Detailed Management Accounting Report for Galway Plc

This report, focused on management accounting, analyzes various systems and techniques applicable to Galway Plc, a manufacturing firm. It begins by defining management accounting and its role in decision-making, then delves into different types of management accounting systems, including cost accounting, stock management, and job costing. The report describes essential requirements for these systems and the methods used for management accounting reporting, such as performance reports and budget reports. A key section calculates income statements under both marginal and absorption costing, using the LIFO and weighted average methods for inventory valuation. The report also defines and discusses the advantages and disadvantages of different budgetary planning tools, analyzing their uses and applications. Finally, it explores the application of management accounting techniques to resolve financial problems, offering a comprehensive overview of the subject matter.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
LO 1............................................................................................................................................3
P 1. Describing essential requirement of different types of management accounting
systems...................................................................................................................................3
P2. Different methods used for Management Accounting reporting.....................................5
M1. Benefits of application of the management accounting system in an organisation........7
LO 2............................................................................................................................................9
P 3 Calculation of income statement under marginal and absorption costing.......................9
LO 3..........................................................................................................................................17
P 4. Defining advantages and disadvantages of different planning tools of budgetary
control...................................................................................................................................17
M3. Analysing uses and application of the different planning tools....................................20
LO 4..........................................................................................................................................22
P5 & M4. Different types of management accounting systems available for resolving the
financial problems................................................................................................................22
CONCLUSION........................................................................................................................24
REFERENCES.........................................................................................................................26

INTRODUCTION
Management accounting is defined as the discipline dealing with the process of
gathering, sorting, analysing financial as well as non-financial information so as to prepare
reports providing deep insight to the managers. It assist them in making business decisions
for accomplishment of business goals. It further assists in the company in preparation of
managerial reports, records, and accounts with available information, statistics and other
financial as well as non-financial data. This helps the management and employees can in
decision making related to business operations and investment. The present report is based on
Galway Plc. which is a manufacturing firm. The present report will discuss different types of
management accounting systems for organization for making profit. Further the report will
discuss about the concept of management accounting reporting and its uses in decision
making. Income statement under Marginal and Absorption Costing of Galway Plc. Along
with interpretation will be disclosed. It will also define budgetary tools & advantages and
disadvantages from different budgetary planning tools. At last, the report will shed light on
solving the financial problems with the help of management accounting techniques.
MAIN BODY
LO 1
P 1. Describing essential requirement of different types of management accounting systems.
Administration accounting system is defined as the process of preparing internal
managerial reports for assisting in making of crucial business related decision. This system
assists company's administration in identifying, and recording statistical as well as financial
information for planning, decision-making process.

Essential requirements of different types of Management Accounting System in Galway Plc.
are as follows:
1. Cost Accounting System – This method of management accounting system is
basically related to the charge associated with the business operations and processes.
The cost accounting system helps Galway Plc. in evaluating fair value incurred for
carrying on all the manufacturing and production process. This method also helps in
assessing the level of profit margin with minimum operation fare by improving the
quality of product and service. Company should make effective business plans and
strategies for controlling its expenses. This method consists of following sub parts:
1. Job Order Costing Method – This method of accounting system helps in
determining the fee amount as incurred for producing a specific product or group of
products by the company (Otley, 2016).
2. Process Costing Method – This method assists in collecting and assigning of
charge amount. This expense is assigned to units produced. This method helps the
companies especially in case of identical units where large production process is
carried out.
2. Stock Management System – This is defined as tool that allows to track goods and
services across business supply chain. However, this modify the whole spectrum
spanning from order placement with vendor to order delivery to consumer and this
also supports to map out complete journey of commodity. Therefore, one of the
beneficial aspect of this system is that it aids to provide transparency and this has
huge impact on bottom line of business. Additionally, the valuation can be done with
following techniques as are-

