Management Accounting Report: ABC Company Cricket Bat Analysis

This management accounting report examines the financial information needs of managers at the ABC Company, a manufacturer of cricket bats and accessories. Part A of the report identifies the primary information requirements for sales, technical, cost accounting, production, and engineering managers, highlighting the importance of balanced scorecards, ERP systems, and cost analysis for decision-making. Part B presents special-purpose management accounting reports for the cost accounting and sales managers, detailing cost classifications, sales figures, and budget comparisons. The report then delves into factors affecting cricket bat costs, including material costs, labor, and indirect expenses. Finally, it outlines the implications of new automated systems on the company's cost structure, emphasizing potential benefits such as cost reduction and improved efficiency. This analysis provides a comprehensive overview of management accounting practices within the context of a manufacturing business.

Management accounting
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Contents
Management accounting..................................................................................................................1
Contents...........................................................................................................................................2
Introduction......................................................................................................................................3
Part A...............................................................................................................................................4
A) What are the primary information needs of each manager?...................................................4
B) Prepare a special-purpose management accounting reports for any two of these managers..5
Part B...............................................................................................................................................8
A) What factors affect the costs of cricket bats sold by the ABC Company?.............................8
B) Briefly outline the implications of new automated systems on the cost structure of cricket
bats...............................................................................................................................................9
Conclusion.....................................................................................................................................10
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Introduction
The term management accounting is considered to be the tool through which the management of
the company are able to dispense the information that is relating to the managers of the company.
This is seen that through this method the companies that are working in the industry are able to
maximise the production and are able to reduce the cost of the production through identifying the
specific requirements for the same. Through the process of management accounting the company
is able to identify, measure and interpret the financial performance of the company1. This
approach helps in getting the information through which the efficiency of the product of the
company can be determined and through which the company is able to maximise the cost of
production. Here this report is based on the ABC company that manufacturers cricket balls, bats
and various other accessories through which they are able to increase the sales of the company.
The report would hence provide the primary information which is required by the managers of
the company.
1 Hiebl, Martin RW, Christine Duller, Birgit Feldbauer-Durstmüller, and Patrick Ulrich. "Family
influence and management accounting usage—Findings from Germany and
Austria." Schmalenbach Business Review 67, no. 3 (2015): 368-404.
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Part A
A) What are the primary information needs of each manager?
The primary information that is required by the managers of the company help them to make the
strategies for the future of the company and through this they are able to achieve the objective of
maximising the profit for the company2.
Some of the primary information that is required by different managers of the company includes:
 Sales manager of the company: The sales manager of the company would be required to
have the balanced scorecard system through which he would be able to measure the
performance of the company which is related to the company’s objective and through
which the operations of the company are achieved. He would be requiring the customer
base and information on the sales staff of the company. The person who are
outperforming in the sales team and the person who are below the mark. Also, he would
be requiring the information different sales figure that are attributed to the different items
that are sold by the company3.
 Technical specialists: Here through this the technical specialist of the company would be
required to have ERP system so that they are able get the information which is presented
in the comprehensive manner. He would be able to manage all the business organisation
in the best possible manner. The technical specialist would understand the different
system through which they are able to identify the requirement of making the engineering
work more important.
 Cost accounting manager: The cost accounting manager would be required to have the
information that is related to the cost of the goods sold by the company. The cost
manager would be considered to be liable for identifying the cost of the product that is
suitable for the company. The cost accounting manager would be required to identify the
2 Clarke, Brian, Paul Collier, Rahat Munir, Gary Oliver, Peter Robinson, Natasja
Steenkamp, and Ofer Zwikael. "Strategic management accounting: CPA program."
(2019).
3 Taylor, Lynda C., and Robert W. Scapens. "The role of identity and image in shaping
management accounting change." Accounting, Auditing & Accountability Journal 29, no. 6
(2016): 1075-1099.
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different costing practices so that they are able to perform the objective of identifying the
current cost of the company.
 Production manager: The production manager of the company would be requiring the
information about the line production and the process that are involved in the production.
Also, the amount of the production target that the company has to achieve on time is
defined by the production manager of the company.
 Engineering manager: The engineering manager of the company would be requiring the
primary information about the task and the changes that the company wants to achieve.
He would be requiring the information about the types of plants and machinery that are
available in the company.
