Management Accounting Report: Analyzing Vitacoco's Financials

This report provides a comprehensive analysis of management accounting principles and their application to Vitacoco, a coconut water producer. The report begins with an overview of management accounting, its roles, and principles, including cost accounting, inventory management, and price optimization systems. It differentiates between management and financial accounting, highlighting the qualitative characteristics of useful financial information. The report then delves into various management accounting reports, such as accounts receivable aging and cost accounting reports, and critically evaluates the impact of management accounting systems. It explores budgetary control as a planning tool, examining different types of budgets and analyzing planning tools like the Balanced Scorecard and Porter's Five Forces. Furthermore, the report discusses financial governance, benchmarks, and financial and non-financial KPIs. It analyzes financial problems faced by organizations and provides insights into how Vitacoco can adapt its management accounting systems to respond to financial challenges and achieve sustainable success, incorporating the characteristics and skills of effective management accountants and information systems. The report concludes with a detailed evaluation of accounting planning tools and their role in solving financial problems and leading Vitacoco to sustainable growth.

Zun Thet Hmu San
UB-05-19
AUGUST 28, 2020

Assignment front sheet
Learner name Assessor name
Zun Thet Hmu San Daw Khin Su Su Yin
Date issued Completion date Submitted on
5.6.2020 28.8.2020 28.8.2020
Qualification Unit number and title
Edexcel BTEC Level 5 HND Diploma in Business Unit-5: Management Accounting
Assignment
title Management Accounting
In this assessment you will have opportunities to provide evidence against the following criteria.
Indicate the page numbers where the evidence can be found.
Criteria
referenc
e
To achieve the criteria the evidence must show that
the student is able to:
Task
no. Evidence
P1 Explain management accounting and give the essential
requirements of different types of management systems. 1 2-18
P2 Explain different methods used for management accounting
reporting. 2 19-23
P3
Calculate costs using appropriate techniques of cost analysis to
prepare an income statement using marginal and absorption
costs.
3 26-28
P4 Explain the advantages and disadvantages of different types of
planning tools used for budgetary control. 4 29-46
1

P5 Compare how organization are adapting management accounting
systems to respond to financial problems. 5 51-60
Table of Contents
Executive Summary....................................................................................................................1
Introduction...............................................................................................................................2
Company Profile of Vitacoco......................................................................................................2
P1.1: Management Accounting and its roles and principles.....................................................3
1) Designing and Compiling............................................................................................5
2) Management by Exception........................................................................................5
3) Control at Source Accounting....................................................................................5
4) Accounting for Inflation.............................................................................................6
5) Use of Return on Investment.....................................................................................6
6) Utility..........................................................................................................................6
7) Integration..................................................................................................................6
8) Absorption of overhead costs....................................................................................6
2
Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.
Learner signature: Zun Date: 28.8.2020

9) Utilization of Resources.............................................................................................6
10) Controllable and Uncontrollable costs..................................................................6
11) Forward-Looking Approach....................................................................................7
12) Appropriate means................................................................................................7
13) Personal contacts...................................................................................................7
P1.2: Management Accounting Systems with their benefits....................................................7
Cost Accounting System.............................................................................................................7
Classification of Costs.................................................................................................................7
Benefits and Limitations of Cost Accounting System..............................................................10
Inventory Management System...............................................................................................11
Price-Optimizing System..........................................................................................................12
Pricing Policies..........................................................................................................................12
Management Accounting Systems in Vitacoco........................................................................13
Cost Accounting System...........................................................................................................13
Inventory Management System...............................................................................................14
Price Optimizing System..........................................................................................................14
P2.1: Differences between Management Accounting and Financial Accounting....................15
P2.2: Qualitative Characteristics of useful financial information............................................16
Relevant...................................................................................................................................16
Reliable.....................................................................................................................................16
Understandable........................................................................................................................16
Comparability...........................................................................................................................17
Consistency..............................................................................................................................17
P2.3: Types of Management Accounting Reports with their benefits.....................................17
3

Accounts Receivable Aging Report..........................................................................................17
Cost Accounting Report...........................................................................................................18
Inventory Management Report...............................................................................................19
D1: Critically evaluate the impact of management accounting systems on accounting report
which is integrated with different functional areas.................................................................20
D2: Traditional and Activity-Based Costing..............................................................................21
Activity-Based Costing..............................................................................................................21
P4.1: Budgetary control as a planning tool..............................................................................23
P4.2: Different types of operation and capital budget for control..........................................24
M3: Analysis of two planning tools with their pros and cons for preparing and forecasting
budgets.....................................................................................................................................26
Balanced Score Card................................................................................................................26
Porter Five Forces....................................................................................................................28
P5.1: Financial governance, Benchmarks, Financial and Non-financial KPI.............................31
Financial Governance...............................................................................................................31
Benchmark...............................................................................................................................31
Financial and Non-financial KPI................................................................................................32
Financial KPIs............................................................................................................................33
Non-Financial KPIs....................................................................................................................33
P5.2: Financial problems by two organizations which currently using different management
accounting systems and ways to respond to problems...........................................................34
M4: Characteristics and skills of an effective management accountant and an effective
management information system in Vitacoco.........................................................................35
D3: Evaluation of accounting planning tools to respond appropriately to solve financial
problems and lead Vitacoco to sustainable success................................................................35
4

Conclusion................................................................................................................................36
References................................................................................................................................37
Executive Summary
This report provides comprehensive management figures related to Vitacoco, a coconut water
producer. First, to understand how to work with a management accountant. It explains the
basics of a management accountant and his principles. Appropriate cost analysis methods are
designed to minimize penetration of income statements. Used to explain differences in
reconciliation values due to differences in results for the above costs. Vitacoco recommends
using action-based cost systems instead of traditional cost systems. Five strengths of the
Balance Scorecard and Porter: Vitacoco has budgeted to increase the accuracy and depth of the
project, and has suggested two more. Learn about the financial problems of soft drink makers
Vitacoco and Zico. It is found that project methods should be systematically incorporated to
solve financial problems and that qualified management accountants should be hired.
Introduction
This report provides an overview of the necessary statistical information from executives and
top executives for decision makers. During the past two decades many organizations have
faced dramatic changes in their environment especially in information technology and global
market arena. To succeed in today’s highly competitive environment, to obtain customer
satisfaction is an overriding priority for every business. Therefore, organizations have adopted
new approaches for their management and ways of doing thing. Companies must adopt a
philosophy of continuous improvement that involves a continuous search to reduce costs,
eliminate waste and improve quality and performance of activities that increases customer
value or satisfaction. This philosophy has significant impact on management accounting system
from traditional role-providing information to managers to monitor the activities of employees.
5

Now, Management accounting supports continuous improvements by identifying opportunities
for changes and then providing information to employees to empower them to focus on the
continuous improvement of customer value. Therefore, every organization should have
awareness on role of management accounting in creating values for customer, business and
society. As a new business, Vitacoco needs to adopt appropriate management accounting
systems to streamline operations and increase profits. Budget control is critical to the
effectiveness and efficiency of Vitacoco. It can be enhanced by other planning tools. According
to the report, Vitacoco is facing financial problems. Companies looking to reduce costs
continuously and eliminate waste to improve the quality and performance of businesses that
increase customer value and satisfaction should embrace the concept of sustainable growth.
This concept has a significant impact on the management accounting system. From information
to managers, it examines the performance of traditional staff.
Company profile
Vitacoco produces and distributes coconut water to keep consumers healthy and refreshed.
Vitacoco Coconut Juice contains a variety of nutrients and flavors, and is included in a modern,
convenient packaging that encourages consumers to maintain a healthy diet and maintain a
healthy lifestyle. Vitacoco obtains fresh coconuts and buys its bottles from trusted suppliers and
manufacturers. Vitacoco uses coconut water as a nutrient and sells it in bottles.
Address: No.105/107, Kha-Yae-Bin Road, between Pyi Daung Su Yeik Tha (Halpin) Road and
Road, Manawhari Road, Yangon 11191. Phone: [phone]. Email: [e-mail].
LO-1
P-1.1
For through understanding management accounting area, definition, role, principle and
differences from financial and management accounting are disclosed as a introduction.
Management Accounting
That branch of accounting deals with presenting, providing information management such
systematic perform managerial functions an effective, efficient manner (Bhattacharyya, 2011).
Management Accounting is the accounting system for making decisions of the business
enterprise. Management Accounting furnishes the necessary information to assist the business
6

enterprise to make rational decisions through the development of policies, procedures in order
to meet the day to day commitments of the enterprise (Pandikular, 2009).
Internal financial report that helps manage managers' decision-making processes to achieve
business goals. In other words, it is about understanding financial and cost data and turning
that information into useful information for managers and officers within the organization.
The importance of management accounting
Many companies in order to survive in the competitive market, that is associated with rapidly
changing technology, have to using modern methods to work continuously improve quality
control and reduce the cost of their products. In this situation, many companies are changing
their information systems and to avoid traditional systems and move towards long-term view of
management accounting. Customers are looking for higher wages and shareholders are seeking
a greater share and competition takes place to produce better products with better features
and lower prices. Business success depends on how we manage all these factors and other
factors. Management accounting tools have followed the growing trend in recent years. This
process, with the introduction of ABC, ABM, ABB, Target Costing, Kaizen Costing, Back Flash
costing, JIT, TQM and recently started and tools such as ERP, Six Sigma is reached. Growing
economic competition imposes great pressure on managers to make business decisions in order
to maximize financial performance in this matter. To answer this, need a range of management
accounting techniques have been employed by the Company. The heavy competitive
environment prevailing in the world markets, the use of cost management and continuous
improvement of the organization is one of the critical success factors and managers can only
make the right decision about the efficiency of production and operations That have a good
understanding of how to conduct outreach activities and processes. This system, also
identifying and measuring the cost of the basic activities of the organization, to identify non-
value-added activities and introduce activities that improve organizational performance
Roles of Management Accounting
The following functions related with management accountant to reflect the roles of
management accounting (Mohammad, 2016).
Helping Forecast the Future
7

Management accounting report aims to help in planning, monitoring and in determining
decisions on the way forward. Management accounting reports are designed for offering
internal information to management. Information is not just financial, also all kinds of
information. Management accounting performs decision making and focus the future strategies
in organization (Mohammad, 2016).
Helping in Make-or-buy Decisions
Costs and products are in most cases. Management Accounting provides insights that enable
decision making at both operational and strategic levels (Mohammad, 2016).
Forecasting Cash Flows
Management accounting includes the design of budgets and trend curves, and managers use
this information to determine how money and resources are allocated to generate the
expected revenue increase (Mohammad, 2016).
Helping Understand Performance Variances
Management accounting uses analytical techniques to help management make positive
discrepancies and address negative aspects (Mohammad, 2016).
Develop a financial strategy
The Management Accountant is responsible for sales forecasting and forecasting, among other
management accounting tools. These include gross income; Information may also be included
in the Company's financial statements to develop strategies for equity and revenue growth.
Management accountants play an important role in formulating effective financial strategies,
such as purchasing capital or reducing operating costs for running a business.
Explain the financial consequences of the decisions
Managers can explain if senior leaders adjust the capital structure of their company
Concealment of additional debt or stock supplementation. This includes merging with other
companies’ other decisions are made. For example, start a new operation or fire a large
number of personnel. They can explain how budget and financial statements change a
company's time to determine a company's profit or loss. The company is making good business
decisions, but only by digging out the numbers.
Monitor Expenses
8

Create a flexible budget with other reports that allow supervisors and department heads to
review costs. This is important. This is because operating costs directly affect bottom-line
profits. Management Accountants can choose the best budgeting method by meeting the
needs of stakeholders. Help the company as much as you can. Stakeholders can create special
reports to make it easier for stakeholders to understand any cost to their department or
organization.
Maintain Profitability
Accountants need to make their business more profitable. It can be used to make a lot of
money, including analyzing breaches. With this type of analysis, accountants compare sales and
costs to determine which company is violating. With sales in mind, management can focus on
production factors as well as other factors that affect profitability. This will help determine the
sales target and overhead cost. In addition, you can manage accounts. Examine direct and
indirect production costs by helping to improve the company's cost structure. Accountants
need to make their business more profitable. It can be used to make a lot of money, including
analyzing breaches. With this type of analysis, accountants compare sales and costs to
determine which company is violating. With sales in mind, management can focus on
production factors as well as other factors that affect profitability. This will help determine the
sales target and overhead cost. In addition, you can manage accounts. Examine direct and
indirect production costs by helping to improve the company's cost structure.
Principles of Management Accounting
1. Designing and Compiling
Statistical information; Documentation Other evidence of past or future results is designed to
meet the needs of each business and / or problem. It must be collected. This means that the
management accounting system needs to present relevant information. Then solve the
problem. Also, adjust the accounting information to meet management requirements (Money
Matters All Management Articles, 2019).
Designed to meet the needs of business and / or specific problems, along with other evidence
of current or future outcomes. Compliance means that the management accounting system is
9

required to submit relevant information. Then you can solve the problem. In addition,
accounting data can be modified and audited to meet management requirements.
2. Management by Exception
Rules apply to exceptions when information is submitted to management. This means adhering
to budget control and cost standards. In this way, the actual performance is compared to a
predefined task to detect fraud. Only the worst scams can be properly reported to be
mismanaged. This way, the management will have more time to read the information (Money
Matters All Management Articles, 2019). Management rules are strictly adhered to when
managing information management. This means adhering to the cost standards of the budget
control system and the management accounting system. In this way, it compares to a
predefined one to find the actual performance deviations. Only serious misrepresentations are
misrepresented by management. This allows management to spend less time reading
information and more time to take action. Accept a predetermined amount of overhead costs.
Indirect costs are combined with indirect costs. Therefore, the method or method chosen to
absorb the overheads should automatically give the most effective results. The cost of
controlling a resource accountant is best determined by the resources that control the resource
accountant. Provides quantitative and qualitative information on the use and use of services,
such as vehicles. In this way, employees-controlled goods and services cannot be said to be
profitable unless the capital is kept in check for inflation. This means that the value of money is
not stable. Therefore, it is necessary to assess the value of capital from the actual financial
statements recalculated by the relevant business owners. In this way the inflation rate is taken
into account to determine the true success of the economic impact.
3. Control at Source Accounting
Cost control is best controlled by resource control where they occur. Details of individual skills
and product issues. Power repair and maintenance; The use and utilization of services such as
motor vehicles are constituted by quantitative and qualitative information. In this way,
employees and staff are encouraged. Control of equipment and services (Money Matters All
Management Articles, 2019).
4. Accounting for Inflation
10

Capital cannot be bought without proper capital. This means that the value of money is volatile.
Therefore, it is necessary to assess the true value given by the business owners by recalculating.
In this way the inflation rate is taken into account to determine the true success of the
economic impact (Money Matters All Management Articles, 2019).
5. Use of Return on Investment
The return on investment is not called another investment. Profitability indicates the impact of
the business. The capital used for this purpose is calculated at the actual monetary value
(Money Matters All Management Articles, 2019).
6. Utility
Management accounting systems and templates should be used only if they have a useful
purpose (Money Matters All Management Articles, 2019).
7. Integration
This means integrating all the necessary information related to management so that they can
be used most effectively at the same time to provide accounting services at the least cost
(Money Matters All Management Articles, 2019).
8. Absorption of Overhead Costs
Anyone with a pre-determined fee will be charged an additional service charge. Indirect costs
are combined with indirect costs. Therefore, the method or method chosen to absorb
overheads should achieve the desired results in the same way (Money Matters All Management
Articles, 2019).
9. Utilization of Resources
Available resources should be used effectively. The reason is that some resources are only
available for a reason and some resources are scarce all year round. Therefore, the accounting
system should make sure that the appropriate use (Money Matters All Management Articles,
2019).
10. Controllable and Uncontrollable Costs
Based on cost control, cost control and two types of control are assigned. There is no sense in
taking steps to control costs that are out of control. Therefore, management accounting
11

systems can provide methods for controlling costs (Money Matters All Management Articles,
2019).
11. Forward Looking Approach
Management accounting systems can predict future problems with standard costing methods
by adjusting standards. In this way, there is no future problem (Money Matters All
Management Articles, 2019).
12. Appropriate Means
Collection of statistical data, appropriate methods for recording and presenting should be
selected. This means the use of accounting in every business organization. In other words, a
typical computer can be used in a small business organization, and a high-tech computer with
appropriate software can be used in business organizations and multinational corporations
(Money Matters All Management Articles, 2019).
13. Personal Contacts
Department managers, personal communication with supervisors, employees, and other
personnel is completely replaced by reports and statements. No This means that personal
communication is to avoid misunderstandings between management and employees. Also,
accountability can be easily identified and exercised control when needed (Money Matters All
Management Articles, 2019).
P-1.2
Management Accounting System
According to generally accepted accounting principles, a financial accountant is an impartial
organization. Emphasis is placed on the preparation of information for external parties, such as
public policy and lenders. Managing Accountants collects company financial information and
makes reports for internal and confidential use by managers to make decisions and find ways to
run the company more effectively. These reports address management information
requirements are based on budget.
Benefits of management accounting system
According to (Heidmann, 2008), the role of having a suitable management accounting system is
one of the necessary things since it can provide lots of benefits for every kinds of organization.
12

By using a suitable management accounting system, the organization can get important
information which can provide the organization to be managed effectively. Besides, as the
management accounting system shared the necessary information of the organization to the
rights person of each different department, different departments will get a good
communication and connecting which can help to get an effective teamwork. By this ways,
having a suitable management accounting system helps the organization to get a higher
efficiency and performance which is very important for the organization to be successful.
The usage of management accounting system in Lucky Bakery, its impacts on the organization,
how the organization reduces the cost for inventory, waste materials and its impacts on the net
profit of the organization will be showed at the following below.
Inventory Management system
The management system is a tool to track products throughout your business's supply chain. By
mapping the entire journey of a product, you can optimize a wide range of colors from your
order with your seller to your customers. The transparency provided by this software has a
huge impact on the bottom of a business. By accurately tracking products, businesses reduce
waste and analyze trends. Better investment decisions can be made (Bose, 2019).
Inventory management is vital for most companies, including manufacturing and retail facilities.
Maintaining the appropriate levels of inventory is important, because having excess inventory is
costly. Inventory management helps in controlling and balancing both outgoing and incoming
merchandise (Daniel, 2011).
The key to account management is about the format and placement of the inventory. Many
parts of the plant or supply network are required before normal production and planned
production and storage of materials.
13

Just-In-Time (JIT)
JIT was started in 1960 by Japan Motor Corporation in Japan. This method only maintains
inventory for production and sale. As a result, storage and insurance costs are reduced, along
with the cost of liquidity and surplus inventory. As a result, companies can save a lot of money
and resources.
If a manufacturer suddenly increases demand, the required list may not be issued in time. If the
company does not get part of the production time, it can cause blockages. If companies fail to
meet the needs of their customers (Ukil, et al., 2016).
Materials Requirement Planning
In this method, forecasting and trading determine the amount to be produced and when to
produce it. Manufacturers need to be able to predict sales based on past and present sales data
and consumer needs. Unlike JIT, this approach ensures that companies are always on hand to
meet the needs and desires of their customers. However, management accountants are unable
to complete orders or surplus accounts due to incorrect estimates.
Economic Order Quantity (EOQ)
This form calculates the number of units that a company needs to automatically list companies.
This approach requires constant monitoring of consumer needs. This is cost effective.
This method limits both JIT and MRP. This model works for each team. This way the company
will not be able to issue frequent and erroneous orders, but will get a list of products and
services.
First In, First Out (FIFO)
The FIFO accounting system manages accounts by using the first or oldest stock for the first
time. Only if the product is currently in storage. FIFO is a stock exchange. The oldest stock
should be used first as it reduces the expiration date of the old list. This model is compatible
with other models, such as the EOQ model.
This production or receipt first removes the first item from the account and calculates the
remaining items at current costs. as a result,t list price is close to the final price.
However, the cost of archaeological research records the cost of goods sold compared to
current revenue.
14

Benefits of inventory management system
Without an inventory management system, the goods and products that flow through an
organization will inevitably be in disarray.
Streamlines operations
All manufacturing facilities are required to make a good list of the materials needed to produce
their products. If a component is missing and not listed, the entire production process may be
interrupted. As such, accounting management operations help to smooth the productivity and
productivity (Daniel, 2011).
Lowers liabilities
Inventory management helps to reduce the losses and responsibilities caused by overstock.
Having an effective accounting management plan will immediately notice a profit decline. This
prevents certain products from being pre-ordered. A good example is some clothing sales at
clothing stores. These stores usually order spare parts to meet consumer needs. In such cases,
accounting management considers sales before purchasing clothes. Otherwise, the store will
have to offer deeper discounts to eliminate storage surpluses (Daniel, 2011).
Better ordering
Another benefit of accounting management is determining the best time to order specific
items. Especially for exceptional lead time. Some products take longer to reach from
manufacturers than others. Therefore, a proper accounting management plan is needed to
calculate the time. For example, a shop offered special discounts on a mustard, merry-go-
round, but did not arrive in a short time. Inventory management will be used or checked
carefully before selling all necessary items. Accounting management systems make the
economy more efficient by allocating managers more resources. Companies, also called cost
accounting systems (product costing or cost systems), make profit analysis, marketing, and
marketing. A framework used by companies to estimate the cost and cost of their products
(Daniel, 2011).
Accurate cost estimates of products are important for profitable operations. It is only possible
to figure out which product is the most profitable and which product is not. Also, the costing
15

system lists items to prepare the statement of financial statements. Helps to estimate the
closing value of closed items and inventory (Daniel, 2011).
Employment Costs are production job. Companies that produce unique products and make
special orders. for example, it is a case management company, Furniture maker Cost accounting
system for the manufacturer and the cost of the high-cost air monitoring system (Daniel, 2011).
Process costing is a cost accounting system that collects production business. Production is a
mix of different departments, so the costs are reasonable for products from one department to
another. For example, it can be used in refineries, oil refineries, and oil refineries. A system of
accounting for costs, such as chemical manufacturers (Daniel, 2011).
There are situations when a firm uses a combination of features of both job-order costing and
process costing, in what is called hybrid. In cost allocation is carried out based on either
traditional costing system or activity-based costing system.
Traditional costing system calculates a single overhead rate and applies it to each job or in each
department. Activity-based costing on the other hand, involves calculation of activity rate and
application of overhead costs to products based on their respective activity usage. Cost
accounting systems have two different costs and absorption, depending on various are shared
only through overhead (Daniel, 2011). Still further refinement to costing accounting systems
include JIT-costing, back-flush costing.
Cost accounting system
A cost accounting system is used by manufacturers to record production activities using
a perpetual inventory system. In other words, it’s an accounting system designed for
manufacturers that tracks the flow of inventory continually through the various stages of
production.
Also known as the Costing System, the accounting system is a program for companies and
factories to evaluate the cost of a product and to evaluate the company's value (Martin, 2013).
Cost accounting plays a huge role in determining the cause of any losses. Say, for example, your
cost of production is low, and prices are high but yet losses persist. This can be due to low output
levels due to inefficiency. Cost accounting helps us determine this. There are three types of cost
accounting systems. The types are.
16

