Management Accounting Report: Analysis for Wiz Phone Ltd, UK

This report delves into the core concepts of management accounting, examining its role in facilitating informed decision-making, planning, and control within organizations. The report contrasts financial and management accounting, highlighting their distinct objectives, users, and reporting requirements. It explores various management accounting systems, including inventory management, cost accounting, price optimization, and job costing, outlining their importance and benefits for businesses like Wiz Phone Limited. The report analyzes different types of reports such as account receivable, job cost, inventory, and budget reports. Furthermore, the report presents an analysis of absorption and marginal costing, along with capital expenditure, master, and cash flow budgets, and their respective advantages and disadvantages. The report also covers key performance indicators, balance scorecards, and the skills required by accountants, concluding with a SWOT and PESTLE analysis for Wiz Phone Limited.

Management
accounting

INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1.................................................................................................................................................3
P2.................................................................................................................................................4
M1................................................................................................................................................5
LO2..................................................................................................................................................5
P3.................................................................................................................................................5
LO3..................................................................................................................................................7
LO 4.................................................................................................................................................7
P5.................................................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management accounting is mainly concerned with presentation of the professional
knowledge ad and abilities for revealing accounting information that helps the manager in
formulating policy, controlling and planning for undertakings. The present report is based on
Wiz phone Limited, a producer or manufacturer of the special charge adapter and able for the
mobile phones and the other types of the gadgets specifically for retail customers in entire UK.
Furthermore, the study highlights several aspects of MA and importance of its systems in an
enterprise. Moreover, the study also presented the use of various planning tools or budget along
with their benefits and limitation to the business corporations.
LO1.
P1.
Management accounting is been defined as the practice of facilitating the financial
resources and an information to the managers in making decisions (Amran, 2020). In other words
it is also defined as the process of determining, measuring, assessing, communicating and
interpreting the financial information to the managers for achieving the organizational goals
effectively and efficiently.
Difference between financial and management accounting
Basis Financial accounting Management accounting
Meaning It means an accounting system
that emphasize on formulation
of final report of an entity to
facilitate financial information
to interested parties.
On the other hand it is the
system that provides relevant
information to managers in
making plans, polices and the
strategies for the purpose of
running business in an
effective way.
Objective The main purpose of FA is to
provide financial information
to the outsiders.
However, the purpose of MA
is to help management in
planning and process of
decision making by
facilitating in detail
information on several
matters.
Users The major users under
financial accounting are the
internal and external parties.
On other note, the main users
under MA are internal
management.
Reports It provides for preparation of
the summarized reports
regarding a financial position
Under this detailed and the
complete reports are framed in
relation to various

of an enterprise. information.
Auditing & publishing The financial statements are
required to be audited and
published by that of the
statutory auditors.
The reports under MA not
needed to be published or
been audited by the statutory
auditors.
Importance of MA information
It relates with using information in relation to the operations for producing reports that
facilitate ongoing insight with respect to performance of the business like profit margin,
utilization of labor. This helps the managers of the Wiz Phone Limited in making operational
decisions with an objective increasing efficiency and also in making the long run decisions
relating to investment.
MA systems and its importance
Inventory management system- It is the system that combines processes and the
technology which oversee maintenance and the monitoring of the stocked products within the
premises (Panchenko, 2018). This system plays a critical role in managing inventory and stock
items of the business with keeping a track on the assets. The system also helps in analyzing
inventory needs and in automating ordering.
Cost accounting system- It refers to the framework that is used by an enterprise for
estimating cost of the product for making profitability assessment, valuing inventory and
controlling cost. This system is found as important in anticipating accurate product cost for the
profitable operations.
Price optimization system- It is referred as the use of the mathematical tools by Wiz
Phone Limited for determining the way in which customer responds towards different prices for
the services and the product by using different channels (Shevelev, Sheveleva and Gvozdev,
2017v). This MA system helps in identifying suitable prices for attaining objective profit
maximization effectively.
Job costing system- It means the method of computing or recording costs of producing
job instead of the process. Manager by using this system could be able to track cost of every job,
maintaining relevant data relating to business operations.
P2.
Account receivable report- It involves information in relation to the goods provided on
credit to the customers or any other party. This report plays a critical role in finding out problems
present in collection process of the firm (Amara and Benelifa, 2017). It helps the manager in
overlooking the old debts and tightening credit policies.