Hence this is seen that these are the basic information that the managers of the company require
so that they are able to manage the work that is to be done by them. It is considered that through
this information they are able to decide about the resources that are required by the company
before taking the decision of making changes4. This is seen that through this the effective cost
that is required by the company for the project would be determined. Also, the company would
be able to make the decision of changing the method of assembling through providing the
information to the managers of the company.
B) Prepare a special-purpose management accounting reports for any two of these managers
There are various reports that are prepared by the company for the managers of the company so
that they are able to take the best and efficient decision for the purpose of implementing the
change in the process of the company. Hence through this the all the managers of the company
are able to take all the decision that are related to the implementation of the change in the
company (Latan, et. Al., 2018)5. Hence for this purpose two special purpose accounting reports
4 Wouters, Marc, and Markus A. Kirchberger. "Customer value propositions as
interorganizational management accounting to support customer collaboration." Industrial
Marketing Management 46 (2015): 54-67.
5 Latan, Hengky, Charbel Jose Chiappetta Jabbour, Ana Beatriz Lopes de Sousa Jabbour, Samuel
Fosso Wamba, and Muhammad Shahbaz. "Effects of environmental strategy, environmental
uncertainty and top management's commitment on corporate environmental performance: The
role of environmental management accounting." Journal of cleaner production 180 (2018): 297-
306.
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are prepared by the company which includes cost accounting manager report and sales
accounting manager report.
Management accounting report for costing manager
The costing is considered to be one of the most important tools that is used by the company so as
to identify the actual cost of production that of production that is involved by in the making the
product of the company. In the present process of changing the method of assembly of the
cricket Bat requires that the company should focus on the classification of the cost that would be
additionally required by the company so that they are able to minimise the cost per bat that is
produced by the company and are able to increase the amount of profit that is required by the
company to achieve the objective of maximising the profit. Hence for this change the company
should consider the classification of the different cost that is attributable by the company6. There
are various attributes that are required by the cost manager of the company which includes the
different nature of the cost. Some of the cost includes the production administration,
development and distribution of the production according to the method. This is considered that
the nature of direct as well as the indirect cost of the company needs to identified by the cost
manager so that they are able to allocate the budget that is required for the purpose of
introducing the change in the company process of manufacturing the cricket bats. The cost
managers of the company are required to have the access of the different cost that is associated
with the processing and assembly of the product of the company. Some these includes variable
and the fixed cost.
Some of the direct cost of the company that are associated with the assembling of the bat before
the change are specified as below:
Name of the item Per unit cost Total cost
Direct material $10 $1000
6 Alawattage, Chandana, Danture Wickramasinghe, Mathew Tsamenyi, and Shazhad Uddin.
"Doing critical management accounting research in emerging economies." Advances in Scientific
and Applied Accounting 10, no. 2 (2017): 177-188.
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Direct labour $5 $500
Variable cost $2 $200
Fixed cost $5 $500
Cost per unit $22
Total cost 100 units $2200
Through this information that is available to the cost manager of the company he would be
sufficiently taking the best decision that would suit the company best. Through this the company
would be able to reduce the cost that is related to the cost of the new application of the new
process in the company.
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Management accounting report for the sales manager
The sales report of the company contains the various sales result of the company that are
obtained for the period of week. The report would contain the sales report of the week. Also, the
sales report would confirm the total number of the customers that have joined the company
before changing the process of assembly of the bat. There are various sales executive of the
company who’s result would be analysed here so that they are able to maximise the production
of the company and through this they would be able to analyse the sales executive of the
company who is not able to produce the desired result7. The budgeted sales and the actual sales
that are achieved by the company are defined under this management accounting report for the
sales manager of the company. The sales of the company in the previous period were at a great
heights and company managed to touch the figure of $500,000. This is considered that the sales
executive of the company performed their obligation in the best manner through which they were
able to maximise the production of the company8. There are total of 15 sales executive that are
working with the company and the budgeted sales target that was defined for all the sales
executive were equally distributed. The total sales target for the sales managers were $700,000.
As the sales figure of the company was having a significant variance due to the market
deviations and competition in the market. There are various products that are sold by the
company and the most part of the sales were realised from the sale of the bat; on the second
position the cricket ball was sustaining.
Sales figure for the present period
Sales figure Cricket Bat Cricket ball Other accessories
Total actual sales for
the period
250,000 150,000 100,000
Estimated budget for the period
7 Pavlatos, Odysseas. "An empirical investigation of strategic management accounting in
hotels." International Journal of Contemporary Hospitality Management 27, no. 5 (2015): 756-
767.
8 Kamal, Shah. "Historical evolution of management accounting." The cost and management 43,
no. 4 (2015): 12-19.