1. Job order costing
2. Process costing
3. Traditional costing and
4. Activity- based costing.
Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.) (Averkamp, 2017).
Traditional Costing
Traditional costing is the allocation of factory overhead to products based on the volume
of production resources consumed. Under this method, overhead is usually applied based
on either the amount of direct labor hours consumed or machine hours used. The trouble
with traditional costing is that factory overhead may be much higher than the basis of
allocation, so that a small change in the volume of resources consumed triggers a massive
change in the amount of overhead applied. This is a particularly common issue in highly
automated production environments, where factory overhead is quite large and direct
labor is close to non-existent (Bragg, 2018).
For example, a traditional costing calculation might find that factory overhead should be
charged to products at the rate of $500 per direct labor hour, so if there is a slight change
in the production process that increases direct labor by one hour, the cost of the product
has just increased by $500 of overhead. Such a large change in applied overhead is
nonsensical, since there is not always a direct relationship between the volume of
production resources and factory overhead.
Activity-based costing
A system that seeks to accurately track indirect costs to products based on their use for
manufacturing activities by indirectly allocating costs to activities. ABC is best when accuracy is
very important and indirect costs include a large proportion of total costs compared to direct
costs (Wilkinson, 2018).
17

Benefits of cost accounting system
Measuring and Improving Efficiency
Cost accounting allows a company to measure data that can be measured effectively. time, costs,
etc. can be effective. Then, the actual numbers are compared to industry and business (Toppr,
2019).
Identification of Unprofitable Activities
The whole company is making a profit that doesn't mean all work is company's profit and non-
profit. As a result, actions that can result in the loss of a company can excluded because you know
doing things for expense accountants (Toppr, 2019).
Fixing Prices
This is an important advantage of the cost accounting practitioner. Many businesses rate their
products based on the production costs of these products. We need to first calculate the actual
cost of production of these products. Costs vary between fixed costs and variable costs. It allows
the company to adjust prices in various business situations. Without the help of cost statistics, we
prepare the prices both economic losses can be very high and very low (Toppr, 2019).
Price Reduction
Sometimes prices are reduced in difficult economic situations, such as depression. In some cases,
these prices fall below the total cost of the product to help the company survive this difficult time.
Such decisions must be led by cost accounting (Toppr, 2019).
Control over Stock
Another important advantage of cost accounting is that it helps with refining and controlling the
equipment. Cost statistics will help us to calculate the most appropriate level and level of
economic reform. It's never been over-leveraged or over-the-top. Also, the costs incur
management for these materials and services. (Toppr, 2019).
Evaluates the Reasons for Losses
Every firm has to deal with periods of profits and losses. But now they must always evaluate or
investigate the reasons for the losses suffered. This will help to tackle the problem or overcome
the cause by some other means necessary. So, if you cannot eliminate the reason you can at least
minimize the losses (Toppr, 2019).
18

Aids Future Planning
One of the biggest advantages of cost accounting is that it will help the management with future
plans they may have. For any production or selling plans, it is important to have detailed data
about the machines, the labor capacity, output levels, levels of efficiency of each process etc
(Toppr, 2019).
Price optimization system
Price Optimization Systems are mathematical programs that calculate how demand varies at
different price levels, then combine that data with information on costs and inventory levels to
recommend prices that will improve profits (Smith-Barrett, 2017).
Best Price is a process that determines the true retail value of a consumer product or service.
The principle may seem like a lot to think about, but manufacturers and retailers spend a lot of
time on high-end products to ensure that they can sell their products quickly while making a
profit. If the item is too expensive, it will not be sold. If the cost is too high, the store will
unnecessarily limit its support. Each manufacturer is responsible for the demand for their
products. It uses a low-cost formula based on the level of competition and the cost of
production (Koons, 2019).
Price Taker
A business unit which sets the selling prices of its products and services according to the current
price of other similar kind of products and services in the market can be defined as price taker
(Martinek, et al., 2018).
Price Setter
A price setter is a business unit which has chances, ability or opportunity to sets its own prices
for the products and services sufficiently different from those of competitors and stand with its
own signature and standards can be defined as price setter (Bragg, 2020).
Pricing Policies
19

Price Skimming
Businesses are introducing new products to the market at affordable prices. As the product
progresses over time, so does the price. With the advent of competitors, sales reductions will
increase.
Cost savings have the following advantages: Businesses can get the most money their
customers want to pay at a higher price. If it is too high, the price can be flexibly reduced. In
addition, consumers can consider the high initial price as quality and quality. Later, when prices
fall strategically, consumers will think they are selling cheaply. But starting with a low price will
only attract competitors.
Penetration Pricing
To reduce the price. Penetration revenue aims to sell new products at the lowest prices and to
drive bigger sales. This pricing policy requires companies to create a bigger market and gain a
bigger market.
By entering a market that is cheaper than existing brands, consumers may be forced to change
their brand. When a brand can offer the lowest price, it can prevent competitors from offering
the lowest price. However, low prices will only appeal to consumers who are not affected by
the price.
Prestige Pricing
Consumers want high quality. It means accepting high prices as a valuable commodity. This
pricing policy is used by luxury brands or service providers who value high quality products.
Such companies are profitable but can only target potential customers.
Product life cycle
The sequence of stages that every product progress through until it reaches the stage where it
is finally abandoned or discontinued from the market can be defined as products life cycle. Four
stages of product life cycle are 1. Introduction Stage, 2. Growth Stage, 3. Maturity and 4.
Decline (Benett, 2020).
20

Fig – Product life cycle
Source – thestreetmarket.com
Benefits of price optimization system
How demand varies at different price levels and then combine that data with information on
costs and inventory levels to recommend prices that will improve profits. Price Optimization
Models help businesses determine.
1.Get immediate financial benefits
The main benefit is that the solutions allow a retailer to focus on the details in a store. For
example, after a low-cost process, sales revenue may be lower in the product category. But the
whole limit has gone up. Therefore, you can focus on cleaning up your service issues. Be
mindful of your product packaging and remember the importance of your brand. Also, improve
your product description by providing details. You can encourage your customers to shop
(Walkowski, 2018).
2. Parallel working with many categories
With low-cost software, you can apply some rules from your store to special categories. Pricing
strategies automatically, half automatic They can be activated automatically or manually - they
all depend on the product or product of a product you sell. Note, too, that this system can be
very helpful and helpful for the type manager (PM) that will simplify complex tasks with all
types. With this support, workers can be more effective (Walkowski, 2018).
21

3. Automation of all processes in a company
Solutions of this type are enabled by optimization to a large extent. Pricing systems can
eliminate the need to be done by hand and minimize human errors. There is no reason to
expect a better sale forecast tomorrow due to automation. Because data is stored separately,
companies can adjust prices whenever needed. Most importantly, price changes can be
associated with all sales channels at the same time (Walkowski, 2018).
Do you wonder why Amazon is such a giant? Amazon makes several prices changes every day -
thanks to that, we can also talk here about the magic of the lost benefits. Do you think that
they could do it all manually?
4. Price cohesion warranty
If you use fair pricing in your sales channels, you don't have to worry about your offer being
one-sided. By setting rules you can eliminate most mistakes and your offer will be united. Your
customers will not be confused; Because prices are always right and true (Walkowski, 2018).
5. Make decisions quicker, based on data
Use price optimization system and speed up your decisions, based on hard data and not
intuition. Thanks to automation you’ll react to trends and changes at your competition quicker
(Walkowski, 2018).
As you can see, e-shops have strong profits right away, thanks to solid technology for reducing
costs. It works simultaneously with many types and automatically processes. Because it reduces
your workload and gives you accuracy. So, if you want to grow your business, you should adjust
your prices. Achieve the success of your e-shop. Do you need more information to improve the
price?
Job Costing System
A job costing system involves the process of accumulating information about the costs
associated with a specific production or service job. This information may be required in order
to submit the cost information to a customer under a contract where costs are reimbursed
(Smith-Barrett, 2017).
Employment cost means costs system collects the company's production and production costs
(Martin, 2013).
22

An employment opportunity is a system that collects information about the costs of
producing or servicing a job. According to a contract, this information will be needed to
report the cost to the consumer use for the expertise of the company (Woodruff, 2018).
Benefits of job accounting system
It is appropriate for firms that are engaged in production of unique products and special orders.
 Costs can be checked at any stage of completing a task.
 This provides a framework for controlling costs by taking appropriate steps.
 Profit from each job is described separately in Job costing.
 The cost, after the job each component of the selling price and profit can be compared
with estimates for cost control and mitigation. Only then will the benefits of each job.
 Management can estimate the cost of the work based on past records for work costs.
 The actual cost of the previous job can be compared to the current job.
 The overhead recovery rate may be pre-determined on the basis of the overhead rate of
recovery.
 Trend analysis can be modified by collecting historical costs for work costs.
 There is over or under recovery of the overhead.
 The estimate applies to the budget control system, followed by the cost.
 Damages and defects that arise from every task are easily detected and they can be
easily controlled.
 Work costs are reasonable for costs and contracts.
 Costs simplify the cost of each job.
 Actual costs compared to actual costs. In this way, excessive overhead control can be
taken.
 In the case of the Administrator. The contract is included with the cost of labor, along
with the estimated cost of a contract, with some estimated cost of employment.
Advantages of job-costing system
Job-costing system can adjust the performance of the workers to be more efficient and
effective. The organization can increase or decrease the cost according to the performance and
managed well. The organization can reduce the waste cost for the services fees of the
23

employees and push the employees to get a better and more amount of performance if it is
necessary by the help of job-costing system (Heisinger, 2001).
Disadvantages of job-costing system
Although job-costing system can adjust and reduce some waste costs, employee dissatisfying
and work-place unhappiness can be occurred because the usage of this system in some
situation. When the organization does not need much performance from the employee, the
employees will get only a little amount of fees for their job and it can continuously lead to the
work place dissatisfying which can decrease the improvement of the organization (Heisinger,
2001).
P-2.1
Since the aim, the role and the responsibility of management accounting and financial
accounting system are different, the functions and form of running of each system are also
different. The differences between the two systems will be shown at the following below.
The accounting field contains three subfields: financial accounting, management accounting,
and auditing. This category is user-centric. Financial accounting involves transferring accounting
information to external parties, while management accounting involves generating accounting
information for managers and other employees to complete their work. The auditing is giving a
review of the reliability and usefulness of all types of accounting information. Other sub-fields
of accounting include taxation and accounting information systems (Caplan, 2006).
Differences Between Financial Accounting and Management Accounting
There are two main branches in Accounting for producing organization information and reports.
These are Management Accounting and Financial Accounting. The following points explain the
major differences between financial accounting and managerial accounting:
Legal Requirements
Public companies are required to provide annual financial statements whether they are useful
for management or not. Management Accountants, on the other hand, can choose and produce
only when management accountants need the required management information.
24

Focus on business areas
Most financial accounting firms cover the entire business, but management accounting firms
focus on the business sector. The Accounting Officer compiles a management record of various
products and services aimed at determining the financial position and performance of the
business environment. To determine the profitability and economic performance of clients and
other departments and businesses.
Accounting Principles
Financial accounting is required to comply with legal requirements and generally accepted
accounting principles, but management accounting is not required to do so. Statements of
financial accounting need to be consistent to ensure that they can be compared with historical
data, and that it also ensures the accuracy of the information to outsiders. Management
accountants, on the other hand, make their key decisions. Its main purpose is to meet the
management requirements of the management and control processes.
Time Dimension
Although financial accounting provides a brief overview of past economic developments,
management statistics include future and past data as well as future data. The management
accountant uses the data to predict which business will end up in the future.
Report Frequency
The financial statements are prepared annually or annually and the management reports are
revised as necessary. Management accounting reports are usually one day long. It usually takes
about a week or so to prepare (Bazley, et al., 2014).
P-2.2
In running a suitable management accounting system, the accuracy and stability of necessary
information for the reports is also very important. These are the qualitative characteristics of
useful financial information.
Qualitative Characteristic of Management Accounting Information
According to (Belkaoui, 2002), the qualitative characteristics of management accounting
information can be divided into four types. The four types of characteristics are relevance,
reliability, consistency and comparability. Relevance and reliability are basic qualitative
25

characteristics. The secondary qualitative characteristics are consistency and comparability.
These features are described in detail below.
The qualitative characteristics of useful financial information. Be able to produce reports with
useful information, organization members should learn the Qualitative characteristic of
financial information and different types of managerial accounting reports.
Relevant
Financial information may also be disclosed to the decision of relevant company or consumer of
company or organization. Thoughts can influence ideas. It can also be considered as something
to control (Katsuri, 2018).
The captured data should be consistent with the purpose for which it is used. Needs need to be
reviewed from time to time to reflect the needs of change. We are responsible for collecting
and reporting performance information in accordance with a wide range of regulatory
indicators. They are strong and prosperous communities under the government's white paper.
Where appropriate, each service identifies reliable local performance indicators to manage
performance and drive growth.
Reliable
In the characteristics of correlation, all three components are predictive value, feedback value
and timeliness. The nature of relevance in business accounting is very useful for obtaining
information inside and outside the company to make effective long-term or short-term
decisions for the company's accountants and managers. Companies can realize predictable
value based on relevance. Management field or accounting field can obtain useful information
inside and outside the company and make effective decisions by predicting market conditions
and customer needs. Feedback within the organization must also be verified and corrected.
Researching feedback that can benefit the organization is also one of the functions, including
relevance. For a limited period of time, collecting useful information based on timely
components. This information may also be supported by the organization’s strategic plan
(Belkaoui, 2002).
Data stabilizes with storage over time. This should reflect a consistent data collection process.
Progress toward performance goals should reflect real change rather than change in data
26

collection methods or approaches. Manual or clear access to manual resource information from
automation or other systems and records.
Reliability
Management accounting information is reliable for the organization and very useful for the
organization's accountants and managers. This is because the information in business
accounting is reliable and managers and accountants can use it for their respective tasks. The
characteristics of reliability usually include three parts. These three components are
verifiability, neutrality and representational faithfulness. Verifiability is useful for verifying the
financial value of a company. Then, management accounting is also involved in keeping the
organization neutrality. Representative faithfulness is also an integral part of reliability and can
support the development of the organization (Belkaoui, 2002).
Accuracy
The data must be captured at the point of movement. The data is captured at the point of
continuous movement. Performance data is a direct link between the service manager or the
listing staff to Performance Plus. P + is restricted for security purposes and for the purpose of
inserting information from appropriate input pages. The individual password can be changed by
the user. No one should use it except that user.
Where appropriate data, this means that fractions and numbers will be entered into the system
for calculating the result. They are decided or agreed upon in accordance with published
guidelines. This phase of the process eliminates miscalculations and provides background
information for the leader.
Timeliness
Information should be stored as soon as possible after the event or incident and intended to be
used within a reasonable time. Information must be available quickly and frequently to meet
information needs and influence service or management decisions. Performance data is
requested to be available within one calendar month from the end of the previous quarter and
must be submitted quarterly to the relevant policy and review body. In addition, as part of
Performance Plus' development, performance information is available on the Three Rivers DC
27

website through custom reporting. This can improve access to information and delay
information in traditional ways.
Faithful representation
A concept that statements be produced that accurately reflect the condition of a business.
For example, if a company reports in its balance sheet that it had $1,200,000 of accounts
receivable as of the end of June, then that amount should indeed have been present on
that date. The faithful representation concept should extend to all parts of the financial
statements, including the results of operations, financial position, and cash flows of the
reporting entity. Financial statements that faithfully represent these aspects of a business
should have the following three attributes (Bragg, 2019).
Comparability
Organizations can compare financial information from different departments or situations with
management accounting. By comparing the company's financial information, organizations can
find more effective information for the next financial plan. Organizations can make better plans
next time to match the profits and costs obtained by comparing financial information (Belkaoui,
2002).
Comparison means that the body compares time and information with other bodies and
entities to a similar capacity (Katsuri, 2018). Different systems produce the different types of
managerial accounting reports
Requirements for managerial reports depend on the nature, type and size of organizations. The
following statements are generally used in Financial reports for management decision making
Verifiability
If the information is accurate, it assures the consumer or company that the product or product
is reliable and useful. When it is a company product, you can repair any uninsured. Something
went wrong during the warranty period (Katsuri, 2018).
Timeliness
Information should be provided to clients and consumers by identifying sufficient time to
decide by identifying several companies receive product information over time (Katsuri, 2018).
Understandability
28

It is easy understand about product information for use and has many advantages for the
company. Once the company's customers understand the product's information, the product
may decide to buy (Katsuri, 2018).
Consistency
The consistency is very important for reporting to corporate management field and CEO. This is
one of the signs of management accounting information and can help organizations report and
financial information. Consistent organizations will certainly have systematic accounting
procedures and rules to support the development of organizations in the market. Besides,
consistency can affect organizational productivity in a positive way (Belkaoui, 2002).
P-2.3
Different types of managerial accounting reports
The Management Accounts report allows small business owners and managers to monitor the
company's performance. It is reviewed frequently during the accounting period, if necessary.
The owner or manager may request a quarterly or quarterly review, depending on the type of
project and the timeliness of the information. Monthly reports may be requested on a weekly
or daily basis. Physical accounting firms can use management accounting reports to streamline
their production processes. These reports are generally based on inventory, hours include labor
or unit costs. The manager can then compare the different assembly lines within the company
to see where the progress is. You know that you can offer bonuses to the best entertainment
venues. Reporting the importance, needed and suitable information to the right person at a
suitable time and condition is one of the essential things in running management accounting
system. Seven types of management accounting reports will be shown and three from these
will be defined at the following below.
Budget Report
Budget reports help small businesses analyze their company's performance. If the business is
sufficient, managers analyze the performance and control costs of their department. Estimates
for that period are usually based on actual costs from previous years. If the entire small
business or individual entity cannot find possible ways to reduce costs beyond last year's
budget, it may need to increase the budget in the next few years. Owners and managers can
29

use budget reports to provide incentives to employees. In this case, employees may be
rewarded for achieving certain financial goals.
Accounts Receivable Aging Reports
The Senior Citizens Income Tax Report is an important tool for companies to manage cash flow
when lending to their clients. This report breaks down consumer debt by looking at their debt.
Elderly reports are 30 days late. Includes separate columns for invoices late 60 days and more
than 90 days. A manager can use the aging report to look for problems with the company's
collection process. The company needs to tighten its credit policies if significant consumers
cannot provide their balance. Debt review prevents the collection department from ignoring
old debts.
Job Cost Reports
Labor cost reports describe the costs for a specific project. They usually match the revenue
estimate and the company can evaluate the performance of the work. Instead of wasting time
and money on low-paying jobs, you can identify high-paying business ventures based on the
company's efforts. As the project progresses, work cost reports are also used to analyze costs.
Job cost reports of Vitacoco soft drinking company helps the company to in estimating the
overhead cost of each product line and provide information to analyze them which can
continuously help in choosing a suitable strategy for the company's improvement and profit.
Inventory and Manufacturing
Companies on physical accounting can use management accounting reports to streamline their
production processes. These reports generally list inventory; Includes hours, hours, labor, or
unit costs. The manager can then compare the different installation lines within the company,
and Where there will be progress, the organization know that bonuses can be offered to the
best performing departments. Job cost reports and inventory and manufacturing reports of
Vitacoco soft drinking company helps the company to in estimating the overhead cost of each
product line and provide information to analyze them which can continuously help in choosing
a suitable strategy for the company's improvement and profit.
(M1) Evaluate the benefits of management accounting systems and their application for your
selected local manufacturing organization.
30

Management Accounting Systems in Vitacoco
For the selected organization, cost accounting system, inventory management system and price
optimization system in following management accounting systems are useful for this operation
Cost Accounting System
Use performance-based costs and process costs. Used for Vitacoco cost accounting system to
determine total production cost.
I will paint coconut water bottles. Each group will have 10,000 coconuts. Each group will receive
direct support. The total cost of total production can be calculated as follows by directly
calculating labor and cost as follows:
Vitacoco
Cost Accounting Report for one batch of coconut water as at 1st Jan 2020
Direct materials
Direct Labor
Direct Expenses
Prime Cost
$
2,500
1,500
2,000
6,000
1,000(+) Total Production Overheads
Total production Cost
(+) Administration overheads
Research and Design overheads
Selling and Distribution overheads
Total Cost of Sales
(+) Profit
7,000
500
700
300
8,500
Selling Price 9,700
Hence, the selling price for one bottle of coconut water is $9,700/10,000 = $0.97.
Inventory Management System
Vitacoco has developed Business Order Quantity (EOQ) and First Edition (FIFO) to manage
inventory efficiently and effectively.
31

