to measure adequate measure of benefit. While in this
event, they are using the absorption costing and the advantage is 17500. In this event there is use
f absorption costing they get net benefit of 15675. The variety is monitored by using of selled
cost through this technique.
TASK 3
P.4 Advantages and disadvantages of different types of planning tool used in budgetary control
Budgetary control is a process in terms forecasting and evaluation of financial management
process. Financial plan is the compelling network that can give data about the costs and cost
acquired by Williams Performance Tenders. It is future estimation of advantages and deals.
Budgetary control help the company to determine the costs and expenses. Hence firm can create
various policies and strategies so that they can reduce the cost and expenses.
Budgetary control process:
It is the powerful and effective procedure which can easily accommodate the company to
evaluate the benefits and cost for future period. In this step planned angel are used to expel the
contrasts in organization. Different valuable focuses that includes different procedures to cope
with sending needs. Arranging is the basic factor that is used to control the different problems
and issues in company. Tools used for budgetary control by Williams Performance Tenders are
described below:
Forecasting tool: It is the procedure in which company evaluate the cost and present data and
information. Evaluating future cannot comprise of various data and information that are collected
in the company. It is the important procedure that are considered by company fort arranging the
future undertakings.
Advantages: It helps in furnishing the business with profitable information to business which can
be used to settle on choice to what comes to organization (Bracci and Maran, 2012).
9

Disadvantages: There are subjective estimation which depends on subjective sources of
information and hereafter not having capacity to be considered as more solid.
Contingency tool: It is the effective and efficient tool which helps in solving the situation or
circumstances in efficient manner. It helps the company to create effective and efficient plans
and solve all problems (Cardoni, 2012).
Advantage: It helps in decreasing the business risks as it creates preventive measures fir future
risks whether man made or natural. Williams performance tenders creates effective pans and
strategies so that they can prevent the future risks.
Advantages:
It helps in decreasing the business risks as it creates various plans and policies.
Disadvantage: It involve creating of different plans that require the cost and time. If there is no
contingency then planning will be failed. It is uncertain in nature.
M.3 Evaluation of different planning tools and its application for forecasting
In order to conduct budgetary control, William performance tenders need to use the planning
tools such as contingency, forecasting etc. Forecasting tools are used by organizations whether
the companies are big or small. It helps in determining the expenses and cost in the business
activities. Contingency tools are applied by large scale firms as it requires time and money. It
helps in educating the risks which is involved in internal as well as external activities such as
disasters, lockouts etc. In scenario tool various possibilities are developed by manager to create
preventive measures and this is the reason that this method is followed by medium and large
scale companies.
D.3 Evaluation of planning tools for responding to financial problems
William performance tenders helps in manufacturing the boats. Company has facing many issues
and problems related to cash flow, quality etc. To solve these issues company has to calculate the
few tools such as KPI. Forecasting tool is used by organization which involves less cost and
many benefits and it helpful in estimation of costs and expenses. KPI will help organization to
determine the key areas which results in enhancing the profit and company can also tackle the
financial issues (Chen, and et. al., 2011).
10

TASK 4
P.5 Compare the ways how companies are adapting management accounting
In every company, it is find that supervisors use different systems so that they can easily
accomplish the goals and it results in solving the issues and problems that is involved in different
matters in company. Company can move to consolidating bookkeeping report that is based on
utilization of assets which are taken by administrators. They are implementing framework such
as cost upgrading, feed framework to increase the wages of association. They can easily solve
the money related issues (Christauskas and Miseviciene, 2012). It is described below:
Rules and regulations: In this step every company creates different rules and regulations
so that it can listed in satisfactory manner. If there is any transaction or record which is not
disclosed by company then there are many problems and issues which is faced by the company.
Conflicts regarding the product service: There are many issues and problems that have
outcomes for association' execution (Gond, and et. al., 2012) . Through all accounts there is
effective and essential for company to evaluate the each product so that there is no mistakes done
by company. It helps in reducing the fraud in company.
Comparison between Williams performance tenders and Sollatek UK
William performance tender Sollatek UK
This is an organization which helps in
manufacturing of boat. It helps in solving the
issues and problems related to money so that
company so not face any issue and problem. It
helps in enhancing the level of productivity in
the company.
This is the company which helps in
assembling the staple substances. It use other
bookkeeping devices so that they can find the
problems related to bookkeeping.
M.4 Evaluation of planning tools to deal with financial issues
Different planning tools are used by company so that they can increase their operations.
Many financial issues and problems are faced by the company such as cash flow statement,
product quality degradation and they can be solved through various planning tools such as
forecasting tools which helps in determining the cost and expenses of company related to future
11