1. LIFO – It is a method that aids in accounting for undertaking calculation for
inventory and cost of sales. Therefore, LIFO is defined as technique that operates
under the assumptions that allows business owner to value inventory at the less
cost of amount. This is method that majorly use at time of high inflation.
2. FIFO – This is defined as technique that helps to estimate the value of inventory
at the end of accounting period. Henceforth, this based on assumption that first
good purchase are also defined as first good sold.
3. Job Costing System – It is defined as process that aids to assign cost to the specific
job. Therefore, this widely use in construction industry as this aids to allocate cost to
individual construction project at a firm. Additionally, cost accounting is system that
has the ability to do job cost accounting and the end result has ability to accurately
define the profitability. It emphasizes on expenses associated with manufacturing
process of specific commodity (Chenhall and Moers, 2015). Therefore, job order cost
accounting aids to track expenditure of enterprise in terms to produce a commodity. It
is helpful method that accumulates the cost of components and assign these cost to
commodity.
P2. Different methods used for Management Accounting reporting.
Management Accounting Report is inclusive of standard financial statement such as
balance sheets and profit & loss account. This is defined as process that provide information
on number of values of management as this enables in judging the effectiveness of
responsibility. However, management accounting reports works as to provide owners and
managers the tools that aids to cut cost, better services and direct funds to high performing
product and services. Herein, methods use for management accounting report are defined in
following mode as-

1. Performance Report – The performance report is one of the most important report
that assist the company in evaluating, assessing and reviewing the actiontowards the
opeational function of business. It helps the management in making strategic
decisions and plans for the betterment, growth of the company. However, the formost
responsibility accounting performance report is budget that aids to compred actual
and budgeted amount of controllable cost for department and their managers (Craig
and et.al., 2018). By framing and implementing strategies and plans, business goals
can be achieved and improved.
2. Cost Managerial Accounting Report – This type of management accounting report
helps in determining the amount of expenses incurred for carrying on production
function of product or services of the company. While making this assessment, it
takes into account all expenses related to raw material, overhead, labour and others
factors. This report helps the management of Galway Plc. in realizing the costing and
selling prices of their products and services and in estimating profit from them in the
near future.
3. Budget Report – It helps in making projections as well as estimates related to future
business operations depicting the amount to be spent on carrying on the business
operations. Budget are prepared on the basis of previous experience business has met
with. Galway Plc. by making budgetary plans and strategies can makes more profit
and can conduct its business operations properly. It assists the management of the
company in making effective use of the limited budgeted amount and resources
(Maas, Schaltegger and Crutzen, 2016). With the help of budget report, a company
can make assessment of its performance as well as profitability level and can deal
with future contingencies and unproductive cost expenses.

4. Account Receivable Ageing Report – This report helps in determining the amount
which is to be received from its customers to whom creditor sales has been made. It is
helpful to company especially in conducting its business operations by acquisition of
raw material etc. on credit basis. It also helps in determining the potential defaulters in
relation with the non-payment of money. Also it helps in evaluating the problem
which Galway Plc. is facing in the process of money collection as due.
M1
Management Accounting system helps in managing, controlling and evaluating the
business operations of the company and suggest improvement requires if any. On the other
hand, Galway Plc will use this system to get better performance in following contexted
manner as are -:
Management Accounting
System
Benefits
Cost Accounting System 1. It helps to control and plan the
economic resources allocation, and the
usage of those resources. Also, it helps
in comparing the actual costs incurred
with budgeted cost to identify the cost
to access most incurring part of
business.
2. It assist in determining the operational
efficiency and improvement required if
any in the business (Novas, Alves and

Sousa, 2017).
Inventory Management System 1. It can help the company in minimizing the
price related expenses that are linked with
operations function of business.
2. With help of managing inventory, entity can
amend the performance of delivery among market
and end user to enhance profitability.
3. By use of this method the stock can be
maintain and managerial authority to entity can
have proper inventory management.
Job Costing System 1. The job costing system helps in evaluating
cost per task as allotted for taking better
and improved decision process.
2. It is system of managment accounting that
ais in monitoing and track out the
performance level of individual employee
as well as to team to undertake changes in
terms to have effective comtrol on cost, to
improve efficiency of business and
productivity (King and Clarkson, 2015).
LO 2
P 3 Calculation of income statement under marginal and absorption costing
Marginal costing – It is the change in the total cost price which arises in case of increase in
the quantity produced by one more unit. This is effective method to identify the cost of

producing one more unit.
Absorption costing – It provides full detail of the cost expenses which has been incurred in
manufacturing a particular product or service. It takes into consideration all the cost related
to direct material, labor and overhead in the manufacturing process of each cost center.
Under marginal costing