Part of the EOQ is calculated by removing the raw materials needed to produce coconut water.
Therefore, the best place to store only products for coconut water production will reduce the
cost of storage and ordering.
With the First In, First Out system, Vitacoco is sure to be the first to use the first coconut and
packaging bottles from the supplier in the production process. The first finished product will be
sold before the last product. This will give your insight into the Vitacoco manufacturing
industry. The first system will allow you to reduce the effective stock price of the product. The
first finished product will be sold before the last product. This will allow you to reduce the
effective stock price of the finished product.
Price Optimizing System
Vitacoco is a new brand launched in Myanmar in 2019. It uses its pricing policy to sell its
products at a cheaper price. Vitacoco is a reasonably priced policy as it is intended for
commercial production.
D1 Critically evaluate the impact of management accounting systems on accounting report
(positive and negative consequences) which you have integrated with the different functional
area.
For selected organization from positive impact from different management systems on
organizational performance can be evaluated by better improvement / modification of
inventory management report and accounts receivable agent report.
First, a cost accounting system is used. This is especially true for the finance department. It
benefits the department and the organization as a whole. Implementing this system will allow
you to write senior and expense reports to make money. In particular, the Treasury should
continue to work with Vitacoco and their businesses. It will help the loan bureau to help you
decide what customers should not lend to on time. Cost Statement reports analyze costs.
Departmental analysis. Unnecessary costs can be reduced to reduce production costs. This
report will allow the Marketing Department to make a profit decision to determine the selling
price of Vitacoco Coconut Water, a useful piece of information for the marketing department.
Vitacoco used a cost accounting system to cover these costs. Because Vitacoco uses a cost
system, the business budget is a key document that needs to be revised. This includes the
32

production volume from each production department and the cost of a production report that
includes camels. The performance of the company also relies on the information reported as
the management accounting which as the better information could result the better
performance as the managers could make better decision in organizational processes. The
budget report is used to measure the closeness of the budget performance and actual
performance during the period of accounting. This report is used to compare the both set of
data. Sales and income are listed first and then comes the sales costs, sales expenses, general
and administrative expenses, other expenses and net operating income. The account receivable
aging report is typically used as a tool for estimating potential bad debts, which are then used
to revise the allowance for doubtful accounts. The usual method for doing so is to derive the
historical percentage of invoice amounts in each date range that usually become a bad debt
and apply these percentages to the column totals in the most recent aging report. 10 The
performance report is the report that measure the result of the activity in term of the success
over the specific period of time. The time period could be differed according to the activity or
undergoing process of the company. The productivity of the employee and that of the
company’s process is presented in the performance report. The manager then fills up the gap if
necessary and keep on track of positive performance according to this report, and this could
help in increasing the productivity, directly or indirectly by managing the performance level.
Inventory report lists the past inventory transactions. Inventory transactions include
transactions in manual inventory processes such as physical counts, period-end closings and
transactions. The manufacturing report keeps on track of monthly changes in new orders,
production, employment, supplier transportation, and manufacturing industry inventory. In the
job costing report, it is presented that the process of systematically determining the labor and
material costs for each job and using this information to create customer quotes. The process
of organization uses the job costing report information to ensure that product pricing can cover
actual costs, overhead, and profits. There are various advantages that organization can take
over applying and implementing management accounting system and management accounting
reports. The advantages of management accounting systems and their applications are already
mentioned in the above tasks. Management accounting reports include budgeting reports,
33

accounting receivable aging reposts, performance reports, inventory and manufacturing
reports, job cost reports, other information report, etc. By using these reports, we can have a
lot of improvements for our organization. We can manage what we measure and the reporting
process makes us easier to see the key priorities. It helps us to fasten up the transparency in the
firm. Reporting enables to gain trust between the stakeholders over time. In our firm, the use of
budget accounting reports helps us to know the performance of the outlets. We can have more
control whether their sales are high or low. The company will try to fix the problem if the sales
are decreasing and try to achieve goals while working within the budget. Moreover, the use of
performance reports helps us to realize the dynamic conditions of the employees and how the
departments are working. Because of this report, the HR department can know whether they
need to make job rotation or job add new skillful workers. It will help the firm to increase in
production and will become profitability. The report will be included
Total cost of transfer from other departments
According to the department, there are workers and factories
According to the department, unit cost
Total and unit cost until the end of the department's operation
Start and end cost of WIP storage
Expenses are transferred to the next department or warehouse
Cost is calculated based on the number of units. Costs are determined by profit estimates to
determine the selling price of a product.
Agent Report This account receipt will be used to manage your actual production costs and to
manage performance and other critical decisions. It will also provide a clear picture of all the
costs involved in purchasing or manufacturing equipment to optimize the resources of all
departments.
Vitacoco has three major manufacturing plants. (1) Coconut water treatment, (2) Bottles (3)
Storage of finished goods. The profit margin of 10,000 coconuts is recorded to determine the
selling price by preparing cost reports for each process.
This report includes outstanding balances and durability, as well as unpaid invoices. Businesses
that sell products and services from customers use this report. Using the report is useful for the
34

business to calculate the cost of debt for the business. The invoice will be recorded and a
unique amount of each user will be recorded. Currently 1 to 30 days, 31 -60 days, businesses
can determine which customers are wasting their time:
Vitacoco
Accounts Receivable Aging Report as at 15th August 2020
Number of
days due
Current 1-30 days 31-60 days 61-90 days Over 90
days
Total
Clients $ $ $ $ $ $
Gandamar
Wholesale
200 100 0 0 0 300
CityMart 100 600 200 0 0 900
Marketplace 300 0 0 0 0 300
City Express 400 500 0 0 0 900
ABC Store 200 100 100 100 0 500
G&G Store 200 50 0 0 0 250
999 Store 300 100 0 0 0 400
Total 1,700 1,450 300 100 0 3,550
The Accounts Receiver Aging Report provided by Management to the Board of Directors as
instructed by previous clients will allow top management to change their credit policies if
necessary. Decide to stop working with unmanaged clients. The credit department regularly
contacts clients for an efficient invoice and collection process. This report describes the
changing nature of economic cash flow and problems.
As mentioned in the report above, ABC Store should reconsider its relationship with ABC Store
and Vitacoco at the end of the contract period.
The second is EOQ and FIFO. They will assist in submitting accounting management reports.
These reports are for the purchase of raw materials. It is especially suitable for departments
that need to produce and store finished goods. Systems and reports can reduce storage and
construction costs by allowing operations to be aware of the amount of raw materials
35

purchased. Vitacoco has implemented the Business Order Quantitative Order (EOQ) and Initial
Initiative (FIFO) to effectively manage inventory.
Part of the EOQ is calculated by removing the raw materials needed to produce coconut water.
Therefore, the best place to store only products for coconut water production will reduce the
cost of storage and ordering.
With the First In, First Out system, Vitacoco can ensure that the first coconuts and packaging
bottles received from suppliers are used first in its production process. The first finished
product will be sold first before the final product. This will allow you to reduce the effective
stock price of the finished product.
As mentioned above, Vitacoco uses Business Order Quantity (EOQ) and First Instance (FIFO) as
its accounting management systems. Therefore Systems will need management accountants to
revise account management reports.
Management accountants must first determine the value of an account. Use FIFO first. This is
especially true for businesses that sell a large number of listings. Once the first purchase is
recorded as a sale, the last purchase is considered wholesale. Account size and value are
recorded over a period of time. Indicates the date of purchase and quantity and price of each
shipment. Sales were also recorded during the period. Therefore, FIFO can calculate the value
of the list sold during that period, as described in the following reports. The remaining balance
value can be calculated.
Vitacoco
Purchase Orders for bottles within Accounting Period from 1st Jan 2020 to 31St Dec 2021
Date Quantity of bottles
Purchased (One
pack contains 3000
bottles)
Unit Cost
$
Value
$
Jan 15 3 10 300
Feb 15 4 10.50 420
Mar 15 3 11 330
36

Vitacoco
Sales Orders for Finished Goods within Accounting Period form 1st Jan 2019 to 31st Dec
2019.
Date Quantity Sold Unit Cost
$
Cost of Goods Sold
(COGS)
$
Mar 19 9,000 0.92 8,280
Mar 23 8,500 0.92 7,820
Hence, the cost of goods sold for this period is $16,100.
In the third part, a better pricing system will be used to assist in the production of cost statistics
reports to determine the price of goods sold. This system needs to be integrated with the
marketing department. It will show you which price to use. Vitacoco is a new brand launched in
Myanmar in 2020 and uses its pricing policy to sell products at the latest prices. Vitacoco is a
reasonably priced policy as it is intended for commercial production.
LO-2
P-3
Job cost reports and inventory and manufacturing reports of Lucky Bakery helps the company
to in estimating the overhead cost of each product line and provide information to analyze
them which can continuously help in choosing a suitable strategy for the company's
improvement and profit.
Cost
Cost in business and accounting is the amount of money a company spends on production. Cost
is the amount of money a company spends to create or produce a product or service. This
means he ca not lose money on sales. But he is not making a profit. From a buyer's point of
view, the cost of a product is also known as price. This is the amount of revenue the seller
makes for a product, including the cost of production and the mark-up that the seller adds to
make a profit.
37

Different Classification cost such as, Fixed Cost
A periodic cost that remains more or less unchanged irrespective of the output level or sales
revenue, while in practice, all costs vary over time and no cost is a purely fixed cost, the concept
of fixed costs is necessary in short term cost accounting. Organizations with high fixed costs are
significantly different from those with high variable costs. This difference affects the financial
structure of the organization as well as its pricing and profits. The breakeven point in such
organizations (in comparison with high variable cost organizations) is typically at a much higher
level of output, and their marginal profit (rate of contribution) is also much higher. EX-
insurance, interest, rent, salaries.
Variable Cost
Variable cost proportional changes to the level of output. The main cost for manufacturers is
the cost of materials ( EduPristine, 2017).
Variable costs are expenses that change based on production levels — rising as production
levels rise, and falling when production levels drop. Variable costs play an important role in
business operations, affecting everything from your break-even analysis, which tells you how
many units you need to sell in order to break even, to your net profit (Girsch-Bock, 2019).
This type of cost can vary directly with changes in level of activity over a specified period. For
example, Shoe manufacturing company produces various designed shoes and thus direct
material, labor cost must be incurred with level of activity of production unit.
A cost is different from the amount of production and the services provided. There is no
production. If the service is not available, there should be various costs. EX- Bonus, wage cost.
Fixed Costs
Fixed Cost refers to the cost or expense that is not affected by any decrease or increase in the
number of units produced or sold over a short-term horizon. In other words, it is the type of
cost that is not dependent on the business activity, rather it is associated with a period of time
(Wall Street Mojo, 2018).
Fixed costs are related to production changes. These costs increase, though not inconsistently.
For example, rent, interest rate, Property tax and staff salaries. However, due to long-term fixed
costs, fixed costs are limited to a fixed period of time. For example, a manufacturer may decide
38

to increase demand and expand capacity of its products as it requires higher costs for factories
and equipment ( EduPristine, 2017).
A cost that is fixed and it cannot be change unlike variable, fixed cost does not change with an
increase or decrease in amounts of goods or services produced or sold.
They are expenses that have to be paid by a company, independent of any specific business
activities are usually established by contract agreements or schedules.
Total Cost
It is defined as the sum of fixed, variable and semi variable costs ( EduPristine, 2017).
Total cost is an economic measure that sums all expenses paid to produce a product, purchase
an investment, or acquire a piece of equipment including not only the initial cash outlay but
also the opportunity cost of their choices (My Accounting Course, 2020).
Direct Cost and Indirect Cost
Direct costs typically include the major components for manufacturing goods and the labor
directly required to produce those goods. Direct costs are also referred to as prime costs. On
the other hand, indirect costs include plant-wide costs such as those resulting from the use of
energy and fixed capital. Indirect costs are also referred to as overhead ( EduPristine, 2017).
Direct cost is the price directly related to the production of a specific product or service.
Indirect costs are costs that are not directly responsible for the costs (eg project, factory,
project or product). Indirect costs are fixed or fixed. Some costs may be directly related to the
project. EX - Indirect product, Indirect labor.
Incremental cost
This is mainly the additional cost associated with the production of another production. It also
refers to differential as cost ( EduPristine, 2017).
An incremental cost is the difference in total costs as the result of a change in some activity.
Incremental costs are also referred to as the differential costs and they may be the relevant
costs for certain short run decisions involving two alternatives (Averkamp, 2020).
Opportunity Cost
39

It is defined as the cost of an alternative that is forgone (benefit, profit, value given up) in order
to pursue a certain action ( EduPristine, 2017).
Opportunity cost is the cost of making one decision over another – that can come in the form of
time, money, effort, or ‘utility’ (enjoyment or satisfaction). We make these decisions every day
in our lives without even thinking.
“Opportunity cost is the cost of making one decision over another. That can come in the form
of time, money, effort, or ‘utility’ (Boyce, 2020).
Sunk Cost
The cost is already there and is non-refundable ( EduPristine, 2017).
A sunk cost is a cost that has already been paid for and cannot be recovered in any way (Fiorillo,
2018).
Material Cost
Material cost is the cost of materials used to manufacture a product or provide a service.
Excluded from the material cost is all indirect materials, such as cleaning supplies used in
the production process. Follow these steps to determine the amount of material cost to
assign to a unit of production (such as a completed finished goods item):
1. Ascertain the standard quantity of the material used to manufacture one unit.
2. Add the standard amount of scrap associated with manufacturing one unit.
3. Determine the standard amount of scrap associated with setting up the production run,
and apportion it to the individual unit.
4. If any scrap is then sold, apportion the revenue back to the individual unit.
For many materials, the cost of scrap and the revenue from the resale of scrap are so small
that it is not worthwhile to apportion it to the material cost.
If the material cost has been established as a standard, then you can subsequently
calculate the material yield variance to see if actual materials usage was as expected, or
you can calculate the purchase price variance to see if the purchase price of the material
40

was as expected. These variances are useful for investigating problems in the production
and purchasing areas of a business (Accounting Tools, 2018).
Material cost constitutes a major proportion of the total cost of the product. All products are
made up of one or many materials. So, the accurate determination of material cost may be
direct material cost or indirect material is essential.
Whenever a product/component is manufactured out of a material some portion of it goes as
waste/scrap in the form of chips or risers etc. In addition to this some components/parts may
not meet the final specifications essentially needed such as surface finish, dimensions and
surface hardness etc. and are therefore rejected in the final inspection process, thus leading to
scrap (Jain, 2019).
It can be easily identified as the direct cost to the unit of equipment. For example, the value of
glass is directly related to the production of light bulbs. Needed as a key component in the
production of a product or commodity.
Labor Cost
The labor costs definition is the total cost of all labor used in a business. It is one of the most
substantial operating costs. These are particularly important in any business which experience
heavy human resource labor costs: construction, manufacturing, and other industries which
have partially or non-automated operations. These costs include 2 main subcategories.
The direct labor costs definition is summarized as the cost of labor which is used directly to
make products. Meanwhile, the indirect labor costs definition is simply explained as the cost of
labor which is used to support or make direct labor more efficient (Wilkinson, 2013).
Labor Costs Explanation
These costs are explained by many as the most important cost a company will face, is a key
factor in almost any business. This is due to the fact that employee turnover is one of the main
factors which causes a business to fail. To begin, it is in the best interest of any owner that unit
labor costs and inflation are minimized to maximize profits.
41

The importance of labor costs does not stop here. They are a variable cost. As such, they must
also occur in a predictable cycle to avoid cash flow problems. If a firm is seasonal and requires
additional labor at peak times, business controllers must have the cash on hand to afford this
increase in cost. If a business plans properly it will avoid many cash issues associated with the
cost of labor (Wilkinson, 2018).
Labor Costs Formula
A single formula will not serve the many different needs associated. Despite this, a common
and simple formula is included below:
Labor Costs = (total sales x labor %) / average hourly rate of labor
Labor costs are salaries earned to produce goods or provide specific services to customers. The
total cost of wages is much higher than wages. In addition to the payroll taxes associated with
these wages, the company also includes health insurance. Life insurance workers'
compensation insurance covers the company's pension benefits and other company benefits.
Types of Costing
Marginal Costing
42

Marginal Costing is a costing technique wherein the marginal cost, i.e. variable cost is charged
to units of cost, while the fixed cost for the period is completely written off against the
contribution.
The term marginal cost implies the additional cost involved in producing an extra unit of
output, which can be reckoned by total variable cost assigned to one unit. It can be calculated
as:
*Marginal Cost = Direct Material + Direct Labor + Direct Expenses + Variable Over heads
Characteristics of Marginal Costing
 Classification into Fixed and Variable Cost: Costs are bifurcated, on the basis of variability
into fixed cost and variable costs. In the same way, semi variable cost is separated.
43

 Valuation of Stock: While valuing the finished goods and work in progress, only variable cost
is taken into account. However, the variable selling and distribution overheads are not
included in the valuation of inventory.
 Determination of Price: The prices are determined on the basis of marginal cost and
marginal contribution.
 Profitability: The ascertainment of departmental and product’s profitability is based on the
contribution margin.
In addition to the above characteristics, marginal costing system brings together the techniques
of cost recording and reporting.
Marginal Costing Approach
The difference between product costs and period costs forms a basis for marginal costing
technique, wherein only variable cost is considered as the product cost while the fixed cost is
deemed as a period cost, which incurs during the period, irrespective of the level of activity.
Facts Concerning Marginal Costing
44

 Cost Ascertainment: The basis for ascertaining cost in marginal costing is the nature of cost,
which gives an idea of the cost behavior, that has a great impact on the profitability of the
firm.
 Special technique: It is not a unique method of costing, like contract costing, process costing,
batch costing but, marginal costing is a different type of technique, used by the managers for
the purpose of decision making. It provides a basis for understanding cost data so as to
gauge the profitability of various products, processes and cost centres.
 Decision Making: It has a great role to play, in the field of decision making, as the changes in
the level of activity pose a serious problem to the management of the undertaking.
Marginal Costing assists the managers in taking end number of business decisions, such as
replacement of machines, discontinuing a product or service, etc. It also helps the management
in ascertaining the appropriate level of activity, through break even analysis, that reflect the
impact of increasing or decreasing production level, on the company’s overall profit (Jargons,
2019).
The marginal costing method is a method of calculating the marginal or variable costs in terms
of cost, and the fixed costs during the period are fully amortized in the payment. The term
"marginal cost" refers to the additional cost involved in producing additional production units,
which can be calculated as the total variable cost allocated to a unit (Harris, 2009).
Marginal cost is the change in the total cost when the quantity produced is incremented by
one. That is, it is the cost of producing one more unit of a good (Tutorial Points, 2020).
Through this method only the variable cost is allocated i.e. direct materials, direct expenses,
direct labor and variable overheads to production. It does not include the fixed cost of
production ( EduPristine, 2017).
Advantages of Marginal Costing
 Easy to operate and simple to understand.
45

 Marginal costing is useful in profit planning; it is helpful to determine profitability at
different level of production and sale.
 It is useful in decision making about fixation of selling price, export decision and make
or buy decision.
 Break even analysis and P/V ratio are useful techniques of marginal costing.
 Evaluation of different departments is possible through marginal costing.
 By avoiding arbitrary allocation of fixed cost, it provides control over variable cost.
 Fixed overhead recovery rate is easy.
 Under marginal costing, valuation of inventory done at marginal cost. Therefore, it is
not possible to carry forward illogical fixed overheads from one accounting period to
the next period.
 Since fixed cost is not controllable in short period, it helps to concentrate in control
over variable cost.
Need for Marginal Costing
Let us see why marginal costing is required:
 Variable cost per unit remains constant; any increase or decrease in production changes
the total cost of output.
 Total fixed cost remains unchanged up to a certain level of production and does not
vary with increase or decrease in production. It means the fixed cost remains constant
in terms of total cost.
 Fixed expenses exclude from the total cost in marginal costing technique and provide us
the same cost per unit up to a certain level of production.
Features of Marginal Costing
 Marginal costing is used to know the impact of variable cost on the volume of
production or output.
 Break-even analysis is an integral and important part of marginal costing.
 Contribution of each product or department is a foundation to know the profitability of
the product or department.
46

 Addition of variable cost and profit to contribution is equal to selling price.
 Marginal costing is the base of valuation of stock of finished product and work in
progress.
 Fixed cost is recovered from contribution and variable cost is charged to production.
 Costs are classified on the basis of fixed and variable costs only. Semi-fixed prices are
also converted either as fixed cost or as variable cost.
 All costs are categorized into fixed and variable costs. Variable cost per unit is same at
any level of activity. Fixed costs remain constant in total regardless of changes in
volume (Accounting Notes, 2019).
 Fixed costs are considered period costs and are not included in product cost, only
variable costs are considered as product costs.
 Stock of work-in-progress and finished goods are valued at marginal cost of production.
 In marginal process costing, products are transferred from one process to another are
valued at marginal costs only.
 Prices are determined with reference to marginal cost and contribution margin.
 Profitability of departments, products etc. is determined with reference to their
contribution margin.
 In accounting, marginal cost, the overhead control account in the cost ledger represents
only the variable overhead. Fixed costs are taken as expenses in the profit and loss
account and thus excluded from costs.
 Presentation of data is oriented to highlight the total contribution and contribution from
each product.
 The difference in the magnitude of opening stock and closing stock does not affect the
unit cost of production since all the product costs are variable costs.
Marginal costing is a principle whereby variable costs are charged to cost units and the fixed
costs attributable to the relevant period is written off in full against the contribution for that
period is the ascertainment of marginal cost and the effect on profit of changes in volume or
type of output by differentiating between fixed costs and variable cost. In marginal costing,
costs are classified into fixed and variable costs. The concept of marginal costing is based on
47

the behavior of costs that vary with the volume of output. Marginal costing is known as
‘variable costing’, in which only variable costs are accumulated and cost per unit is ascertained
only on the basis of variable costs. Sometimes, marginal costing and direct costing are treated
as interchangeable terms.
The major difference between these two is that, marginal cost covers only those expenses
which are of variable nature whereas direct cost may also include cost which besides being
fixed in nature identified with cost objective.
Contribution of Marginal Costing
In marginal costing, costs are classified into fixed and variable costs. The concept marginal
costing is based on the behavior of costs with volume of output. From this approach, it is not
possible to identify an amount of net profit per product, but it is possible to identify the amount
of contribution per product towards fixed overheads and profits. The contribution is the
difference between sales volume and the marginal cost of sales.
In marginal costing it is not possible to determine the profit per unit of product because fixed
overheads are charged in total to the profit and loss account rather than recovered in product
costing. Contribution is a pool of amount from which total fixed costs will be deducted to arrive
at the profit or loss (Accounting Notes, 2019)
The marginal cost of an item is same as variable cost. The marginal production cost an item is
sum of its direct materials, labor and expenses cost. Marginal costing is not good enough for
short term but it gives a lot of benefits to those who runs long term. Another benefit is that it
makes easier for companies to separate fixed costs and variable costs that it shows amount of
profit at every level of output with help of cost volume profit relationship, in the end it gives
better results to company.
Absorption Costing
48