(DRURY, 2013). Key performance indicators are used so that they can easily solve various
issues and problems.
CONCLUSION
It has been concluded from above report that management accounting is very important
in every company. Through this form can easily evaluate the data and information. This helps the
company to take effective and efficient decisions. They can also compare the past with present
information. Organization can take corrective actions so that they can improve their
performance. Different management accounting systems are used. Calculating cost using
different techniques of cost analysis to prepare income statement using marginal and absorption
costing. Use of planning tools use in management accounting such as forecasting and
contingency tools. Comparison of ways in which company can use management accounting to
solve the financial problems and issues.
REFERENCES
Books and Journals
Zopiatis, A., Constanti, P. and Theocharous, A.L., 2014. Job involvement, commitment,
satisfaction and turnover: Evidence from hotel employees in Cyprus. Tourism
Management. 41. pp.129-140.
Zainun Tuanmat, T. and Smith, M., 2011. Changes in management accounting practices in
Malaysia. Asian Review of Accounting. 19(3). pp.221-242.
Windolph, M. and Moeller, K., 2012. Open-book accounting: Reason for failure of inter-firm
cooperation?. Management Accounting Research. 23(1). pp.47-60.
Turan, H., 2015. Taylor's Scientific Management Principles": Contemporary Issues in Personnel
Selection Period. Journal of economics, business and management. 3(11). pp.1102-
1105.
Taylor, T., Doherty, A. and McGraw, P., 2015. Managing people in sport organizations: A
strategic human resource management perspective. Routledge.
Springer, Berlin, Heidelberg.Riisgaard, L. and Gibbon, P., 2014. Labour Management on
Contemporary K enyan Cut Flower Farms: Foundations of an Industrial–Civic
Compromise. Journal of Agrarian Change. 14(2). pp.260-285.
Schaltegger, S. and Csutora, M., 2012. Carbon accounting for sustainability and management.
Status quo and challenges. Journal of Cleaner Production. 36. pp.1-16.
12

Riisgaard, L. and Gibbon, P., 2014. Labour Management on Contemporary K enyan Cut Flower
Farms: Foundations of an Industrial–Civic Compromise. Journal of Agrarian Change.
14(2). pp.260-285.
Moser, D. V., 2012. Is accounting research stagnant ?. Accounting Horizons. 26(4). pp.845-850.
Mistry, V., Sharma, U. and Low, M., 2014. Management accountants' perception of their role in
accounting for sustainable development: An exploratory study. Pacific Accounting
Review. 26(1/2). pp.112-133.
Klychova, G.S., Faskhutdinova, М. S. and Sadrieva, E.R., 2014. Budget efficiency for cost
control purposes in management accounting system. Mediterranean journal of social
sciences. 5(24). p.79.
Johnson, H.T., 2013. A New Approach to Management Accounting History (RLE Accounting).
Routledge.
Granlund, M., 2011. Extending AIS research to management accounting and control issues: A
research note. International Journal of Accounting Information Systems. 12(1). pp.3-19.
Christ, K. L. and Burritt, R.L., 2017. What constitutes contemporary corporate water
accounting? A review from a management perspective. Sustainable Development. 25(2).
pp.138-149.
Barth, M.E., and et. al., 2012. Fair value accounting, earnings management and the use of
available-for-sale instruments by bank managers.
Bracci, E. and Maran, L., 2012. The role and use of management accouting systems (MAS) in
family firms: a case study. Piccola Impresa/Small Business. (3).
Cardoni, A., 2012. Business planning and management accounting in strategic networks:
theoretical development and empirical evidence from enterprises’ network" agreement".
Management Control.
Chen, H., and et. al., 2011. Effects of audit quality on earnings management and cost of equity
capital: Evidence from China. Contemporary Accounting Research. 28(3). pp.892-925.
Christauskas, C. and Miseviciene, R., 2012. Cloud–computing based accounting for small to
medium sized business. Engineering Economics. 23(1). pp.14-21.
DRURY, C.M., 2013. Management and cost accounting. Springer.
Gond, J.P., and et. al., 2012. Configuring management control systems: Theorizing the
integration of strategy and sustainability. Management Accounting Research. 23(3).
pp.205-223.
Online
What are the Different Types of Management Accounting Systems? 2017. [Online]. Available
through: <http://www.wisegeek.com/what-are-the-different-types-of-management-
accounting-systems.htm>. [Accessed on 31st March 2017].
13