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Sales figure Cricket Bat Cricket ball Other accessories
Estimated sales for the
period
300,000 250,000 150,000
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Part B
A) What factors affect the costs of cricket bats sold by the ABC Company?
Identification of the cost of the producing and assembling the bats of the company is one of the
most important elements that the company should consider so that they are able to make the
strategies for procuring them. The variable and the fixed cost that is attributed to the cost of the
company is one of the most important factors that is required to be considered for purpose if
identifying the cost of the bat. The willow that is used by the company is one of the most
important factors for determining the cost of assembling the bat for the company as if the price
of the willow for assembling the bat goes up then the company would not be able to sell the bat
at the desired level. Also, the direct labour that is related to production cost directly affects the
cost of the cricket bat as if the labour cost increases then the company would not be able to sell
the bat at the similar rate as the company was selling earlier. Also, there are some other indirect
cost that are related to the cost of the cricket bat that are sold by the company9. These includes
the transport cost, power and the fuel that is related to the production and the sales of bat. The
operations cost is also one of the significant costs that the company has to consider as one of the
factors that affects the cost of the cricket that is sold by the company10.
Testing cost of the bat that is associated with each and every bat that the company sells is one of
the most significant factors that affects the cost of the cricket bat that the company sells. Here
this is seen that the testing cost is directly attributable to the cost of the company and this is one
of the major cost due to which the company is considering to introduce automated machines for
the purpose of assembling and testing of the cricket bats11.
9 Lapsley, Irvine, and Josephine V. Rekers. "The relevance of strategic management accounting
to popular culture: The world of West End Musicals." Management Accounting Research 35
(2017): 47-55.
10 Lewis, Marc B., and Evelin Perez Maldonado. "Exploring Implementing a CMA Program into
an Undergraduate Accounting Program." (2019).
11 Strauss, Erik, Gerhard Kristandl, and Martin Quinn. "The effects of cloud technology on
management accounting and decision-making." Management and Financial Accounting
Report 10, no. 6 (2015).
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B) Briefly outline the implications of new automated systems on the cost structure of cricket
bats.
The implementation of the newly automated machines in the companywide be beneficial for the
company as through this the company would be able to reduce the cost that is based on the
production and testing of bats. Here this is seen that the company would be having extra cost of
implementation of the automated machines in the company production line. Due to which the
profit margin of the company would decrease in its initial year 12. Here this is considered that
through this the company would be having better testing and assembling system that would
increase the quality of the product that the company would sell. Also, the cost that is related to
the labour would be reduced which is beneficial for the company as this is directly attributed to
the cost of the bats that are sold by the company.
The fixed cost of the company would get increase and the company would be considering to
increase the price of the bat that they sale to the customers so as to recover the cost investment 13.
The cost that is related to the testing of the cricket bat would be reduced by the company and due
to which the profitability of the company would be attributed to be greater in the next few years.
The company would be able to assemble more bats through the implication of the new automated
machines due to which the cost of production of single bat would reduce14.
On the other hand, the cost of the company on the technical staff and the repair and maintenance
would increase which would impact the cost structure of the cricket bats that are sold. As these
costs would be indirect for the assembling of the product15.
12 Morden, Tony. Principles of strategic management. Routledge, 2016.
13 Kartalis, Nikos, Mathew Tsamenyi, and Kelum Jayasinghe. "Accounting in new public
management (NPM) and shifting organizational boundaries: Evidence from the Greek Show
Caves." Accounting, Auditing & Accountability Journal 29, no. 2 (2016): 248-277.
14 Usenko, L. N., I. N. Bogataya, N. V. Bukhov, T. B. Kuvaldina, and A. V. Pavlyuk. "Formation
of an integrated accounting and analytical management system for value analysis
purposes." European Research Studies 21 (2018): 63.
15 Uyar, Ali, and Cemil Kuzey. "Does management accounting mediate the relationship between
cost system design and performance?." Advances in accounting 35 (2016): 170-176.
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Conclusion
The above analysis that is done on the ABC company states that, management accounting is one
of the significant tools that is to be considered by each and every organisation that are working in
the country. This is seen that through this the company is able to identify the primary
information that is required by the different managers so that the manager is ready to take the
decision for implementation of new strategies in the company. The company would be requiring
the information on the cost of the product that it sells so that they are able to reduce the cost at
the level that is acceptable by the company. Hence the management accounting tool is
considered to be important for every company to take decision.
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