A cost accounting method for valuing inventory. Absorption costing includes or “absorbs” all
the costs of manufacturing a product including both fixed and variable costs. That means that
all costs including direct, like material costs, and indirect, like overhead costs, are included in
the price of inventory. Absorption costing gives a much more comprehensive and accurate view
on how much it really costs to produce your inventory then the variable costing method (My
Accounting Resource, 2020).
Absorption cost accounting is a cost accounting system which is used for inventory valuation.
Including variable and fixed manufacturing expenses and material and labor costs. Absorption
cost calculation is also called full cost calculation. This guide includes the contents, how to
calculate and the advantages and disadvantages of using this accounting method (Khan & Jain,
2008).
Absorption costing is one of approach which is used for the purpose of valuation of inventory or
calculation of the cost of the product in the company where all the expenses incurred by the
company are taken into the consideration i.e., it includes all the direct and indirect expenses
incurred by the company during the specific period.
Absorption Costing Formula
Absorption cost formula = Direct labor cost per unit + Direct material cost per unit + Variable
manufacturing overhead cost per unit + Fixed manufacturing overhead per unit
It can also be modified to,
Absorption cost formula = (Direct labor cost + Direct material cost + Variable manufacturing
overhead cost + Fixed manufacturing overhead) / No. of units produced
49

Explanation
The formula for AC can be computed by using the following steps:
Step 1: Firstly, the direct labor cost per unit is directly attributable to the production. The direct
labor cost can be determined based on the labor rate, level of expertise, and the no. of hours
put in by the labor for production. However, the labor cost can also be taken from the income
statement.
Step 2: Secondly, identify the material type required and then determine the amount of the
material required for the production of a unit of product to calculate the direct material cost
per unit. However, the direct raw material cost can also be taken from the income statement.
Step 3: Thirdly, determine which part of the manufacturing overhead is variable in nature. The
manufacturing overhead is available in the income statement.
Step 4: Next, determine which part of the manufacturing overhead is fixed in nature and then
divide the value by the number of units produced to arrive at a per-unit cost.
Step 5: Finally, the formula for absorption cost is derived by adding up direct labor cost per unit,
direct raw material cost per unit, variable manufacturing overhead per unit, and fixed
manufacturing overhead per unit, as shown above (Wall Street Mojo, 2019).
50

Absorption costing (also known as full absorption costing) indicates that all of
the manufacturing costs have been assigned to (absorbed by) the units of goods produced. In
other words, the cost of a finished product includes the following costs:
 direct materials
 direct labor
 variable manufacturing overhead
 fixed manufacturing overhead
Absorption costing is required for external financial reporting and for income tax reporting.
Another method of costing (known as direct costing or variable costing) does not assign the
fixed manufacturing overhead costs to products. Therefore, direct costing is not acceptable for
external financial and income tax accounting, but it can be valuable for managing the company
(Accounting Coach, 2020).
It is a way to absorb fixed and variable costs into production. In this way the full cost is fixed
and the variable is absorbed by the production cost ( EduPristine, 2017).
A method for calculating costs concern with a production process and absorption costing
apportion them to individual items, it is mainly allowed by accounting standards to make an
inventory valuation that is stated in a balance sheet of an organization, when an entity pays for
them, these costs are not recognized as expenses in month. Instead, they remain in inventory is
empty, they are charged to cost of goods sold.
The main benefit of absorption costing is that it is in compliance with GAAP and does a better
job of accurately tracking profits than variable costing.
Calculation as given case
1. Calculate product cost per unit and cost of closing inventory under each of marginal and
absorption costing.
2. Prepare operating statement using marginal costing from given case.
3. Prepare operating statement using absorption costing from given case.
51

Absorption Costing and Marginal Costing: Impact on Profit:
In absorption costing, stock is valued at total cost while in marginal costing stock valuation is
done at variable cost only. This means that in absorption costing, stock valuation is higher than
in marginal costing. When production exceeds sales, profit under absorption costing is higher
than that of marginal costing. But when sales exceed production, profit under absorption
costing is lower than that of marginal costing.
Absorption costing is a principle whereby fixed, as well as, variable costs are allotted to cost
units and total overheads are absorbed according to activity level. Absorption costing confirms
with the accrual concept by matching costs with revenue for a particular accounting period.
Stock valuation complies with the accounting standard and fixed production costs are absorbed
into stocks.
Absorption costing method avoids separation of costs into fixed and variable elements, which is
not easily and accurately achieved. Cost plus pricing under absorption costing ensures that all
costs are covered.
Pricing at the marginal cost may, in the long-run, result in failing to cover the fixed costs. It is
important to note that in absorption costing sales must be equal to or exceed the budgeted
level of activity otherwise fixed costs will be under absorbed.
The absorption of production overheads under absorption costing has the following impacts:
(i) When production exceeds sales during the period, a higher profit is shown under absorption
costing, since the fixed overhead is absorbed over a greater number of units produced, and
carried to next accounting period along with closing inventory.
(ii) When sales are in excess of production, a lower profit is reported under absorption costing.
Since, less portion of fixed production overhead is recovered in valuation of closing stock and
current period’s cost of production is higher.
52

The following generalizations to be made on the impact on profit of these two different
methods of costing:
(a) Where sales and production levels are constant through time, profit is the same under the
two methods.
(b) Where production remains constant but sales fluctuate, profit rises or falls with the level of
sales, assuming that costs and prices remain constant, but the fluctuations in net profit figures
are greater with marginal costing than with absorption costing.
(c) Where sales are constant but production fluctuates, marginal costing provides for constant
profit, whereas under absorption costing, profit fluctuates.
(d) Where production exceeds sales, profit is higher under absorption costing than under
marginal costing for the reason that absorption of fixed overheads into closing stock increases
their value thereby reducing the cost of goods sold.
(e) Where sales exceed production, profit is higher under marginal costing. The fixed costs,
which previously were part of stock values, are now charged against revenue under absorption
costing. Therefore, under absorption costing the value of fixed costs charged against revenue is
greater than that incurred for the period.
The choice between using absorption costing and marginal costing will be determined by the
following factors:
(a) The system of financial control in use e.g., responsibility accounting is inconsistent with
absorption costing.
(b) The production methods in use e.g., marginal costing is favored in simple processing
situations in which all products receive similar attention; but when different products receive
widely differing amounts of attention, the absorption costing may be more realistic.
(c) The significance of prevailing level of fixed overhead costs.
53

Standard Costing
A costing technique which is used in comparing the revenues with the actual result and standard
costs and informing management about the deviation and measurement of corrective for the
improvement can be defined as standard costing (Berger, 2011).
In certain operating conditions, when certain standards are set costs, they are called standard costs
( EduPristine, 2017).
An important subtopic of cost accounting. Standard costs are usually associated with a
manufacturing company's costs of direct material, direct labor, and manufacturing overhead.
Rather than assigning the actual costs of direct material, direct labor, and manufacturing overhead
to a product, many manufacturers assign the expected or standard cost. This means that a
manufacturer's inventories and cost of goods sold will begin with amounts reflecting the standard
costs, not the actual costs, of a product. Manufacturers, of course, still have to pay the actual costs.
As a result there are almost always differences between the actual costs and the standard costs,
and those differences are known as variances (Averkamp, 2019).
Standard costing and the related variances is a valuable management tool. If a variance arises,
management becomes aware that manufacturing costs have differed from the standard (planned,
expected) costs.
 If actual costs are greater than standard costs the variance is unfavorable. An
unfavorable variance tells management that if everything else stays constant the
company's actual profit will be less than planned.
 If actual costs are less than standard costs the variance is favorable. A favorable variance
tells management that if everything else stays constant the actual profit will likely
exceed the planned profit.
The sooner that the accounting system reports a variance, the sooner that management can
direct its attention to the difference from the planned amounts.
54

If we assume that a company uses the perpetual inventory system and that it carries all of its
inventory accounts at standard cost (including Direct Materials Inventory or Stores), then the
standard cost of a finished product is the sum of the standard costs of the inputs:
1. Direct material
2. Direct labor
3. Manufacturing overhead
1. Variable manufacturing overhead
2. Fixed manufacturing overhead
Historical Costing
In this way the costs are not determined in terms of actual costs, but predetermined costs. It is
decided only after the cost has been paid. Almost all organizations use this method ( EduPristine,
2017).
M2: Produce the financial report which can explain the causes for different results obtained under
marginal and absorption costing in each period by applying reconciliation technique
ZTH Manufacturing Factory
Income Statement base on Marginal Costing
For the year ended 31st December 2019
Period-1 Period-2 Period-3 Period-4
£ £ £ £ £ £ £ £
Sale (Sale unit 
Selling price
67,500 60,000 82,500 75,000
Less Valuable costs
of sales (Sale Unit
 Valuable Cost)
(27,000) (24,000) (33,000) (30,000)
Contribution 40,500 36,000 49,500 45,000
Less: Fixed Cost 1,000 1,000 1,000 1,000
55

Fixed Production
OH)
Non-
Manufacturing OH
15,000
(25,000)
15,000
(25,000)
15,000
(25,000)
15,000
(25,000)
Net Profit 15,500 11,000 24,500 20,000
ZTH Manufacturing Factory
Income Statement base on Absorption Costing
For the year ended 31st December 2019
Period-1 Period-2 Period-3 Period-4
£ £ £ £ £ £ £ £
Sale (Sale Unit 
Selling Price)
67,500 60,000 82,500 75,000
Less: Cost of Sale
Sale Unit  Total
Production Cost
of Sale)
(36,000) (32,000
)
(44,000) (40,000)
Gross Profit 31,500 28,000 38,500 35,000
Adjustment for
over total
(Under)
Absorbed
Nil Nil (1,000) Nil
56

Less:
Manufacturing
OH
Selling &
Distribution OH
(15,000) (15,000
)
(15,000) -
Net Profit 16,500 1,3000 23,500 20,000
Cost Per Unit
Marginal Absorption
£ £
Direct Material 15 15
Direct Labor 10 10
Variable Production OH 5 5
Fixed Production OH Nil 10
30 40
Working-1
Fixed production overhead absorption rate
= Total fixed production overheads/budgeted unit
= £10,000/1000 unit
= £ 10 /unit
Closing stock units
Period-1 Period -2 Period -3 Period-4
Opening Unit Nil 100 300 100
Production unit 1000 1000 900 1000
Sale units 900 800 1100 1000
Closing units 100 300 100 100
Value of closing
stock: Marginal
£
3000 9000 3000 3000
57

Value of closing
stock:
Absorption £
4000 12000 4000 4000
Over (under)
Absorbed
- - Under absorbed -
Reconciliation statement for marginal costing and absorption costing
Period-1 Period -2 Period -3 Period-4
£ £ £ £
Profit as per
marginal costing
15,500 11,000 24,500 20,000
(+) Different
closing stock
1,000 3,000 1,000 1,000
(-) Different
opening stock
Nil (1000) (3,000) (1,000)
Profit as per
absorption
costing
16,500 1,3000 23,500 20,000
There will be inevitable differences in profit figures calculated using two methods. These
differences will arise whenever there is an increase or decrease during a period. If inventory
levels increase, absorption costing will give a higher profit. This is because fixed overheads held
in closing inventory are carried forward to next accounting thus reducing cost of sale instead of
being written off in current period cost as is done under marginal costing. If inventory levels
decrease marginal costing will give a higher profit. This is because fixed overheads brought
forward in opening inventory are charged by increasing cost of sales and reducing profit for
period. If inventory levels are constant both methods (absorption and marginal) will give same
profit. When two methods are used and give different profit figures, it might be necessary to
prepare a reconciliation. The aim of this reconciliation is to account for different between
actual profit obtained not only using absorption costing method with actual profit obtained, but
58

also marginal costing method. A statement which is began with the company's own data of an
account balance, subtracts and adds the reconciling items with an additional column and uses
adjustments to get the record of the same account held by a third party can be defined as
reconciliation statement. To provide an independent verification of the veracity of the balance
in the company and to clarify the differences between the two versions of the account are the
aim and objective of reconciliation statement (K, 2008).
D2 Important Methods of Costing
Many organizations need to make decisions about setting selling prices for their sales and
accepting price for their purchases. One of influencing factors on price is cost of product or
purchases. One of influencing factors on price is cost of product or purchases.
Variety of costing
(Pethari, 2020) states that the variety of costing is mainly based on the nature of
business process which directly influence on the final costing level of product or service.
Therefore, to obtain the successful financial indicators which calculate about the various direct
and indirect costing. Additionally, it can also classify into two major groups such as job costing
and process costing.
Unit costing
This is also called production cost alone. It is expressed in identical units, and the cost of a
suitable product is due to the continuous production of the product ( EduPristine, 2017).
Example: Cement manufacturing, Dairy, Mining etc.
Unit costing is known as “output” or “single output” costing. Unit costing is followed by the
concern, which produces a single product on large scale continuously. The cost units are
identical costs. Moreover, the products are having uniform homogeneous character. This
product is not produced through continuous process. This is the main difference between unit
costing and process costing (Money Matter, 2020).
59

Contract costing
In this way, the costs are high and the work is time consuming and widespread ( EduPristine,
2017).
Example: Construction of roads and bridges, buildings etc
Contract costing is a variant of job costing. Like job costing, contract costing is also a form of
specific order costing. So, both job costing and contract costing are based on the same costing
principles. In fact, a big order is termed as a contract and a small order as a job. Contract
costing is also known as terminal costing as the preparation of Contract Account is terminated
or closed after the completion of contract (Prakriti, 2019).
Example of undertakings which adopt contract costing are builders, civil engineering
contractors, road making or repairing concerns, dams and bridge constructional concerns. The
person who undertakes the work to complete is known as ‘Contractor’ and the person who gets
the work done through contractor is known as ‘Contractee’.
Features of Contract Costing
Contract costing has certain distinctive features. The important features of contract costing are:
1. Contracts are generally of large size and, therefore, a contractor usually carries out a
small number of contracts in the course of one year.
2. A contract generally takes more than one year to complete.
3. Work on contract is carried out at the site of contracts and not in factory premises.
4. Each contract undertaken is treated as a cost unit.
5. Separate Contract Account is prepared for each contract in the books of contractor to
ascertain profit or loss on each contract.
60

6. Most of the materials are specially purchased for each contract. These will, therefore,
be charged direct from the supplier’s invites. Any materials drawn from the store are
charged to contract on the basis of material requisition notes.
7. Generally, all laborer is treated as direct laborer.
8. Most expenses, such as, electricity, telephone, insurance, etc. are also direct in nature.
9. Plant and equipment may be purchased for the contract or may be hired for the
duration of the contract.
10. Payments by the contractee are made at various stages of completion of the contract
based on architect’s certificate for the completed stage. An amount known as retention
money is withheld by the contractee as per agreed terms.
11. Penalties may be incurred (paid) by the contractor for failing to complete the work
within the agreed period.
12. Contract costing is less detailed and simpler than job costing.
13. Each contract or work involved in contract costing is executed or done as per the
specifications given by the contractee. So, one contract may be dissimilar to another
contract.
14. Contract costing is concerned with the costing of construction work or repair work and
not with the costing of any goods.
15. As the contract is undertaken at the contractee’s promises most of the items of cost
chargeable to a contract are direct costs. Indirect costs are very few.
16. As the contract or work is done at the contract site far away from the premises of the
contractor, the problem of cost control is greater in the case of contract costing. There
can be loss of materials and equipment, damage to plants and wastage of labour, posing
problem of cost control.
17. In the case of contract costing, work commences on receipt of order from the customer.
18. In case of complete contract, there is the problem of determination of the amount of
profit to be carried to current year’s Profit and Loss Account, and the amount of profit
to be carried forward.
61

19. There is no heavy investment on assets initially in the case of contract costing.
Product Costing
Commodity costs are used to determine the cost of a product or service. The main costs
incurred are process costs; Hiring and direct costs. Each of these approaches applies to different
productions and decisions.
The main product costing methods are:
 Job costing: This is a costly burden for a separate manufacturing job. This method is
used when individual or multiple products are unique. This is especially true when jobs
require direct payment from customers or are audited by customers.
 Process costing: It is the division of labor between departments or departments. It
collects material and overhead costs and divides the total production cost by individuals.
When producing large quantities of the same product, labor costs are usually used for
longer production times ( EduPristine, 2017).
Product costing is not an absolute term having a permanent definition. The definition of
product costing varies with the purpose behind costing a product. A product costing can be
simply defined as the total amount of costs assigned to a particular product based on a specific
Purpose of the management of the organization (Borad, 2020).
Commodity costs are used to determine the cost of a product or service. The main costs
incurred are process costs; Hiring and direct costs. Each of these approaches applies to different
productions and decisions.
Job Costing System
In this way, the costs for each workplace are set separately and to a certain extent. Sewing
products should also be covered at this cost ( EduPristine, 2017).
Example: Repair of buildings, Painting etc.
According to (Wilkinson, 2013), it can assume that most of manufacturing companies are
mainly used this type of costing system because job costing can demonstrate about the detail
62

information of project through maintaining the valuable financial information. Due to these
data, it can explore many different kinds of appropriate business action plans.
Job opportunity is the process of gathering information about the costs associated with a
manufacturing or service job. This information is required to provide a customer with cost
information under a refund agreement. The information is useful in determining the accuracy
of a company's forecasting system. It should quote prices for a reasonable profit. This
information can also be used to cover production costs.
Batch Costing System
In this way, costs are incurred for units manufactured in the same series as nature and design
( EduPristine, 2017).
Example: Pharmaceuticals.
Batch costing is a form of specific order costing. Job costing refers to costing of jobs that are
executed against specific orders whereas in batch costing items are manufactured for stock. A
finished product may require different components for assembly and may be manufactured in
economical batch lots.
When orders are received from different customers, there are common products among orders
then production orders may be issued for batches, consisting of a predetermined quantity of
each type of product. Batch costing method is adopted in such cases to calculate the cost of
each such batch (Lodha, 2018).
Difference Between Job Costing and Batch Costing
In case of job costing, work is undertaken as an identifiable unit and cost of each job is
ascertained separately. Such a method of costing is suitable in case of motor workshop, printing
press and where manufacture of products is according to customers’ specific requirements.
Batch costing is extension of job costing. Job costing refers to costing of jobs that are executed
against specific orders whereas in batch costing items are manufactured for stock. In batch
costing a batch may represent a number of small orders passed through the factory in batches.
Each batch is treated as a unit of cost and is separately costed. Cost per unit is ascertained by
dividing the total cost of the batch by number of items produced in that batch
63

Cost of painting is the difference between the total cost of producing a product or a service
group and the product or service within a group. For cost accounting purposes, batch costs are
assumed to be individualized within a set of costs. Total batch cost is divided by the number of
units produced to get the total unit cost (Lodha, 2018).
Process Costing System
(Indeed, 2020) pointed out that the process costing bases on the specific activities-based
costing methods to calculate the price of raw materials and other expenses which influenced in
each business process.
It is used for products that go through different processes. Like the garment production
process, the throat, Weaving and finishing products. Each process is a finished product that can
be sold. Therefore, process costs are used to calculate the cost of each stage of production
( EduPristine, 2017).
A process costing system accumulates costs when a large number of identical units are
being produced. In this situation, it is most efficient to accumulate costs at an aggregate
level for a large batch of products and then allocate them to the individual units produced.
The assumption is that the cost of each unit is the same as that of any other unit, so there
is no need to track information at an individual unit level. The classic example of a process
costing environment is a petroleum refinery, where it is impossible to track the cost of a
specific unit of oil as it moves through the refinery.
A process costing system accumulates costs and assigns them at the end of an accounting
period. At a very simplified level, the process is:
 Direct materials. Using either a periodic or perpetual inventory system, we determine the
amount of materials used during the period. We then calculate the number of units begun
and completed during the period, as well as the number of units begun but not completed
(work-in-process units). We generally assume that materials are added at the beginning of
the production process, which means that a work-in-process unit is the same as a
completed unit from the perspective of assigning material costs. We then assign the
amount of direct materials used based on the total of fully and partially produced units.
64