Job cost report- It is the MA report that reflects expenses for particular project financed
by the business. They are been matched with anticipation of the revenue for the purpose of
evaluating job’s profitability. It helps in determining areas that are higher earning which in turn
helps in focusing on the additional effort rather wasting time and the money towards the job
contains low profit margins (Nespeca and Chiucchi, 2018). Such report are been used for
assessing expense at the time when project is running in progress so that wastage areas can be
corrected before it gets out of the control.
Inventory report- This report include items like inventory waste, overhead cost per unit,
labor cost per hour. It is the reports that assist in comparing several assembly lines within the
business for highlighting improvement areas and in offering bonuses to the best performers.
Budget report- This report includes information about the expenses and the cost that
might be incurred in producing the product. It helps the owners in assessing the business
performance and enables managers of Wiz Phone Limited in analyzing performance and
controlling the costs (Curry, Hersinger and Nilsson, 2019). The estimated budget is prepared on
the basis of actual expenses from the previous years.
M1.
Benefits of MA systems
Systems Benefits
Inventory system This system helps in achieving productivity
and efficiency in business operations. It also
helps in minimizing cost of inventory and
maximizing profits and sales.
Job costing system It is the system that allows the managers in
computing profit earned on each job. It helps in
ascertaining that particular jobs resulted as
desirable for pursuing in future.
Cost accounting system It is the MA system that enables in finding out
exact reason behind increase or the decrease in
the profit.
Price optimization It is the most suitable system that helps the
Wiz Phone Limited in setting up of the best
prices which are affordable for the customers
for purchasing products.
LO2.
P3.
Absorption costing

Particulars
Amoun
t (£) Total
Gross profit 22500
less: selling & adm expenses:
Variale selling and
adm. Exp. 7875
fixed selling & adm
exp. 10000 17875
Net profit 4625
Marginal costing
Particulars
Amount
(£) Total
Sales 1500*35 52500
less:
COGS 1500*15 22500
Variale selling and
adm. Exp.
15%*5250
0 7875
Variable contribution margin 22125
less:
Fixed selling and adm exp. 10000
fixed prodn o/h 1500*5 7500
Net profit 4625
Particulars
Amount
(£) Total
Fixed overhead
absorbed
1500*7.
5 11250
Actual fixed o/h 1500*5 7500
Over absorbed 3750
Working note-
Particular
s Total
selling
price 35
units sold 1500
sales
value 52500

Interpretation- From the above table it has been interpreted that net profit resulted by
applying absorption and marginal costing accounted as Pound 4625. This means that level of an
inventory is constant while absorption costing is reflected a better technique as compared to
marginal costing. This is because absorption costing includes both variable and fixed cost as the
part of its production activity that in turn helps in computing accurate profits. On the other hand,
marginal costing does not takes into account fixed cost and includes only variable cost.
LO3.
Capital expenditure budget- It is the formal plan which states timing and amount of the
fixed asset that need to be purchased by Wiz Phone Limited (Panchenko, 2018). This planning
tool revolved around the capital expenditures that involve large outflow and inflow of the money
in financing the investment projects.
Advantages Disadvantages
It is the budget that assists in understanding the
risks and its related effects.
Under this budget, uncertainty results to wrong
applicability.
It helps in making informed decisions by
considering all the possible factors.
In this the decisions are mainly long term and
are counted as irreversible in the nature.
Master budget – It refers to an aggregation of all the lower level kind of budget produced
by Wiz Phone Limited’s several functional areas and involves final reports, cash forecasts and
the financing plan.
Advantages Disadvantages
This planning tool reveals earning and the
spending as the whole and reflects that the
business has positive or negative financial
state.
Master budget having lack of the specificity
because it include total or collective sum of
each and every department.
This budget has an ability to determine the
problems and the plan in future.
As this budget involves various categories and
the numerical figures so it becomes difficult
for the managers to update and read.
Cash flow budget- It means anticipation of all the cash inflows and outflows which are
expected to occur in certain period of time (Nespeca and Chiucchi, 2018).
Advantages Disadvantages
It helps in analyzing the cash position of the
Wiz Phone Limited.
This budget limits the spending power as many
of the services accept only digital payment and
no cash.
It provides detail information about cash It is the budget that creates danger of the theft