 Direct labor. Labor is accumulated by units throughout the production process, so it is
more difficult to account for than direct materials. In this case, we estimate the average
level of completion of all work-in-process units, and assign a standard direct labor cost
based on that percentage. We also assign the full standard labor cost to all units that were
begun and completed in the period. If there is a difference between the actual direct labor
cost and the amount charged to production in the period, the difference can be charged to
the cost of goods sold or apportioned among the units produced.
 Overhead. Overhead is assigned in a manner similar to what was just described for direct
labor, where we estimate the average level of completion of all work-in-process units, and
assign a standard amount of overhead based on that percentage. We then assign the full
standard amount of overhead to all units that were begun and completed in the period. As
was the case with direct labor, any difference between the actual overhead cost and the
amount charged to production in the period is either charged to the cost of goods sold or
apportioned among the units produced.
Cost assigned to units produced or in process are recorded in the inventory asset account,
where it appears on the balance sheet. When the goods are eventually sold, the cost is
shifted to the cost of goods sold account, where it appears on the income statement
(Accounting Tools, 2020).
Cost savings on system cost process when producing the same unit. In this case, most products
are the most cost-effective way to save a lot of money on one product. Since the cost of each
unit is the same as the cost of another unit, there is no need to track data at each unit level. An
example of a process that is environmentally friendly is the refinery. Track the value of fuel
passing through a refinery.
The process costing system in Vitacoco soft drink company in Myanmar
In selected organization, financial consultants are mainly used the process costing
methods because they can easily understand about the major manufacturing cost. Due to the
specific analysis on the product manufacturing process, they also point out the valuable
65

financial information to obtain the maximum net profit. Basically, company mainly calculate the
cost of raw materials which include in manufacturing process to obtain the qualified products.
By estimating on each specific process, Vitacoco Myanmar can also manage the waste and
expenses which influence on its net profit.
Service or operating costing
This method is used to cover the cost of a service, such as a nursing home. It is used to
determine the cost of a service ( EduPristine, 2017).
Multiple costing
When it comes to different components, such as cars or electronics, the cost of the parts and
the cost of the goods must be determined. Such costs will include different / multiple cost
methods ( EduPristine, 2017).
Multiple costing, also known as composite costing, is a type of accounting method used when
goods are sold that contain several other processed parts, and these parts are costed
differently. Just as the final product needs a cost associated with it, so do each of the parts
created by other processes. This is called costing. Each component or part can be, and usually
is, costed using a different practice. Examples of goods that need multiple costing are
televisions, vehicles, computers, airplanes, and smartphones (Catherine, 2019).
Inventory Costing
Different inventory costing methods are best suited to different situations and financial goals.
 First In, First Out
It doesn't matter if the products sold under the First In, First Out (FIFO) method are actually
purchased at that cost. Provides the oldest cost of sales list. When selling the number of
purchase accounts at the oldest cost, the lowest cost is set to sell.
 Last In, First Out
66

Finally, the first output method (LIFO) is the complete opposite of the FIFO method
 Average Cost Method
The average cost method determines the accounting costs by calculating the average of all
purchase costs.
 Specific Identification Method
The specific registration method is completely consistent with the units sold at cost, determines
the exact cost of each item sold ( EduPristine, 2017).
These include maintaining accounting costs and managing relevant documents. This cost should
be checked by management to find out how much is on the list. By doing so, you can change
the order quantity and production process for customers.
Costing Methods for Manufacturing:
Traditional Methods: Process and Job-Order Costing:
There are two conventional cost methods used in manufacturing. The process cost method
analyzes the net cost of the production process. In most production processes, there is more
than one step, so each step is calculated to reach the average unit cost per unit of the entire
production system.
The cost of hiring is based on the cost of each product. It is useful for customizing individual
productions or for areas where production is very low. In this way, Calculate the exact cost of
production of each unit and the cost of another unit not avaliable ( EduPristine, 2017).
ABC Costing System
A technique of accounting that can be used in finding the necessary total costs of the activity to
make a product or to give a service can be defined as activity based costing (Blokdyk, 2017).
By using activity-based costing system, the company or the organization can take into
consideration of both of the overhead and direct cost, can find the different indirect expense
67

among different product lines, and can set the prices more accurately. Besides, this system can
also guess the overhead costs that might be able to cut back on (Zeuner, 2007).
Activity-based costing (ABC) is an intermediate / intermediate supplement for two conventional
cost methods.
Traditional methods use direct costs to cover costs; Although categorized as workers and other
overheads, ABC considers all costs associated with the raw material industry, whether they fall
under the heading of labor or materials or other items.
The benefit of this approach is that management can track the costliest work compared to the
highest cost. Indicating the need for process change by stating the amount of inequality used in
low-cost activities.
Steps for Performing ABC:
1. Analyze the Activities
2. Gather all the Costs
3. Trace Costs to the Activities
4. Set up Output Measures
5. Analyze the Costs
Features of ABC:
 Indicates High Cost activities
 Helps in establishing and monitoring performance measures
 Is useful for forecasting financial baselines
 Captures the current cost of performing any activity ( EduPristine, 2017).
Activity-based costing (ABC) is a way of actually distributing overhead equipment. This system
can be used to reduce overhead costs. There are many machines and products in complex
68

environments, and ABC works best for complex processes. Conversely, production processes
are used in short spaces.
There are various advantages that organization can take over applying and implementing
management accounting system and management accounting reports. The advantages of
management accounting systems and their applications are already mentioned in the above
tasks. Management accounting reports include budgeting reports, accounting receivable aging
reposts, performance reports, inventory and manufacturing reports, job cost reports, other
information report, etc. By using these reports, we can have a lot of improvements for our
organization. We can manage what we measure and the reporting process makes us easier to
see the key priorities. It helps us to fasten up the transparency in the firm. Reporting enables to
gain trust between the stakeholders over time. In our firm, the use of budget accounting
reports helps us to know the performance of the outlets. We can have more control whether
their sales are high or low. The company will try to fix the problem if the sales are decreasing
and try to achieve goals while working within the budget. Moreover, the use of performance
reports helps us to realize the dynamic conditions of the employees and how the departments
are working. Because of this report, the HR department can know whether they need to make
job rotation or job add new skilful workers. It will help the firm to increase in production and
will become profitability.
Managerial Accounting for Vitacoco: Activity Based Costing
There are two ways to differentiate product overhead costs. This method is based on the cost
of traditional absorption. Based on the Basic-Effective (ABC) method developed in 1980 by
KAPLAN and BRUNS.
Both methods are based on estimating production costs and determining product costs based
on operating costs. But ABC is more precise and complex. ABC Indirect costs are used. It uses an
unbalanced average rate known as overhead absorption rate based on product usage. ABC will
distinguish between movement and activity pools. Expenses will then be tracked directly by
allocating them to activity cost groups and related groups and calculating activity cost rates.
Production-based costs depend on the use of production for products and services and the
resources used by these activities. It helps determine the exact cost of a product or service.
69

Vitacoco has three main operations in coconut water processing. Coconut water is packaged in
bottles and boxes and stored in warehouses. Each activity has its own clock and costs per
person. The overhead absorption rate depends on each function.
Therefore, Vitacoco enables management to make informed decisions about overhead
overheads and drivers. The high cost and non-intrusion make it more visible to effectively
manage management costs and eliminate overheads. Economic-based costs also improve
product and consumer profitability analysis and support sustainable growth and scores.
Vitacoco uses campaign-based costs to value its products. The Vitacoco drinking business uses a
payment method. ABC provides management with the information it needs to make its
decisions and plans. Vitacoco's control uses activity-based costs to determine the final price of a
product. You can also add or delete information from a portfolio of management products. The
company helps you choose the best production line that can handle a variety of products.
Vitacoco's management uses operations to identify key stages of the production process. Then
all costs are allocated. Management then calculates the costs. The next step is to find the total
cost. The manager calculates the movement rate relative to the cost of the cost driver. Finally,
the cost of each operation is related to the final product. This cost-effective approach is
appropriate. Because it increases the cost of production. It also helps diversify products.
Customers are delicious. Finally, it will be able to control the production of various products.
For example, some products can be produced in significant quantities; Some features Includes
resources. This method makes it easy to analyze the data. From the start of production to the
end customer, the company's Vitacoco to monitor all costs of its operations. In addition, it
provides a clear indication of how the customer will react to the company's operating system
for costs. Traditionally, all additional costs are calculated based on the same cost (hours).
Therefore,
Total overhead cost per batch = $ 1,900
Machine hours = 1000 hours
Overhead absorption rate = $ 1.90 / hour
70

Reasonable overhead absorption rate is more accurate. This is because it is based on each
overhead movement that is considered to be used for traditional costs, so the basic cost of the
activity is more accurate.
Costs are based on activity-based activity.
1) Total production overheads = $ 300
2) Administrative overheads = $ 600
3) Research and design overheads = $ 500
4) Benefits of selling and distributing = $ 800
The cost drivers are as follows:
Total production overhead - production hours
Administrative overheads - Number of employees
Research and design overheads - working hours
Sales and Distribution Overheads - Number of bottles sold
Each overhead absorption rate increases the total production overhead, administrative
overhead, management overhead, research and design overhead and increases the accuracy of
individual overhead.
As economic turmoil and industrialization accelerate, executive decision-making costs rise. It is
important to plan effective cost management plans.
LO-3
P-4.1
Budget
It will be used to plan the future of the company, focusing on the financial position of the
company or the financial position of the company. If so, you need to know the budget of the
company's financial manager. When the financial manager does not know the company's
budget, the financial manager cannot manage the money to be spent on the company's
program (AccountingTools, 2017).
Budgeting is the process of managing money and other related resources. This expenditure plan
is called the budget (Hansen, et al., 2007). By making this spending plan, it can help to decide in
71

advance whether have enough money to do. The budget just strikes a balance between
expenditure and income ( Harvard Business School Press, 2005).
The budget estimates revenue and expenditure over a given period of time. It is recalculated
over time.
Budgetary Control
Budget management determines various actual results through the company's budget figures
and standard settings over a period of time, and then compares performance to calculate
budget figures and actual deviations. First, prepare the budget and record the actual results
(Kotas, 1999). Comparing budget and actual figures can enable management to find
inconsistencies and take action to improve them when appropriate (Drury, 2008). Budgetary
control is an ongoing process that helps planning and coordination. Control methods are also
provided by the budget plan. Budget is the means, and budgetary control is the final result
(Willsmore, 2001).
Budget control is for monitoring and preparing budgets for use in the company's future
projects. In preparing the budget for the future, the manager should indicate which funds
should be used in the company's future plans and activities. (Sushila R, 2019).
Management control system that compares the actual income and expenditure with the
planned revenue and expenditure. You follow the plan; You can tell if you need to change
them to make a profit.
Advantages and disadvantages of Budgetary control
Budget control is the monitoring and preparation of future budgets for a company. There are
pros and cons to using budget control. That is a clear goal. Objectives, plans and rules can be
found. If you do not have a clear goal, do not waste your energy. And the company has goals
and objectives to control the budget. Set goals. Managers in each department motivate
employees or company employees to achieve the goals set by the company. It is effective for
the business and operation of the company. Budget control reduces a company's production
costs.
There are many disadvantages to budget control. When inflation is difficult, it is difficult to
balance the budget. In addition, budget control is important for small businesses. It can cost a
72

lot of money for companies or organizations. But budget control is just one tool. It cannot be
used to make decisions about the management process.
According to (Course, 2017), Budgeting is important for the organization because it helps the
organization to maintain a balance between the earning and the spending. It will help the
organization to achieve goals with good credit and less debit. The advantages of budgeting
include.
Planning Orientation
Making a budget makes the management team to think more about the longer-term, taking
away the short-term management process of the business. Budgeting helps to think about the
organization’s financial position and how to improve it (Course, 2017).
Cash allocation
If there is not sufficient cash to invest in both fixed assets and the working capital, the
budgeting process will help to decide which one is more worth investing in (Course, 2017).
Flexibility
(Course, 2017), A budgeting process track the business’ performance throughout the whole
year, helping the firm to make important changes. It helps to increase the growth
opportunities. A budget will help to know if the funds is available to increase the advertising
process to improve the sales. If the sales rate is decreasing, budgeting can identify the areas
where we can cut the costs to become more competitive. (0'HOYT,2014) stated that although
budgeting is important for the organization, it also have some disadvantages using it. Some of
the disadvantages of budgeting include.
Time required
Creating a budget is very time-consuming, especially in a weakly organized environment where
many iterations of the budget are required. The time requirement is usually large if there is
another budgeting process in place, like a system with a large number of employees.
Blame for outcomes
If one of the departments does not reach the budgeted results, the manager will blame the
other departments which provide services to that department for not providing sufficient
supporting.
73

Uncertainty future
Budgeting is making for the future and it cannot be predicted accurately. Budgeting does not
show reality.
Expense allocations
Budgeting may make overhead costs be allocated to other departments and the managers of
these departments may make problems with the allocation method used.
Different types of budgets-operating and capital budget
I’m going to explain sales budget, production budget, raw material usage budget, purchase
budget, labor budget, cash budget and capital expenditure budget.
P-4.2
Sales Budget
The sales budget represents sales revenue and sales overhead and estimates over a period of
time (Hoque, 2005). More accurate sales forecasts mean better resource utilization, higher
profitability and waste. The sales forecast is only an estimate of the demand for goods or
services in the market, and it is essential for preparing a sales budget (Drury, 2008).
Sales Budget is a budget that includes information about sales and budget. The most
important information is included in the sales budget of sales and profit growth. To
accomplish this, the company must do these things (Peavler, 2018).
Vitacoco produces a product known as Vita-Coconut Water. The following information is
relevant to this year's budget 31st December 2020.
Production Budget
The production budget calculates the number of product units that need to be manufactured
and is based on a combination of sales forecasts and planned finished product inventory
(usually safety stock to prevent unexpected increase in demand) (Hoque, 2005). The production
budget is usually prepared for the "push" production system and it is used in the material
requirements planning environment (Drury, 2008).
The production budget is also the company's financial plan. In the meantime, make financial
plans to determine the number of units. This type of budget is important. So, it was used on
demand for products (Peavler, 2018).
74

Benefit of Production budget
In the meantime, take a list of financial plans and plan the number of units. This type of
budget is mainly used for product demand.
At 1st January 2019, 800 units of Vita-Coconut water will go on sale for $ 5,200. It is planned to
be 10% higher than the expected Vita-Coconut water.
Raw Material Usage Budget
According to (Hoque, 2005) , raw material budgeting refers to the process of preparing raw
materials or purchasing budgets based on the quality and quantity of raw materials to be
purchased within a specified period. It not only helps to estimate the price of materials over a
period of time, but also analyzes the demand for materials. Raw material budgets can ensure
improved inventory planning risks, procurement lead times, transportation costs and supplier
relationships (Drury, 2008).
Raw material purchases budget definition
The budget capacity of small business owners directly affects the profitability of their
businesses. Purchase budgets is just one aspect of the company's full-featured budget strategy
(Hoque, 2005). The budget is different from the profit and loss budget because the focus of the
budget is to determine the organization's requirements and purchasing for material
procurement and inventory (Drury, 2008).
The acquisition budget is based on the company's inventory and the company's objectives,
goals and company budget. Procurement budgets meet financial needs and produce products
for company goals (Peavler, 2018).
Benefit of Raw material purchase budget
Examine and obtain a raw material procurement budget that will be used for the purpose or
objectives of the company or organization.
Vita-coconut water requires (a) 5 units of coconut water and (b) 10 units of vitamins and ions.
Coconut water is 0.30 units. Vitamins and ions cost 0.40 per unit. All products are purchased
with a loan term.
At 1st January 2019, Vitacoco had 4,500 coconuts worth $ 1,300 and 12,000 answers worth $
4,800.
75

Purchase budget
A purchase budget allows the owner of the firm to determine how much cash and products are
needed to reach the objectives. This kind of budget is used for the companies which have in
stock products as the value of the stocks plays an important role in purchase budget. The
purchase budget is usually used by the wholesalers and retailers which they do not
manufacture their goods. In the simplest level, the purchase budget can simply match the
expected products which is to be sold in the budget period. It doesn’t try to attempt the budget
at the individual product level. It also reduces the amount of budgeting efforts, which also
eliminates the difficulties of forecasting at the product level. Forecasting helps to smooth out
when the products are aggregated into similar products (Siegel & Shim, 2008).
Labor budget
The labor budget is used to calculate the number of hours that the labors need to work to
produce the units targeted by the production budget. A more advance labor budget will be
used not only for number of hours needed but also break down this information by labor
category. It is also useful for managing the number of workers needed to work in
manufacturing throughout the budget period. This budget helps management to schedule
overtime and the layoffs. The labor budget is usually presented in monthly or quarterly format.
The calculation for the labor budget is by multiplying the number of labor hours for each unit
with the number of units of production from the production budget (Siegel & Shim, 2008).
The labor budget addresses production requirements for both quantity and finance, available
human resources. It can be influenced by wages and the need for incentives.
Vita-Coconut Water has two divisions:
(a) Machining
(b) Assembly.
Labor Requirements Budget
The direct labor budget shows the total direct labor cost and the number of hours worked
directly in production (Hoque, 2005). Direct labor budget is part of the main budget. Since the
production of the budget unit provided by the production budget becomes the starting point of
the direct labor budget, it is prepared after the production budget is prepared (Drury, 2008).
76

Production Overhead Budget
The production overhead budget includes all costs, excluding the raw materials and personnel
generated by the manufacturing company or department during the fiscal year (Drury, 2008).
These ongoing costs are an effective part of the manufacturing costs, incurred and must be
calculated as part of the manufacturing budget (Berry & Jarvis, 2005).
Selling and Distribution Cost Budget
The sales and distribution cost budget estimates product sales and distribution costs. The
budget depends on the sales budget (Berry & Jarvis, 2005). This fee is very closed to the
expected sales for the period. These costs can be estimated per sales unit or percentage of
sales. Sales and distribution representatives should perform together and prepare this budget
(Drury, 2008).
Factory Overhead Budget
“A manufacturing overhead budget contains all the costs, other than raw materials and labor,
that will be incurred by a manufacturing company or department during a fiscal year. These
ongoing costs are a valid part of manufacturing expenses you incur and should be calculated as
part of your manufacturing budget. Review the elements that make up manufacturing
overhead to make sure you are counting these in your manufacturing overhead budget.”
(Johnson, 2018).
Administration Overheads Budget
(Tools, 2018) stated that “the selling and administrative expense budget is comprised of the
budgets of all non-manufacturing departments, such as the sales, marketing, accounting,
engineering, and facilities departments. In aggregate, this budget can rival the size of the
production budget, and so is worthy of considerable attention. The selling and administrative
expense budget is typically presented in either a monthly or quarterly format. It may also be
split up into segments for a separate sales and marketing budget and a separate administration
budget.”
Capital expenditure Budget
The capital expenditure budget is a formal plan that shows the amount and time the
organization purchases fixed assets (Berry & Jarvis, 2005). This budget is part of the annual
77

budget used by the company and is used to organize activities for the next year. Capital
expenditure may include various expenditures, including the upgrading of existing assets, the
construction of new facilities and the equipment needed for new employment (Drury, 2008).
Capital expenditures measure how much or how little an organization owns (Peavler, 2018).
Vitacoco will repair the machine to put coconut water into bottles.
Advantages of capital expenditure budget
Investment appraisal (or capital budgeting) is a process that organizations use to determine
whether a company needs long-term infrastructure or investments to succeed. It is the capital
budget. It could be an investment or an expense. In other words, capital budgets include a fair
distribution of funds / resources in long-term plans.
1. Consistency and flexibility
Expected business opportunities and potential constraints can be easily developed based on the
company's objectives. Flexibility, on the other hand, facilitates strategic assessments for
financial financing and capital budgeting. But before setting any plan or goal, consistency must
be carefully discussed. Tactics The capital budget is critical to the equitable distribution of
resources, taking into account the relationship between strategy and goals in an ever-changing
environment.
2. Better financial decisions
Capital budgeting makes it easier to analyze investment options. Business executives can use a
variety of tools to get different ideas. For this reason, be sure to use the right tools to
determine whether it makes financial sense to start long-term projects.
3. Access risk and uncertainty
When allocating resources to long-term investments, setting a capital budget is the only way to
take the risk involved. Any investment is fraught with uncertainty and uncertainty. Therefore,
participation in long-term projects.
4. Analyze long-term repercussions
The city budget has a long-term impact on your economy and inevitably affects the future
growth and cost structure of the organization. For this reason, the executive must make good
78

financial decisions as it affects the future of the company. In other words, the capital budget
will determine the success of the company.
Financially wise to start long-term projects in the city budget Most small businesses do not
know how much capital budget to implement.
Cash budget
A cash budget is a budget or plan that estimates cash receipts and expenses within a period
(Berry & Jarvis, 2005). These cash inflows and outflows include collection of income, paid
expenses and loan receipts and payments. In other words, the cash budget is an estimate of the
company's future cash position (Drury, 2008).
A budget that is designed to predict the flow of income during a company or organization's
future income cycle (Peavler, 2018).
Advantages of Cash budget
Cash budget is a tool that companies can use to track cash flows within their companies. Both
inflows and outflows are written in the budget. This information usually comes from the
company's regular business operations. The advantages of a cash budget are that it seeks out
the expected amount of money received from customers; Calculating the amount of loans from
company customers; This includes estimating costs and focusing on management. This budget
can help companies reduce costs and begin to control costs. Revenue from high sales is not
always the same as high cash flow. This increases the importance of the budget. Companies can
calculate the monthly sales volume and the amount of money they will receive. This process is
especially important for companies that allow customers to purchase products on credit. Each
company often provides a historical percentage that indicates how much money it makes from
a sale. Indicating the remaining amount that the company will lose this amount.
Administration Cost Budget
The administration budget is the amount of funds required to operate the company (Berry &
Jarvis, 2005). It is defined as the part of the budget that is not related to accounting, sales,
construction or manufacturing. The operating budget is shown as general management
expenses in the income statement (Drury, 2008).
Different types of budgets Capital Budget
79

Capital budgeting is the process by which a business determines and evaluates natural potential
costs or investments. These costs and investments include the construction of new factories;
And long-term joint ventures. The cash flow and outflow over the life of a potential project are
evaluated to determine whether the potential profitability is in line with the objective.
Operational Budgeting
Detailed revenue and expense estimates based on sales over a period of time (usually one
year). It generally consists of several sub-budgets, the most important being the sales budget.
Current budgets are short-lived and therefore they are long-term, eliminating capital
expenditures.
Master Budget
The grand budget is the individual budget of the company. It aims to fully shape its financial
activities and health. Setting company goals and evaluating the organization's performance;
Information, like cost centers within an organization, is important for sales and marketing.
Operating expenses It combines factors such as assets and income flows. Large companies
often use large budgets to streamline individual managers.
Cash Flow Budget
A cash flow budget is a way of estimating when cash flows in and out of a business over a set
period of time. It can help a company decide whether or not to manage its money wisely. The
cash flow budget determines whether a company has enough money to continue operating.
These include factors such as accounts that are used to assess whether it is spending its money
wisely and whether it will be able to withdraw cash.
Financial Budget
The financial budget is based on the assets of the company. cash flow; Tax and Expenditure
Management Strategic Budget The budget uses a comprehensive overview of the expenditure
to illustrate the financial condition of the company and its operating income. For example, a
software company may use its financial budget to determine its value for a public stock
payment or consolidation.
Advantage and Disadvantage of budgeting
Advantage Forecasting
80

A business budget not only allows you to manage your annual expenses but also allows you to
see how much you spend. for example, it helps your insurance premiums to set an average
monthly income target. Calculating the exact premium to be paid. You can use the budget to
estimate your annual results using more than one of your annual revenues.
Price Setting
Only then can you develop your product. Once you know, you can set your prices to profit. If
this price is too high to compete in your market, you can use your budget to identify areas
where your costs can be reduced.
Capital and Credit Procurement
Banks or lenders will lend you money or loans if you do not have the financial information to
show financial statements that prove you are stable. If you are innovative or expanding your
business, the budget will show potential partners how they affect their sales and profits.
Flexibility
A year-round budget keeps track of the performance of your business. Allows you to make the
necessary changes to increase costs or increase opportunities for improvement. If your
marketing is effective, do you have the funds to increase your advertising to increase your
sales? If your sales are slow, the budget shows where you can reduce your costs by narrowing
down the competition.
Disadvantage only considers financial outcomes
The nature of the budget is numerical and the focus of management depends on the number of
businesses. This is usually the purpose of increasing or maintaining profitability. In fact, the
customer does not care about business interests.
The company will buy if you buy good service and well-constructed products at a reasonable
price. Unfortunately, these concepts are very difficult to build into a quality budget. Therefore,
the concept of budget money does not meet the needs of customers.
Blame for outcomes
If a department fails to report its budget results, the department manager will blame the other
departments for not adequately supporting his / her department.
Expense allocations
81

The budget directs departments to share some of the extra costs, and there may be issues with
how managers allocate those departments. This is especially true if services provided by
companies within the company do not allow affordable services elsewhere.
Use it or lose it
If you do not think a department will spend all of its funds during the budget period, the
manager will allow you to spend as much as you can at the last minute. For the past three
minutes or so, he has spent a lot of money, and he spends a lot of money because he believes
budget managers really need their funds but are entitled to some of the money each year.
Time required
It can take time to budget. Budgeting; Especially in difficult environments. If there are well-
designed budget procedures; The company will use budget software to keep employees familiar
with the process and save time. If the economy is changing Repeated budgeting is required.
Alternative methods of budgeting
Zero based budgeting
In a changing business, building a budget means starting something new rather than building on
existing capabilities. It fits in well with Kraft because the organization is always striving for
innovation. Therefore, each budget is built without much reference to the previous budget. In
this way, change is built into budget thinking.
Strategic budgeting
This includes identifying emerging opportunities and building programs to take full advantage
of them. It is closely related to the zero-based budget, and Kraft is focused on gaining a
competitive advantage.
Rolling budgets
Due to rapid change and general uncertainty in the external environment, shareholders are
looking for quick results. US companies regularly report to shareholders. In the UK, compared
to six months, the abrupt budget includes a continuous performance appraisal.
Activity based budgeting
It assesses individual performance and assesses the company's potential for success. These can
be prioritized and budgeted appropriately.
82

Approaches budgets
Zero Based Budget
At ZBB, the annual budget is zero. All costs, including reasons for perseverance, are related to
costs.
Top-Down Approach
This is called a top-down approach. This is because the budget is managed by top management
and the money is transferred to various departments. This approach is based on a percentage
of available sales, and is used as a return on investment (ROI) method for competitive
diversification and budgeting.
Bottom-up Budgeting
In this way, the adjective is assigned to the task to be performed. Plan all activities needed to
achieve your goals. The cost of these activities is determined by the curtains. The total
promotion budget is then approved by the top management. It also gives insight into the
structure of the budget.
Base Budget
Add more funds to a department during the financial year. The basic budget is used to keep the
department running. It comes from spending and adjustments, such as last year's inflation. It is
not intended to fund special projects.
Incremental Budget
Additional budgets are based on past budget results or minor changes from actual results.
Management is a common business method and you do not have to spend a lot of time
budgeting or serious business review. Due to the lack of competition in the industry, this idea
often arises and profits are retained year after year.
Pricing
The amount paid for a product or service or exchanged by the consumer for the benefits of a
product or service.
Pricing Strategy
Businesses can use different prices when selling a product or service. You can set a price for the
most profit per unit you sell or for the market as a whole. It aims to prevent new entrants from
83

entering new markets. It can be used to increase market share in the market or to enter new
markets.
Types Price Skimming
Businesses save money on design platforms to increase sales of new products and services. As
competing products appear on the market, the company's prices gradually fall. One of the
benefits of lower prices is that businesses are more profitable for early adopters to attract
consumers before prices fall. Inexpensive prices not only save on the development costs of a
small business, but also make the product stand out when you launch your product.
Psychology Pricing
Prices are a major concern for American consumers as the economy recovers. Psychological
pricing refers to the way in which traders encourage customers to respond to psychological
steps rather than rationalize. At $ 199, the price per hour proves that the real difference here is
small. But it is also more attractive to buyers than the $ 200 price tag. More than the previous
price. The goal of psychological pricing is to increase demand by misleading consumers into
more valuable prices.
Penetration Pricing
Few companies have adopted these strategies to gain market share. Some companies offer a
small service for free or keep their product low for a few months. Companies only use this
strategy to focus on customers in a specific market. For example, a French telecommunications
company offers free telephone connections to capture or buy customers in the marketplace.
Similarly, Sky TV provided free marketing of its satellite dishes. This gives companies from the
beginning to the consumer. Similarly, few companies are able to reduce the cost of their
products by introducing themselves in the marketplace and introducing themselves as a
consumer base. Similarly, if companies want to promote a top product or service, they can
increase the price of the product or service for that time.
Value Pricing a Product
Price reduction is to reduce the price of the product due to external factors that may affect the
sales of the product. Value does not mean that the company increases the value of the product.
The company considers price when it is afraid of competition or economic downturns that
84

could hurt their sales and profits. McDonalds launched a dietary supplement for consumers,
and the popular food chain began to compete with other fast-food chains. They combine
consumers or a few products. Products are sold to consumers at a satisfactory price.
Pricing Strategy Options
In addition to the total cost of the product. Includes defined profits, including workers and
overhead. Markup price increases the wholesale cost of a product by a percentage. Demand
price is determined by building the optimal relationship between profit and volume. If the unit
profit margin increases significantly, the acceptable price can be compared to selling the same
product as other vendors.
Factors to Consider
Commodity prices determine a business's revenue stream. The price should be sufficient to
cover the cost of the company and the cost of profit. It is better to reduce costs to maintain
stable business profits and cash flow before prices fall. Choose any pricing strategy to increase
profits. Knowing your market and customer base is the key to choosing the right pricing
strategy.
About Competitive Pricing
When many other businesses sell the same product, the seller uses a cheaper strategy. There is
little to distinguish from the seller. Generally, a market leader sets a price for a product. Other
traders have no choice but to follow the competition. The seller will provide you genuine
articles as he does not want to tarnish his image.
Establishing Competitive Pricing
You can start with prices accepted by non-market vendors. They can then choose to ask for a
little more based on better customer service or product warranty enhancements. Retailers
must fully inform customers of the prices offered and resold by their competitors. Once the
price has been set, the sales volume should be checked to see if the strategy works.
Risks of Competitive Pricing
Competitive prices narrow down profits, especially for small businesses. This can lead to a
sudden increase in economic costs. As a result, independent retailers competing with larger
85

boxes will choose other pricing strategies to reduce their profits. For example, focus on locals
and customers.
Supply and Demand considerations.
In economics Supply and demand are related to the different prices of producers and the
quantity they want to sell and the quantity that consumers want to buy. This is the main form
of price used in economic theory. The price of a commodity is determined by the relationship
between supply and demand in the market. The resulting price is referred to as the equilibrium
price and represents the agreement between the manufacturer and the consumer. In
equilibrium, the quantity supplied by the manufacturer is the same as the consumer's
requirement.
Budgeting Preparing, operating budgets and capital budgets for ZTH company: financial year
2021.
Sales budget
= forecasted sales unit  Standard selling price
= 100,000units  25
= $ 25,00,000
Production budget (Purchase budget for merchandizing company)
= Forecasted sales unit + planned closing finished goods – planned opening finished goods
= 100,000+ 20,000 – 2,000
= 118,000 (units)
Raw Material budget
= Budgeted production unit (in b)  raw material used per unit
= 118,000 unit  2 kg
= 236,000 kg
Purchases budget (raw material)
= Budgeted usage unit (in c) + planned closing material + planned opening material
= 118,000 + 20,000 – 3,000
= 135,000 (kg)
Purchase in $ = 135,000  2 = $ 270,000
86

Labor budget
In hour = budgeted production unit (in b)  hour per
= 118,000 unit  3 hr
= 354,000 (hr)
(In $) = budgeted labor hour  rate per hour
= 354,000  $ 2
= $ 708,000
In number = budgeted labor hour/ hour per employee during period
= 708,000 / 4800
= 181 (employees)
Manufacturing over heads budget
Variable:
Power 7000
Maintenance 3000
Fixed 10000
Factory – rent 30000
Depreciation 20000
Salary 50000 = 50000
Total manufacturing overheads = 10000 + 100000 = $ 110,000
Non- manufacturing overhead
Administration:
Salary:70000
General:30000
Total = 100000
Marketing:
Variable: Sales commission 40000
Fixed salary 40000
General 20000
Total = 100000
87

Capital expenditure budget ($)
Purchase of vehicles = 30000
Patent = 20000
Total =50000
Cash budget for ZTH company, financial year 2021.
$ (000) $
Receipts: sales (in a) 2500
others -
Total receipts 25000
Payments: material (in d) 270
Labor (in e) 708
Manufacturing over heads (in
f)
110
Non- manufacturing over
heads (in g)
100
Capital expenditure (in h) 500
Total payments = 1,262
Surplus / deficit =1238
Add: Opening cash balance = 52
Closing cash balance = 1290
M3: Analyze the use of different planning tools and their application for preparing and
forecasting budgets?
Balanced Score Card
The balanced scorecard, created by (Kaplan & Norton, 1993), is defined as a comprehensive
framework that transforms a company's vision and goals into measurable goals. Stakeholders in
a company must have different needs and desires. Therefore, a manager can set specific goals
as a management tool. It can be used as a tool to recognize the organizational responsibilities
of different stakeholder groups and how to effectively manage an organization from different
88

perspectives. (Lawson, et al., 2003) add to contact all stakeholders in BSC strategic goals and
plans to align with organizational goals.
a) Financial
This perspective includes three key provisions for shareholders. Since an organization's financial
performance is critical to its success, actions that reflect financial performance will help
managers know which business is most profitable and most risky. These measurements are
useful because they are based on past data. For example, recapitalization; Cash flow and profits
from projects and businesses will reflect the performance of the financial sector.
b) Customer
This aspect is directly related or directly related to the customer. For example, you can measure
the results of customer complaints and feedback surveys. This is important because customer
satisfaction is important for business success.
c) Business Processes
This perspective will measure the key business processes that will determine the effectiveness
of an organization. For example, the time of production, repair or disposal. This program will
help identify managers who are working in accordance with the standards and identify areas of
business that need to be developed.
d) Learning and Growth
This aspect is related to the development and learning ability of the organization's employees.
Number of training days You can measure the number of qualified or satisfied employees. Since
people are the most valuable resource for a company, this perspective allows managers to
educate their employees about their individual skills. Progress and improvement programs will
be allowed.
As a result, companies can use it as a planning tool to implement their strategies (Atrill &
McLaney, 2009). By using the BSC, management accountants will be able to consider all aspects
of the economy and budget by avoiding reliance on short-term or incomplete financial
resources. BSC provides companies with branches (Campbell, et al., 2002). The BSC focuses on
the development of the organization and allows management accountants to approve the
budget, taking into account development-related costs (Braam & Nijssen, 2004).
89

Table 1.1: Balance Scorecard for Vitacoco 2020
Objectives Targets Measures Initiatives Budget By
Financial Increase profit
margin
By 20% Gross Profit Margin - By expanding into the entire
Myanmar market through
expansion into new regions and
cities.
xxx July
2020
Close all
account
receivables
By
100%
The number of
existing account
receivables
- Draw up coherent and accurate
accounts receivable aging
reports
- Credit department to collect
from debtors
xxx Mar
2020
Customer Increase sales
volume
By 20% Percentage of sales - Launch a new line of products. xxx July
2020
Reduce
response time
to customers
By 10% Delivery time - On-time delivery (defined by
the customer).
xxx Aug
2020
Internal
Processes
To optimize
efficiency of
production
processes
By 20% Output/Input
Time taken for
production
- Purchase new machinery.
- Perform maintenance on
existing machinery.
Xxx May
2020
Learning
and
Growth
Improve
employees’
efficiencies
By 15% Total Company Revenue
Total number of employees
- Employee training programs
involving usage of new
machinery.
xxx Aug
2020
Porter Five Forces
Developed by (Porter, 2008), five forces are used by companies. To assess the competitiveness
of an industry and to produce in line with business strategies. This framework determines
whether an industry benefits a company. It allows managers to decide. Allows you to analyze
key forces to determine. These forces, known as the micro-environment, affect how a company
affects its target market and profitability. The porter's line is shown below:
90

Competitive Rivalry
This force is related to the level of competition between companies in the market. The degree
of competition, the better. The company is more competitive. This means the company's price,
Profit and business strategy will determine. With direct competition, customers can easily
change brands. This energy is high when the industry is slowly growing or is a barrier to entry or
a barrier to entry.
Threat of Substitute Product or Services
This threat arises when customers can easily switch to other products. If there are
replacements in the workplace, competition will be less profitable for the company. Because
there are so many other options, companies cannot set the price they want. You will get the
highest demand than the lowest price.
Threat of New Entrants
The threat of competition will also come from new markets. In the long run, companies will
increase their attractiveness, especially for lucrative industries. Less investment in the market
due to changing costs for customers and access to distribution lines for raw materials.
Bargaining Power of Buyers
It refers to the ability of the customer to influence the prices of an industry. Buyers are likely to
call everyone who looks appropriate, if there are only a few. For example, you can buy a lot; Or
you can easily switch to another company.
Bargaining Power of Suppliers
This means that the suppliers are above the company's rules and regulations. Refers to energy.
Because companies provide the raw materials needed to create their offers, suppliers need to
build strong relationships with suppliers. Suppliers can increase costs or reduce their sales
volume (Story, 2019).
Porter's Fisheries Framework recognizes important standards that define a company's stability
as a planning tool. Threat levels will allow the Cowboys to calculate the company's current and
future profits. This analysis will allow managers and external stakeholders to assess the future
of the corporation, which is not visible in the balance sheet. Using Porter's five strengths,
91

managers can be more profitable and more profitable. It has a good reputation for product
pricing.
Figure 1.2: Analysis of Vitacoco’s micro environment using Porter’s Five Forces Framework.
P-5.1
92
Bargaining Power of
Buyers
- Enhance knowledge
and knowledge for
customers
- Choose from a wide
range of possible brands
Threat of
replacement
- Other soft
drinks (water,
soft drinks, fruit
juices)
Competitive Rivalry
- Competition between
Vitacoco and other coconut
water companies such as
Refresh, Coco Life and CO2.
- Potential loss of market
share
Threat of New
Entrants
- Low entry
barriers due to
low initial
investment
argaining Power of
uppliers
Coconut plantations in
Myanmar
Seasons can affect
oconut harvesting

Management team of every organization should recognize the useful application of financial
governance, benchmark and KPIs for identifying and preventing financial problems.
Financial Governance
Financial governance refers to the way a company collects, manages, monitors and controls
information that includes how companies track transactions, manage performance and control
data, compliance, operations, and disclosures (Kluwer, 2005). In accordance with (Germain,
2010) , financial governance refers to how a company collects, manages, monitors and controls
financial information. Financial governance includes how the companies track financial
transactions, manage performance, manage data, and enforce compliance, operations, and
disclosures.
NGOs benefit from their benefits. The governing body of the NGO is assigned
It is responsible for overseeing the organization on behalf of the beneficiaries because of this,
Members of the Governing Body are often referred to as 'Guardians'. They act as heirs
representing the interests of the beneficiaries.
The Board is responsible for the organization. It is an ethical and financial responsibility.
Financial governance is the stringent set of rules and guidance issued by regulators to ensure
that financial processes are, well, governed. A large part of financial governance is a company’s
reporting capabilities which include everything from internal controls, to audits, to process
workflows, to financial controls, data tracking and security and reporting integrity.
Roles and importance of Financial Governance
Financial governance is important for creating compliance reports and disclosures. Financial
governance can maintain compliance requirements (Young, et al., 2011). Good financial
governance means that the company collects, calculates and displays financial data in
accordance with regulatory rules. Financial governance provides more accurate information, so
the documents used by executives to formulate and guide direction are based on a more
specific understanding of the financial reality of the business. Financial governance is
completed faster, and other financial processes are completed quickly. The financial office can
use standardized workflows and automate time-consuming processes to complete financial
processes faster and more reliably. Financial management clarifies ownership and
93

accountability. Financial governance enables organizations to identify risks faster (Dollery, et
al., 2020 ).
After studying the management accounting system and its tools, it is also very important to be
able to solve the financial problems within the organization by using suitable techniques, tools
and strategies. The two financial problems from two organizations and how it will be solved will
be shown and analyzed in the following below.
Benchmark
A benchmark is a point of reference by which something can be measured. In surveying, a
"bench mark" (two words) is a post or other permanent mark established at a known elevation
that is used as the basis for measuring the elevation of other topographical points.
Benchmarking
Benchmarking is the process of comparing and analyzing the performance of the company with
other standards performance. Benchmarking can generally be distinguished in two types, 1.
Internal Benchmarking and 2. External Benchmarking (Scalzo, et al., 2006 ).
Benchmarking is a process of measuring the performance of a company’s products, services, or
processes against those of another business considered to be the best in the industry, aka “best
in class.” The point of benchmarking is to identify internal opportunities for improvement. By
studying companies with superior performance, breaking down what makes such superior
performance possible, and then comparing those processes to how your business operates, you
can implement changes that will yield significant improvements.
That might mean tweaking a product’s features to more closely match a competitor’s offering,
or changing the scope of services you offer, or installing a new customer relationship
management (CRM) system to enable more personalized communications with customers.
There are two basic kinds of improvement opportunities: continuous and dramatic. Continuous
improvement is incremental, involving only small adjustments to reap sizeable advances.
Dramatic improvement can only come about through reengineering the whole internal work
process (Shopify, 2018).
94

Benchmarking refers to the company's products. It is a process that measures the performance
of services.
Processes are the best in the class compared to other businesses that are the best of the
process. The basic standard is to identify opportunities for regional development. Study
companies with superior performance; Identify the factors that contribute to such superior
performance and compare those processes to how your business operates. You can implement
changes. Benchmarking is the practice of comparing actual performance results with a
standardize performance goal or number–a benchmark. Benchmarking is generally used in
business for setting budgetary and financial performance goals. A benchmark or base number is
used to compare actual results and judge the improvement of the company.
This means you can adapt a competitor's offer or change the scale of the services you provide,
or install a new customer relationship management (CRM) system for better communication
with customers. There are two opportunities for improvement. Continuous and unique. Only
minor modifications for continuous growth. Significant progress can only be made by
integrating the entire internal process.
Internal Benchmarking
Organizations with multiple locations usually use internal benchmarks. The main reason is that
it can access benchmark data more easily. For example, a hotel management company
operating multiple hotels of the same brand might have access to the operational and financial
data of all these assets. The company can make comparisons, such as viewing room sales and
labor costs for these hotels, without having to retrieve information from external sources. By
this way, the company can analyze and compare the performances of its branches and can finds
the points to get a better performance (Scalzo, et al., 2006 ).
External Benchmarking
External benchmarking is the process of comparing the performance of a company's products,
services or processes with other business performance in the industry. The key to external
benchmarking is to identify internal improvement opportunities. By studying companies with
good performance, analyzing the factors that achieve good performance, and then comparing
95

the process with how the business operates, the company can implement changes that will give
greatly improvement for the company (Scalzo, et al., 2006 ).
Three types of Benchmarking
According to its functional process, Benchmarking can also be distinguished into three types.
These are – 1. Strategic Benchmarking, 2. Process Benchmarking and 3. Performance
Benchmarking. Process benchmarking, one of the three types of benchmark testing, is used to
compare operating processes. Performance benchmarking compares product lines, marketing
and sales to determine how to increase or adjust the sale rate. Strategic benchmarking
considers the long-term direction of the company's future strategy relative to its competitors.
Key Benefits
Benchmarking can give benefits the company in many ways. Benchmarking help and provide
the companies to outperform competitors and find ways to be able to get new ideas and
improvements. It can also determine the gap between required performance and actual
performance. When companies know where their strengths and weaknesses are, and can
improve to have better strategy and techniques to achieve the improvements needed for
optimal growth. Companies often use benchmark analysis to improve product and services
quality. Benchmarking also provides the company with the detailed information that need to
compare specific factors of one product with another, so the company can make the necessary
changes to get a better product. After determining the quality, the company can decide
whether to change the product or price accordingly (Needles & Crosson, 2013). Benchmark
analysis can also directly affect the sales and profits of a company. Companies that use this
strategic tool can often improve operations, products, and services to increase sales and profits.
These improvements are not only reflected in the company, but also in the customer. This will
increase brand awareness and build a loyalty which can affect positively on the sale revenues of
the company. By this way, the company can get profit and continuous and stable growth of
success (Monien, et al., 2001 ).
In addition to helping, companies are becoming more profitable and profitable.
 Understand staff costs and structure
 Encourage team building and collaboration to increase competition
96