income and disbursements. because cash tend to be easiest asset which can
be stolen out.
LO 4
P5
Measuring Tool
Key performance indicators: Key performance indicators ( KPI ) are indicators which
help organization to determine how effectively an organization is achieving the key objectives
of the organization. Key performance indicators are used to analyze the success of organization
for achieving goals. This measuring tool used to help the company in focusing on the key area of
the organization. These eventually help the company in overcoming variety of issue which is
faced by company in the market.
Advantage
KPI evaluate the performance of the organization and find out deviations from the Standard plan
and redesign the plans which can help organization to achieve goals effectively and efficiently.
Disadvantages
KPI is suitable for achieving short term objectives but in long term it gets difficult for the
company to operate in the market by just focusing on some key area of the company.
Balance scorecard: balance scorecard is the managerial tool used by managers of
organizations. Balance scorecard is in the form of spreadsheet which records all information
regarding various activities done by staff members and result of the action. On the basis of the
same manager generally uses the same in the organization to make different decision in the
organization to overcome different issue which is faced by company in long run.
Advantage
Balance scorecard help manager to have proper information and reason behind every
cause and effect which help manager to make appropriate strategies.
Disadvantages
Balance scorecard mainly focuses on the internet factors. It do not provide scenario of
external factors like competitors and change in business environment, which impacted the
operation of organizations.

Skills of accountant
 Innovator: Accountant should be innovator, who can adjust the accounting techniques
according to changing environment.
 Communication: Better communication skill of accountant will help accountant to
convey the complex information in simplest from and reduce the scope of
Misunderstanding among others.
 Enthusiasm: accountant should have ability to bring positive attitude among the team
towards the organizational work.
SWOT
 Strength: Biggest strength of the company is goodwill. Another important strength is
customer base.
 Weakness: Main weakness of company is competitors and fewer profit margins.
 Opportunity: Biggest opportunity for a company is expansion of their business.
 Threat: Biggest thread of a company is that they have to compile with different legal
compliances.
PESTLE
 Political factor: Political factor is favorable due to political stability in the nation.
 Economical factor: This factor used to bring mix reaction as interest rate in favorable at
the same time water and fuel rate is very high in nation.
 Social factor: This is not that favorable as customer need used to change on regular basis.
 Technology: This is favorable as company is having good sort of technology to carry out
different operation.
 Legal factor: These factors are not that favorable as they have to compile with different
legal compliance in the market.
 Environmental factor: These factor is favorable as organization used to follows different
environmental policy to carry out different policy of business.
Porters Five
 Threat of substitute product is very low as there is not direct substitute of phone.
 Threat of competitor is high as there are many different mobile phone companies.
 Threat of new entrant is moderate as there are very few phone operator company who
used to come in industry but comes with new innovation.
 Threat of buyer power is very high as they are having good buying power.

 Threat of supplier power is very low for organization.
Different organization adopting account management system
Wiz phone UK Ltd Samsung
Wiz phone UK Ltd uses inventory
management system in the organization to
understand the different position of company
inventory in an organization. Generally
organization used to note down the amount of
inventory in the organization. On the basis of
same organization used to plan the variant
forecasting of inventory in the Cited firm. This
help organization in maintaining good amount
of inventory in an organization. Organization
has hire two inventory manager in the
organization who used to look at different
processing of inventory in the organization.
SAMSUNG at the same time adopts the cost
management system in the organization in this
organization generally used to fix the cost
budget of the company and after that used to
consider the actual performance and compare
the same. This eventually used to help the
company in managing the different cost very
efficiently in the market. Another
CONCLUSION
From the above report it has been concluded that management accounting plays an
important role in running the business smoothly and allows the managers in taking suitable
decisions. MA systems helps in maintaining adequate level of an inventory, controlling cost,
fixing best price etc. This in turn leads to maximization of profit and the sales in effective and
efficient manner. It helps the firm in achieving growing success within the overall industry and
the market and through this managers could be able to maintain its performance at its best and
achieve competitive edge against the competitors in the market.

REFERENCES
Books and journal
Amara, T. and Benelifa, S., 2017. The impact of external and internal factors on the management
accounting practices. International Journal of Finance and Accounting. 6(2). pp.46-58.
Amran, A., 2020. Influence of Decentralization and Management Accounting System
Managerial Performance Against. ATESTASI: Jurnal Ilmiah Akuntansi. 3(1). pp.63-73.
Curry, A., Hersinger, A. and Nilsson, K., 2019. Operations managers’ use of (ir) relevant
management accounting information: A mixed-methods approach. The Nordic Journal of
Business. 68(1).
Nespeca, A. and Chiucchi, M. S., 2018. The impact of business intelligence systems on
management accounting systems: The consultant’s perspective. In Network, smart and open (pp.
283-297). Springer, Cham.
Panchenko, O., 2018. Place and role of management accounting in the general accounting
system. Accounting and Finance. (3). pp.75-82.
Shevelev, A. E., Sheveleva, E. V. and Gvozdev, M. Y., 2017. Methods of internal control in
integrated management accounting system of the enterprise. In SHS Web of Conferences (Vol.
35, p. 01115). EDP Sciences.