 Increase familiarity with key performance metrics and opportunities to grow the
company as a whole.
Mostly Standards help employees understand that a company's processes or products, such as
employee support, are the key to success. It can lead to big wins.
Types of frauds
Check Fraud
Fraud detection is a necessary fraud if the customer checks for the price of the product and
the company's services are not sufficient (Kappel, 2019).
Internet Sales
When most people in the world use the technology, the fraud associated with the Internet
emerges as this type of fraud involves payments from customers, not shipping goods (Kappel,
2019).
Website misdirection
Website misdiagnoses are notoriously bad for companies like Amazon or other sites.
Company clients or websites are the paths that occurs when a problem is needed or if the
credit card information is transferred to other websites (Kappel, 2019).
Charities Frauds
Donations are frauds that lure people with a bad personality to lure out causes or problems
(Kappel, 2019).
Work- from-home scams
Most Americans are very supportive of this scam. This is the dream of most people. Home
workers and signatories make special promises to criminals (Kappel, 2019).
Pyramid schemes
Type of home-based fraud, and investors in the company can make a huge profit when it
comes to recruiting customers in their field (Kappel, 2019).
Identify theft
Identifying theft is usually a lie. Money and money for theft Many ratings and features are
lost (Kappel, 2019).
Credit Card fraud
97

Today, credit cards are the most widely used credit card worldwide. So credit card fraud
problems are the most popular. If the customer does not know the problem, he or she has
the potential to make many purchases (Kappel, 2019).
Debt elimination
Debt cancellation is also the cancellation offered by clients or people to address the bill
(Kappel, 2019).
Insurance Fraud
Insurance fraud is a daily lie to those who do not consider themselves criminals in the United
Kingdom (Kappel, 2019).
Debt
Debt is one of the most important causes of financial problems. When clients rent a house or
car, they can lend (Richardson, 2019).
Unemployment
A term referring to individuals who are employable and seeking a job but are unable to find a
job. Furthermore, it is those people in the workforce or pool of people who are available for
work that does not have an appropriate job. Usually measured by the unemployment rate
which is dividing number of unemployed people by total in workforce, unemployment serves as
one of indicators of an economy’s (Institute, 2016).
Unexpected medical expenses
Financial problems associated with the problems faced by most people. These costs can make
you break even. There are many types of medical expenses. These costs also have an impact
on the financial health (Richardson, 2019).
Retirement
Employees must get their savings early if they want to retire. Retirement also depends on the
financial situation of the public or employees. Due to financial problems, people are
considering retiring. When people do not have enough money to eat and drink, people are
over 60 but have to work (Richardson, 2019).
Having Children
98

Having children can also be a financial problem. Parents of their children are making money
and using this money for their children's lives and education. If parents do not have enough
money, there will be a problem in their children's lives. Parents cannot spend money well on
their children's development (Richardson, 2019).
Financial Benchmarks
Financial Benchmarks are tools that are used to measure business competition and to succeed
in a company or other competitors. The company compares its performance to its
performance. Benchmarking increases the company's sales and profitability. Besides, some
companies and organizations use local standards to improve the performance and performance
of company departments (Sphak, 2019).
The governing body
The Governing Body may have different names. Board of Trustees Board of Directors Executive
Council Executive Committee Finance and staffing issues. Advisory committees are often
formed to support my country plan or new project.
The five roles of board members
Board members should avoid involvement in the day-to-day management of the organization
but they need to be aware of what is happening. Their five roles are:
1. Making sure that funds are used to help beneficiaries effectively.
 The organization has sufficient funds.
 Ensure that the organization has effective senior management.
 To ensure that the organization operates within the law.
 Whether the board can effectively handle its responsibilities.
 Proper use of funds to effectively assist beneficiaries.
 The organization has practical strategies for analyzing and responding to social
problems.
 Monitoring if the organization is doing a good job, annual implementation of its
strategy, and annual monetization of monetary value.
 The budget for expenditures is based on the cost of the business.
99

 Establish appropriate internal controls and accounting systems to ensure the proper use
of funds in the organization.
 Regular checks for compliance with internal controls (eg, carrying or handling).
 Actively participate in internal control where needed (eg large payments allowed).
 Regularly monitors financial reports, including income and expenditure statements, as
well as financial statements.
 Monitoring whether the organization is accountable to its beneficiaries (for example,
submitting financial reports).
 If you do not have evidence to meet with beneficiaries, your work may not be able to
meet their actual needs.
2. Making sure the organization has enough funding
 Approving the income section of the annual budget.
 Monitoring the amount of income and received.
 Actively working out how to ensure the organization will be sustainable, including
approving a financing strategy.
 Monitoring relationships with donors (e.g. if reports are submitted on time).
 Monitoring fund balances including general reserves
 If any fund balances are in negative, this could have serious implications for your
credibility.
3. Making sure the organization has effective senior management.
 Provide CEOs with financial management skills for their role (or support to the CEO
to develop those skills).
 Supporting the CEO to develop a culture of good financial management (eg
leadership, finance and encouragement, and arranging for staff to work together).
 To ensure that the senior finance manager is a member of the senior management
team.
 Recognizing problems and encouraging an open culture that aims to learn from
them.
100

 Senior managers are responsible for the outcome of their decisions and what they
initiate.
 What you want to achieve depends on the workers to do it. Senior managers need
to motivate and support other employees.
4. Making sure the organization operates within the law.
Understand the legal needs of an NGO, including tax laws and health and safety laws.
The management team complies with the official requirements (eg tax returns, annual
reports).
Appointment and supervision of external auditors.
Approval of the audit and annual reports.
reports Submission of reports to government departments.
5. Making sure the board can handle its responsibilities effectively
 Appoint a specialist treasurer with specialized responsibilities for financial management.
 Helping all board members understand their financial management responsibilities and
develop appropriate skills.
 To ensure that there are no conflicts of interest between the activities of the
organization
 Board members' business or business interests.
 Set aside time at board meetings to discuss the financial management aspects of all
major key decisions.
 Offers a day-to-day training called financial governance. It can be a homecoming
Planning & Reporting
Qualifications required to measure performance and report financial results
Decision Making
Skills are required to manage risks and build an ethical environment.
Technology
To operate effectively, technology and information systems need to be managed.
Operations
101

Qualifications required as a mutually beneficial business partner for the operation of the
company as a whole.
Leadership
Skills needed to motivate teams to collaborate with others and achieve organizational goals.
Characteristic of an effective management accountant
Competence
Maintain the appropriate skill level by continuously developing your knowledge and skills.
Relevant laws perform professional duties in accordance with regulations and technical
standards. Exactly Clear Provide real-time decision support information and suggestions.
Acknowledge professional limitations or other barriers to responsible decision-making or the
success of a business.
Find a Replacement for One Large Expense in Your Monthly Budget
When you replace something, it is easier to reduce costs or change habits. for example, If you
do not want to buy expensive coffee in your workplace, plan how to replace it with a new one.
You can buy a new travel cup yourself and get your favorite coffee (and some homemade
coffee).
Find a cost-effective solution to your budget and find a replacement.
Cutting coffee is an example. Your entertainment expenses; What about reducing or reducing
the amount of money you spend on recreation and entertainment? If all your invoices are up-
to-date and only a small amount is left in your bank account, you will know that you have
completed this task.
Identify Expenses You Can Reduce
Identify your budget areas that need special attention next month. Find ways to reduce your
costs and your costs. Use your washing machine with cold water rather than cold water. If you
do not have a home, turn off the heat and turn off the lights. If you have a landline and a cell
phone, decide what you both needs. This is a difficult practice to break with routines.
Identify products or services that you no longer need but offer. Most people are allowed to
renew their bundled services from month to month, even if their needs change. This is because
102

they may be too busy to take care of their invoices, but over time you may find it difficult to
take your bills at once and change the company's service plans or cancel all services.
Unless you have a specific destination, you're just moving the car and wasting gas. If you are
not sure where to start, here is a list of our most popular savings accounts. When your invoice
is a little low, you know you have succeeded here.
Increase Your Spending Awareness
Think about what you have learned about your spending habits by spending money. Is it easier
to separate cash than plastic? Did you buy only what you needed? Do you have enough money
to buy something you want? How much is left in the end? Some people find that people spend
15 percent more on plastic than money. Over the years, over-consumption has increased. If you
want long-term debt solutions for your life, be careful about how you spend your money.
Key performance Indicator
Key performance indicators (KPI) are important indicators for achieving expected results. Key
performance indicators (KPIs) focuses on improving strategies and operations, and help to
create an analytical basis for decision-making and focus on the most important aspects
(Parmenter, 2020).
A performance index, or KPI, is a type of performance measurement. KPIs measure the success
of an organization (or projects, programs, products, and initiatives). Sometimes success can be
achieved by achieving business goals (e.g. no mistakes, no customer satisfaction) and
sometimes using success to achieve strategic goals. Therefore, choosing the right KPIs depends
on a good understanding of what is important to the organization. 'Important' depends on the
department that measures performance. KPIs that are useful for financing will be different from
KPIs for sale.
Benefits of Using KPIs
Setting up key performance indicators can help the organization in finding problems earlier
than just relying on sales data to measure performance. For example, if sales are high, the
expected revenue level may not be reached due to excessive customer service and return costs.
Setting customer satisfaction key performance indicators allows to identify production or
service issues before receiving financial reports to identify these issues later. As a continuous
103

result, KPI can improve monitoring, controlling and marketing flexibility. The ultimate
advantage of key performance indicators is that the results of work can usually be measured on
a specific basis. Although research can make critical guesses and reduce risks, it is important to
set key performance indicators (KPIs) to adjust activities that provides better results than
expected (Parmenter, 2010).
Financial and Non-financial KPI
Financial KPIs are measurable values used by the financial team to measure and track the
progress of specific business goals. In addition, these KPIs helps to determine the performance
of the finance team (Parmenter, 2020).
Non-financial KPIs, also known as organizational intellectual capital, includes knowledge, skills,
brand, corporate reputation, relationships, information and data, patents, processes, trust, or
innovative organizational culture (Parmenter, 2020).
According to (Chartered Global Management Accountant, 2013), it has to do with the mission
of the organization. Refers to programs used to reflect the success or growth of an
organization. KPIs will allow management to monitor progress to achieve strategic goals. KPIs
can be included in the scorecard to focus on top management and other stakeholders, focusing
on the most important and critical metrics to evaluate an organization's success.
Financial KPIs
Financial KPIs are measured through ratio analysis and include the following: profitability,
efficiency, liquidity, financial gearing and investment.
1) Profitability
Return on Capital Employed = Operating Profit
Share Capital+ Reserve+ Non−Current Liability x 100
Gross Profit Margin = Gross Profit
Sales Revenue x 100
2) Efficiency
Average Settlement period for trade receivables = Average trade receivable
Credit Sales Revenue x 365
104

Sales Revenue to capital employed = Sales Revenue
Share Capital+ Revenue+ Non−Current Liabilities x 100
3) Liquidity
Current Ratio = Current Assets
Current Liabilities x 100
Non-Financial KPIs
Non-financial KPIs are not expressed in monetary terms. Non-financial KPIs are usually forward-
looking and can be both qualitative and quantitative. Companies should study non-financial
KPIs. (1) It helps to capture strengths and weaknesses. (2) It is important for business
performance (Leconte, 2018). They can be measured in three perspectives:
1) Customers
Retention Rate = Customers Lost∈a Given period
Number of Customers at the Start of a period x 100
The percentage of consumers who remain customers for an entire reporting period.
Customer satisfaction index from satisfaction surveys.
2) Internal Processes
On-Time Rate = Number of on−timeunits∈a Given Period
Total number of units shipped∈a given period x 100
3) Learning and Growth
Employee Productivity Rate = Total Company Revenue
Total number of employees x 100
Employee Satisfaction index through employee satisfaction surveys.
M4: Analyse how, in responding to financial problems, management accounting can lead
organizations to sustainable success.
According to (Tools, 2018) by providing relevant and accurate information of the financial
management at the right time, it can help organizations manage organizations and promote
business decisions through sound decisions. For this the roles of management accounts are vital
in an organization either. Budget planning, financial management and decision making requires
good quality and ethic management accounts. Characteristics and personal qualities of an
effective management account are as follows a management accountant needs to be
105

acceptable for the all types of employees within the organization to get influence over the
employees in the matter of period. An effective management accountant always has the ability
to take over the views of management so that they could efficiently increase the decision-
making process. In the meaning of being effective, their time valuation is important, being able
to provide the desired information as early as possible According to (Tools, 2018), the main
feature of management information systems is to convince decision makers that their actions
will have the desired effect. The information management system acquires the data generated
in the relevant activity field of any point manager and organizes it into a meaningful form. The
key indicator of the effectiveness of the management information system is the accuracy and
reliability of the information. The accuracy of the data used and the calculations applied will
determine the validity of the resulting information. The information managers receive from
management information systems may be relevant and accurate, but it is only useful when he
makes certain decisions. Problems with management information systems need to be updated.
Even if managers are evaluating trends, it is necessary to make decisions on 32 the future of the
organization based on current data. If this is the latest data, if the current reality is reflected
and the information cannot be used due to data loss, the difference is displayed and the
situation is displayed or the result is displayed due to the lack of data. You can make
appropriate decisions for missing information. Incomplete or incomplete information may lead
to unintended effects of policies.
Management statistics help you find the best financial solutions to the problems faced by
Unicorn employees to help you succeed in marketing. Employees of an organization can set
up bases or KPIs to solve financial problems. This way employees can set budgets and set
requirements. Then the budget should be systematically calculated for financial problems.
To be successful, senior members should develop the best strategy using management
tools and maintenance costs. Higher authorities should use financial information. Only
then can they oversee the truth of the operation. It is effective in running businesses that
help reduce costs and increase profits.
The management accountant has the primary purpose of management in making decisions.
They have strategies and strategies to create financial success and value for their
106

shareholders to meet social and environmental challenges. The question today is how to
establish business models and practices. According to the Environmental Management and
Evaluation Team, some companies can meet these challenges and compete in sustainable
businesses. Management reports show how many businesses are missing out due to a lack
of accountability in valuable intelligence and analysis. Impact and analysis of economic and
environmental factors related to economics; In addition, 60% believe that the manager is
responsible for filling in the information and addressing the environmental and social
issues that the developer is responsible for. However, only 45% of respondents made
unnecessary mistakes in their decision-making - the main reason for the respondents - this
information is irrelevant. Systems and processes that do not support data are another
common barrier. In this case, the senior respondent may have information about this
information. For example, the CIA; CEOs and directors make up 52% of all decisions. One of
the main barriers to registration in the survey is that 60% of voters do not need to obtain
this information from producers. However, it estimates that this is changing and estimates
two-thirds of the next two years for environmental and social data.
1. Forecasting the cash flows
Cash flow forecasts can predict future surpluses or errors that will help make the right
decisions. These include tax amendments; It can help you plan to buy new equipment or find a
small business loan. You can see the impact of future economic changes or decisions. for
example, if you are considering hiring a new employee, your estimates will include additional
income-related expenses. According to new figures from your revenue stream forecast, hiring
that employee shows that your business is in a better position. It will help you decide whether
to rent or not.
Report Management Accounts
There are many ways companies can lead companies to success. Access to natural resources to
strengthen issues during the decision-making process; Use of administrative accounting tools
and techniques such as living standards and carbon emissions. The company's strategy
identifies serious business challenges. Business model;
107

Performance Overview and Licensing License. Explain the impact of these stable economic
problems. Develop a declaration strategy that combines long-term terms to identify financial
and non-financial factors. The International Coordination Report is published by the
International Coordination Report Council. Identify environmental and social trends over time.
M 4.1: Analyse the characteristics of an effective management accountant skills and the
characteristics of effective management information system in line with your selected
organizational situation.
The qualitative characteristics of management accountant
Reliability and Trustworthiness
Accountants are required to meet the security and requirements of the company for the
reliability and reliability of the company. In addition, the accountant must also attend training
programs to ensure reliability and reliability. The company or organization's customers must
know the manager's skills and skills and obtain confidential information (Devault, 2019).
Collaboration
The Company's accountant for collaboration must prove to other members of its members that
it is a member of the membership. Company accountants need to have relationships (Devault,
2019).
Strong Organizational Skills
The Company's accountants are aware of the strengths of the organization, you need to show
your ability and work. In addition, accountants must submit financial statements and
information to senior staff (Devault, 2019).
As mentioned above, to be successful in business, you need to have the necessary skills and
knowledge to have a good management accountant.
1) Commercial Awareness
Management accountant must have general knowledge and skills. Understand how companies
and the industry as a whole work. They should know what the secretarial process is and how it
affects the business environment (Evans, 2014).
2) Technologically savvy
108

It includes accounting and reporting software such as MS Excel and recommendations for
automating technology operations. The company should accelerate its operations while
maintaining or increasing its value.
3) Collaborative
The Management Accountant must be able to work in other functions and advanced
management. Management accountants need to work with others as they cover all aspects of
the business.
4) Able to write reports
Accountants need to gather specific information and report accurately on management and
other operations. Management Accountants should address issues and address issues to
provide advice on issues (Pietrzak & Wnuk-Pel, 2015).
It solved the problem by the giving training to the accountant and setting systematic
procedures, control by audit department. Besides, there should be new management
accounting system with monitoring and external auditor. After that company can be better than
before because they have changed their weaknesses by pursing code of Financial governance.
Therefore, the company established the financial supervising committee, computerized control
systems and employed the internal audit department with qualified accountants. This can be
solved by applying the forming budget committee and setting credit limit. Moreover, these
problems should be audited by both internal audit and external audit for comparison of other
organization. Comparison our expenses to the amount we’ve budgeted can help us discover the
misclassification. Firstly, they managed to solve the problem by benchmarking with the other
organizations to realize the best practices for the future. By benchmarking, we could check our
weaknesses to be improved such as some unnecessary costs cut off. Moreover, the company
didn’t organize the financial situations and the budgets for the activities perfectly. Because of
this, they have encountered some financial crisis and problems concerning with insufficient
budgets. They don’t have enough budget to make promotions in the expos and to give
discounts in some special events. Then they tried to overcome this problem by controlling the
budgets of the organization perfectly and give more attention about the financial situations.
Because of this, problems concerning with the budgets have lower and the company’s financial
109

condition becomes healthy again. Furthermore, they make frequent checks on the reports from
the departments to have better control on the dynamic conditions of the organization.
Depending on those frequent reports, they became enable to make better decisions and
feasible plans have been able to make. The organization have overcome the weaknesses by
taking serious actions on the reports of the departments and with the help of the planning
tools.
D3 Evaluate the positive and negative consequences of the planning tools applied in financial
problems of your selected organization to sustainable success.
In 2014, we founded the Vita Coco Project to support the communities from where we source
our coconuts. Coconut farming communities in remote parts of the world face many challenges
including weak infrastructure, outdated farming practices, and a shortage of schools.
With our Give, Grow, Guide philosophy, we work to help these coconut farmers increase their
annual yield, diversify their crops, and grow sustainably. We also value the impact of education
on a community. We are committed to providing opportunities to future generations by
investing in educational programs, like building new classrooms and awarding scholarships.
Through these efforts, we hope to help positively impact 1 million people in these communities.
Vita Coco is a producer and distributor of coconut water intended to offer refreshing healthy
products. The Company's coconut water products served with various nutrients flavors enable
customers to healthier lifestyle. Coconut water and hemp work together to achieve the
ultimate balance of body and mind, for when you need a moment to relax and unwind. Zico is
founded in 2004. Zico is making premium coconut water. All products are naturally support
hydration with five electrolytes, including as much potassium as a banana. You used to have to
shinny up a tree and machete-open a coconut to experience the refreshing taste of coconut
water, but not anymore. We believe in crafting flavorful and invigorating blends of coconut
water and other plant-based ingredients that deliver optimal sweetness and a clean crisp finish.
We aim to help you and your family stay hydrated and healthy. Employ the well-qualified
accountant with good qualification. Accounting misstatements occur when accounting for or
disclosure of transactions does not comply with generally accepted accounting principles
110

(GAAP) applied to the financial statements. Therefore, profit overstated information leads to
wrong decision making.
Porter's five strengths for solving Vitacoco's financial problems are effective planning tools to
solve Vitacoco's financial problems. Vitacoco's financial problems are mainly due to cash flow.
Therefore, Vitacoco should reconsider the price offered by customers. With five teams,
Vitacoco will be able to assess the competitors in the coconut water market and soft drinks
industry. Customers want to buy, especially in the external micro environment. By analyzing
customer bargaining power, you can determine how much Vitacoco is worth.
Management Accountant Vitacoco should find available resources for new technologies and
effectively manage Vitacoco's debt. Therefore, the company relies heavily on short-term
borrowings and lenders. This is due to the weakness of financial debt management system.
Vitacoco needs to systematically study external factors and effective financial management in
order to be economically viable. They need to consider about product
diversification which can be related or unrelated. Thus, we could ascertain the best practices to
improve performance so that we can close the gap. By comparing and analyzing data by
benchmarking. It can lead us to plan and forecast budgets by looking through some
performance measures such as costs, productivity and profitability. Therefore, we can avoid
unnecessary mistakes that others have done and improve our company’s performance as well
as efficiency resulting in the growth of competitive advantage.
To solve financial problems in Zico, you should first use a qualified management accountant.
Balanced Card is a more effective planning tool for Zico. Equity cards provide management
accountants with information on how businesses interact with standards. It can give you a good
picture of how to handle it. Budget control should be used as a planning tool. Where costs can
be reduced to ensure a clear view of business costs and to ensure timely payment to suppliers.
These include the weakness and inadequacy of financial problems for Vitacoco. Capital to buy
new machines. As mentioned above, Vitacoco has adopted a system of savings costs. But the
real demand for Vitacoco is weak rupee demand and low advertising profits. Since Vitacoco is
still a new business, there is not enough funding to grow the business by buying new machines
with more advanced technology. So Vitacoco lets you choose a collateral. He chose to attract
111

investors and invest in shares of Vitacoco. It is not easy for a small company to attract investors.
Therefore, Vitacoco makes it easier to get a bank loan with a bank loan. To avoid these
problems, Vitacoco can help you find resources for qualified management accountants who can
effectively manage your finances. This can be solved by applying the
Budget Committee and setting the credit limit for individual customer. In addition, there need
to verify by internal audit and external audit team for controlling new accounting methods and
systems. Moreover, an organization can use the following management accounting ways to
respond to financial problems and find out problems with the help of budget targets, KPIs /
indicators (financial and non-financial) and problem-solving assessments and variances.
In comparison, another company known as Zico, a soft drink maker, is struggling with financial
problems. They face financial problems, including poor budget management and early
repayment of customers. These problems are due to the lack of accountants and the lack of
specific business practices and the inability to obtain loans on time due to the supervision of
unqualified accountants. As a result, businesses do not have enough money deliver to suppliers
on time and solve such financial problems. Zico decided to hire a qualified management
accountant to do computer accounting. Zico has revised its policies to prevent the recurrence
of debt and inspected the financial condition of its customers before the seller.
Conclusion
This report provides an overview of Vitacoco's top management, which is important for
executives and business decisions. The management accounting system used will publish its
relevant management statistical reports. It will be useful for the efficient operation of the
business. It is determined that this is a more reliable and precise approach to performance-
based costs. Budget reports were also drafted and the final decision was made over $
10,329.50. The forerunner of budget control is to use the Balanced Scorecard and Porter's two
fisheries projects to analyze internal processes and external micro-environments for effective
strategy and budgeting. Finally, discuss the financial problems of Vitacoco and another
company, Zico. Discuss ways to deal with them with planning tools. Businesses need to know
their financial capabilities to get everything they do. Businesses use accounting as a method to
know how they are performing and to see if there is a balance between what the company
112

acquires and what the company takes out. Financial accounting is focused on the financial
issues of the company and it provides financial related information to internal and external
people concerned with the company. As a complement to financial accounting, companies
make use of management accounting to check its performance and know which operating part
of the firm they are not doing well. There is said to be a linkage between the financial and
management forms of accounting. This linkage is also said to create a short term, narrow focus
that is not supportive of effective operations. The linkage between the two forms of accounting
does not create a short-term focus and it does not create a situation wherein there is no
support for effective operation, its decisions to be done and a focus for a firm provides better.
Works Cited
EduPristine, 2017. Costing Methods & Important Cost Terms. [Online]
Available at: https://www.edupristine.com/blog/costing-methods
[Accessed 10 August 2020].
Harvard Business School Press, 2005. The Essentials of Finance and Budgeting. 1 ed. United
State of America: Harverd Business School Publishing Corporation.
Accounting Coach, 2020. What is absorption costing?. [Online]
Available at: https://www.accountingcoach.com/blog/absorption-costing
[Accessed 1 August 2020].
Accounting Notes, 2019. Marginal Costing: Meaning and Features | Cost Accounting. [Online]
Available at: https://www.accountingnotes.net/cost-accounting/marginal-costing/marginal-
costing-meaning-and-features-cost-accounting/10533
[Accessed 13 July 2020].
Accounting Tools, 2018. Material cost. [Online]
Available at: https://www.accountingtools.com/articles/2017/5/9/material-cost
[Accessed 24 July 2020].
Accounting Tools, 2020. Process Costing System. [Online]
Available at: https://www.accountingtools.com/articles/what-is-a-process-costing-system.html
[Accessed 23 July 2020].
113

AccountingTools, 2017. Budget definition. [Online]
Available at: https://www.accountingtools.com
[Accessed 23 June 2020].
Amadeo, K., 2018. the balance. [Online]
Available at: https://thebalance.com
[Accessed 18 June 2020].
Atrill, P. & McLaney, E., 2009. Management Accounting for Decision Makers. 6th Edition ed.
New York: Prentice Hall.
Averkamp, H., 2017. What is process costing? | AccountingCoach. [Online]
Available at: www.accountingcoach.com/blog/what-is-process-costing
[Accessed 11 June 2020].
Averkamp, H., 2019. Standard Costing. [Online]
Available at: https://www.accountingcoach.com/standard-costing/explanation
[Accessed 23 July 2020].
Averkamp, H., 2020. What is an incremental cost?. [Online]
Available at: https://www.accountingcoach.com/blog/what-is-an-incremental-cost
[Accessed 21 July 2020].
B., 2020. The Economic Times. [Online]
Available at: https://economictimes.indiatimes.com/definition/product-life-cycle
[Accessed 20 June 2020].
Bazley, M., Hancock, P. & Robinson, P., 2014. Contemporary Accounting. Sydney: Cengage
Learning Australia.
Belkaoui, A. R., 2002. Behavioral Management Accounting. 1st ed. London: Greenwood
Publishing Group.
Berger, A., 2011. Standard Costing, Variance Analysis and Decision-Making. 1 ed. Norderstedt:
Druck and Bindung.
Berry, A. & Jarvis, R., 2005. Accounting in a Business Context. 4th ed. London: Cengage Learning
EMEA.
Bhattacharyya, D., 2011. Management Accounting. 1st ed. India: Pearson Education.
114

Blokdyk, G., 2017. Activity-based Costing ABC: Beyond the Basics. 1 ed. Maxico: CreateSpace
Independent Publishing Platform.
Borad, S. B., 2009 . Difference between Financial and Management Accounting. [Online]
Available at: efinancemanagement.com/financial-accounting/...
[Accessed 11 June 2020].
Borad, S. B., 2020. Product Costing | Purpose, Examples, Formula - eFinanceManagement.
[Online]
Available at: https://efinancemanagement.com/costing-terms/product-costing
[Accessed 12 August 2020].
Bose, B., 2019. What Is an Inventory Management System, and What Features Do I Need?.
[Online]
Available at: blog.capterra.com/what-is-an-inventory-management-system
[Accessed 5 June 2020].
Boyce, P., 2020. Opportunity Cost | Economics | Definition | 4 Examples. [Online]
Available at: https://boycewire.com/opportunity-cost-definition/
[Accessed 15 July 2020].
Braam, G. J. & Nijssen, E. J., 2004. Performance effects of using the Balanced Scorecard: a note
on the Dutch experience. Long Range Planning, 37(1), p. 335–349.
Bragg, S., 2018. Traditional Costing — Accounting Tools. [Online]
Available at: www.accountingtools.com/articles/what-is...
[Accessed 12 June 2020].
Bragg, S., 2019. Faithful representation — AccountingTools. [Online]
Available at: www.accountingtools.com/articles/what-is...
[Accessed 9 June 2020].
Bragg, S., 2019. Pro forma cash flow — AccountingTools. [Online]
Available at: www.accountingtools.com/articles/what-is-pro...
[Accessed 29 June 2020].
Bragg, S., 2020. Accounting Tools. [Online]
Available at: https://www.accountingtools.com/articles/2018/2/23/price-setter
115

[Accessed 20 June 2020].
Campbell, D., Datar, S., Kulp, S. C. & Narayanan, V. G., 2002. Using the Balanced Scorecard as a
Control System for Monitoring and Revising Corporate Strategy. [Online]
Available at: https://ssrn.com/abstract=328880
[Accessed 22 October 2019].
Caplan, D., 2006. Management Accounting Concepts andTechniques. 1 ed. New York: University
at Albany, State University of New York.
Catherine, 2019. Multiple Costing: Definition & Calculation. [Online]
Available at: https://study.com/academy/lesson/multiple-costing-definition-calculation.html
[Accessed 29 July 2020].
CFA institute, 2019. Financial Governance. [Online]
Available at: https://www.tagetik.com
[Accessed 27 June 2019].
Chartered Global Management Accountant, 2013. KPIs – financial and non-financial. [Online]
Available at: https://www.cgma.org/resources/tools/essential-tools/kpis.html
[Accessed 15 October 2019].
Course, 2017. What is Management Accounting?. [Online]
Available at: https://www.myaccountingcourse.com/accounting-dictionary/management-
accounting [
[Accessed 12 July 2020].
Daniel, H., 2011. Benefits of Inventory Management. [Online]
Available at: benefitof.net/benefits-of-inventory-
[Accessed 4 June 2020].
Devault, G., 2019. Establishing Trustworthiness in Qualitative Research. [Online]
Available at: https://www.thebalancesmb.com
[Accessed 19 June 2020].
Dollery, B. D., Kitchen, H., Millan, M. M. M. & Shah, A., 2020 . Local Public, Fiscal and Financial
Governance: An International Perspective. 1 ed. Switzerland: Springer.
Drury, C., 2008. Management and Cost Accounting. 7 ed. Huddersfield: Pat Bond.
116

Evans, M., 2014. 5 Essential Skills For Qualified Management Accountants. [Online]
Available at: https://www.linkedin.com/pulse/20141009192039-42923570-5-essential-skills-
for-qualified-management-accountants/
[Accessed 22 August 2020].
Fiorillo, S., 2018. Sunk Cost: Definition, Examples and Fallacy. [Online]
Available at: https://www.thestreet.com/personal-finance/education/sunk-cost-14767636
[Accessed 11 July 2020].
Gartenstein, D., 2018. Types of managerial accounting reports. [Online]
Available at: https://bizfluent.com
[Accessed 28 May 2020].
Germain, R., 2010. Global Politics and Financial Governance. 1st ed. New York: Macmillan
International Higher Education.
Girsch-Bock, M., 2019. Variable Costs: How They Affect Your Business. [Online]
Available at: https://www.fool.com/the-blueprint/variable-costs-examples/
[Accessed 24 July 2020].
Hansen, D., Mowen, M. & Guan, L., 2007. Cost Management: Accounting and Control. 6th ed.
Mason: Cengage Learning.
Harris, E., 2009. Marginal Costing. 1 ed. London: CIMA Student Handbook Service.
Heidmann, M., 2008. The Role of Management Accounting Systems in Strategic Sensemaking.
1st ed. Wiesbaden: Springer Science & Business Media.
Heisinger, K., 2001. Essentials of Managerial Accounting. 2 ed. United State of America: South-
western Cengage Learning.
Hoque, Z., 2005. Handbook of Cost and Management Accounting. 1st ed. London: Spiramus
Press Ltd.
Institute, C. F., 2016. Unemployment - Definition, Types, and Causes of Unempolyment.
[Online]
Available at: corporatefinanceinstitute.com/.../unemployment
[Accessed 14 June 2020].
117

Jain, M., 2019. Material Cost: Meaning and Procedure of Estimation. [Online]
Available at: https://www.yourarticlelibrary.com/cost-accounting/material-cost-cost-
accounting/material-cost-meaning-and-procedure-of-estimation/90567
[Accessed 25 July 2020].
Jargons, B., 2019. What is Marginal Costing? definition, characteristics .... [Online]
Available at: businessjargons.com/marginal-costing.html
[Accessed 11 July 2020].
Johnson, K., 2018. What Is the Definition of Manufacturing Overhead Budgets?. [Online]
Available at: : http://smallbusiness.chron.com/definition-manufacturing-overhead-
budgets15546.html: http://smallbusiness.chron.com/definition-manufacturing-overhead-
budgets15546.html
[Accessed 13 July 2020].
Kaplan, R. S. & Norton, D. P., 1993. Putting the Balanced Scorecard to Work. [Online]
Available at: https://hbr.org/1993/09/putting-the-balanced-scorecard-to-work
[Accessed 22 October 2019].
Kappel, M., 2019. Types Of Fraud In Business That Could Put You In A Bind. [Online]
Available at: https://www.forbes.com
[Accessed 22 June 2020].
Katsuri, S. S., 2018. The qualiative characteristicsof financial statements. [Online]
Available at: https://www.accountingtools.com
[Accessed 1 May 2020].
K, B. B., 2008. Financial Accounting: A Dynamic Approach. 1 ed. New Delhi: Prentice Hall of India
Private Limited.
Khan, M. Y. & Jain, P. K., 2008. Cost Accounting and Financial Management. 1 ed. New Delli :
Tata McGraw-Hill Publishing Company Limited.
Kluwer, W., 2005. Financial Governance - Glossary | CCH Tagetik. [Online]
Available at: www.tagetik.com/uk/glossary/financial-governance
[Accessed 13 June 2020].
118

Koons, K., 2019. What is Price Optimization? (with pictures). [Online]
Available at: www.wisegeek.com/what-is-price-optimization.htm
[Accessed 29 June 2020].
Kotas, R., 1999. Management Accounting for Hospitality and Tourism. 3rd ed. New York:
Cengage Learning EMEA.
Lawson, R., Stratton, W. & Hatch, T., 2003. The benefits of a scorecard system. The
Management Accounting Magazine, 77(4), p. 24.
Leconte, P., 2018. 15 Examples Of Non-Financial Performance Measures To Track. [Online]
Available at: https://www.clearpointstrategy.com/nonfinancial-performance-measures/
[Accessed 22 October 2019].
Lodha, A., 2018. Batch Costing: Meaning, Need and Types (With Calculations). [Online]
Available at: https://www.yourarticlelibrary.com/cost-accounting/batch-costing/batch-costing-
meaning-need-and-types-with-calculations/55833
[Accessed 12 July 2020].
Lüsted, 2012. Apple the company and its visionary founder, Steve Jobs. Minneapolis, MN: ABDO
Pub... [Online]
Available at: www.essaytyping.com/key-performance-indicators...
[Accessed 12 July 2020].
Mallick, C. B., 2020. What Are Key Performance Indicators (KPIs)? Definition, Types .... [Online]
Available at: hr.toolbox.com/articles/what-are-key-performance...
[Accessed 15 June 2020].
Martinek, J., Jorgenson, J., Mehos, M. & Denholm, P., 2018. A Comparison of Price-Taker and
Production Cost Models for Determining System Value, Revenue,. 1 ed. Denver West Parkway:
National Renewable Energy Laboratory.
Martin, J. R., 2013. Cost Accounting Systems. [Online]
Available at: https://xplaind.com
[Accessed 29 August 2020].
Mohammad, A. A., 2016. Changing role of accounting and its systems: a new vision of.
International Journal of Managerial and Financial Accounting, Volume 8 (1), p. 23.
119

Money Matter, 2020. Unit Costing | Meaning | Cost Accumulation | Ascertainment. [Online]
Available at: https://accountlearning.com/unit-costing-meaning-cost-accumulation-
ascertainment/#:~:text=%20Cost%20Accumulation%20procedure%20in%20Unit%20Costing
%20,If%20the%20workers%20are...%203%20Overhead%20More%20
[Accessed 26 July 2020].
Money Matters All Management Articles, 2019. Principles of Management Accounting -
accountlearning.com. [Online]
Available at: accountlearning.com/principles-management-accounting
[Accessed 2 June 2020].
Monien, B., Prasanna, V. K. & Vajapeyam, S., 2001 . High Performance Computing. 1 ed. India:
Springer.
My Accounting Course, 2020. What is Total Cost?. [Online]
Available at: https://www.myaccountingcourse.com/accounting-dictionary/total-cost
[Accessed 23 July 2020].
My Accounting Resource, 2020. What is Absorption Costing?. [Online]
Available at: https://www.myaccountingcourse.com/accounting-dictionary/absorption-costing
[Accessed 14 July 2020].
Needles, B. & Crosson, S., 2013. Managerial Accounting. 10th ed. London: Cengage Learning.
Oakland, 1999. Statistical Proces Control. Oxford: Butterworth-Heinemann.
Pandikular, M. P., 2009. Management Accounting theory and practice. 2nd ed. India: Excel
Books.
Parmenter, D., 2010. Key Performance Indicators (KPI): Developing, Implementing, and Using
Winning KPIs. 2 ed. Canada: John Wily and Sons, Inc. .
Parmenter, D., 2020. Key Performance Indicators: Developing, Implementing, and Using
Winning KPIs. 4 ed. New Jersey: John Wily and Sons, Inc.,.
Peavler, R. M., 2018. A Sales Budget Is Central to Effective Business Planning. [Online]
Available at: https://www.thebalancesmb.com
[Accessed 26 June 2020].
120

Pietrzak, Z. & Wnuk-Pel, T., 2015. The Roles and Qualities of Management Accountants in
Organizations – Evidence from the Field. Procedia - Social and Behavioral Sciences, 213(1), p.
281 – 285 .
Porter, M. E., 2008. The Five Competitive Forces That Shape Strategy. New York: HARVARD
BUSINESS SCHOOL PUBLISHING CORPORATION.
Prakriti, 2019. Contract Costing: Meaning, Features and Procedure | Cost Accounting. [Online]
Available at: https://www.accountingnotes.net/cost-accounting/contract-costing/contract-
costing-meaning-features-and-procedure-cost-accounting/15071
[Accessed 21 July 2020].
Pyles & Prussak, &. R., 2008. SharePoint 2007 the Definitive Guide.. Sebastopol: O’Reilly Media,
Inc... [Online]
Available at: www.essaytyping.com/key-performance-indicators...
[Accessed 11 July 2020].
Richardson, A., 2019. 5 types of Financial problems and hoe to beat them. [Online]
Available at: https://www.moneymanagementiq.com
[Accessed 21 June 2020].
Samsonowa, 2012. Industrial research performance management key performance indicators in
the ICT industry.. Heidelberg: Physica-Verlag.
Scalzo, B. et al., 2006 . Database Benchmarking: Practical Methods for Oracle & SQL Server. 2
ed. Kittrel: Rampant TechPress.
Sherman, F., 2018. What is the Role of management Accounting. [Online]
Available at: https://bizfluent.com
[Accessed 29 May 2020].
Shopify, 2018. Benchmarking. [Online]
Available at: www.shopify.com/encyclopedia/benchmarking
[Accessed 11 July 2020].
Siegel & Shim, J. G. &. J. K., 2008. Budgeting Basics and Beyond. Third ed. s.l.:John Wiley & Sons.
Sphak, S., 2018. The difference between financial and managerial accounting. [Online]
Available at: https://www.accountingtools.com
121

[Accessed 29 May 2019].
Sphak, S., 2019. Monitoring Techniques for management. [Online]
Available at: https://work.chron.com
[Accessed 24 June 2019].
Stokke, K., Vakulchuk, R. & Overland, I., 2018. Myanmar: A political Economic analysis. [Online]
Available at: https://reliefweb.int
[Accessed 27 June 2020].
Story, J., 2019. How to use Porter’s 5 Forces model. [Online]
Available at: https://www.smartinsights.com/online-brand-strategy/brand-development/how-
to-use-porters-5-forces-model/
[Accessed 22 October 2019].
Sushila R, 2019. Budgetary Control: Meaning, Objectives, Control, Advantages and Limitations.
[Online]
Available at: www.accountingnotes.net
[Accessed 24 June 2020].
thein, M. & Myo, K. M., 2018. Social Factor development in Myanmar. [Online]
Available at: https://www.jstor.org
[Accessed 25 June 2020].
Tools, 2018. The qualitative characteristics of financial statements.. [Online]
Available at: https://www.accountingtools.com/articles/what-are-the-qualitative-
characteristicsof-financial-statem.html
[Accessed 5 July 2020].
Toppr, 2019. Advantages of Cost Accounting: Fixing Prices, Prices Reduction. [Online]
Available at: www.toppr.com/.../advantages-of-cost-accounting
[Accessed 6 June 2020].
Tutorial Points, 2020. Cost Accounting - Marginal Costing. [Online]
Available at:
https://www.tutorialspoint.com/accounting_basics/cost_accounting_marginal_costing.htm
[Accessed 12 July 2020].
122

Ukil, S. I., Ahmed, M. M., Khan, A. & Uddin, M. S., 2016. Just in Time Manufacturing System in
Minimizing theInventory Cost in Production Management. Jahangirnagar Universrty Joumal of
Science, 39(1), pp. 43-57.
Walkowski, R., 2018. 5 advantages of price optimization that you need to know. [Online]
Available at: ce-expert.io/5-advantages-of-price...
[Accessed 11 June 2020].
Wall Street Mojo, 2018. Fixed Cost (Definition, Formula) | Step by Step Calculation. [Online]
Available at: https://www.wallstreetmojo.com/what-is-wallstreetmojo/?source=footer
[Accessed 11 August 2020].
Wall Street Mojo, 2019. What is Absorption Costing?. [Online]
Available at: https://www.wallstreetmojo.com/absorption-costing/
[Accessed 15 July 2020].
Wilkinson, J., 2013. Labor Costs. [Online]
Available at: https://strategiccfo.com/labor-costs/
[Accessed 26 July 2020].
Wilkinson, J., 2018. Activity Based Costing | Activity Based Costing Steps. [Online]
Available at: strategiccfo.com/activity-based-costing
[Accessed 12 June 2020].
Willsmore, A. W., 2001. Business Budgets and Budgetary Control. 1 ed. London: Sir I. Pitman &
sons, Company Limited,.
Wilson, B. &. B. &., 1998. Managing Quality.. Oxford: Butterworth-Heinemann.
win, K. h., 2018. The Legal System of the Republic of the Union of Myanmar in a Nutshell.
[Online]
Available at: https://www.nyulawglobal.org
[Accessed 24 June 2020].
Woellner, Z., 2013. Business Analysis of Apple Inc Mü nchen: GRIN Verlag. [Online]
Available at: www.essaytyping.com/key-performance-indicators...
[Accessed 8 July 2020].
123

Woodruff, J., 2018. What Is a Management Accounting System?. [Online]
Available at: https://bizfluent.com
[Accessed 29 May 2019].
Young, B., Bakker, I. & Elson, D., 2011. Questioning Financial Governance from a Feminist
Perspective. 1st ed. New York: Routledge.
Zeuner, P., 2007. Activity-Based Costing. 1 ed. Norderstedt: Druck and Bindaung : Books on
Demand Gmb H.
QUALIFICATION Edexcel BTEC Level 5 HND Diploma in Business
UNIT Unit 5-Management Accounting
BATCH CODE UB-05-19
ASSESSOR NAME Daw Khin Su Su Yin
LEARNER NAME Zun Thet Hmu San
LEARNER FEEDBACK FORM
124

Learner Signature: Zun
Date: 28.8.2020
125