Management Accounting Techniques at Warburton Bakery: A Report

This report provides an in-depth analysis of management accounting practices, focusing on the case study of Warburton Bakery, a UK-based family-owned business. The report explores essential requirements of management accounting, detailing various systems such as inventory management, cost accounting, price optimization, and job order costing. It also examines different management accounting reporting methods, including inventory management reports, performance reports, and budget reports. Furthermore, the report evaluates the benefits of these systems and their applications within an organization, alongside a critical assessment of these systems and reports in the organizational process. The study proceeds to analyze appropriate cost analysis techniques to prepare an income statement, including absorption costing, marginal costing, standard costing, variance analysis, and break-even analysis. The report also delves into the advantages and disadvantages of planning tools and their practical applications. Finally, the report compares how organizations adapt accounting systems to address financial problems, analyzing aspects where management accounting leads to sustained success, and evaluating planning tools in response to financial issues, concluding with insights into the effectiveness of management accounting strategies.

Management Accounting

Contents
INTRODUCTION.......................................................................................................................................4
TASK 1.......................................................................................................................................................4
P1 Management accounting and their essential requirement...................................................................4
P2 Different methods used for management accounting reporting..........................................................6
M1 Benefits of these systems along with application in organization.....................................................7
D1 Critically evaluation of systems and reports in organizational process..............................................7
TASK 2.......................................................................................................................................................8
Appropriate techniques of cost analysis to prepare income statement.....................................................8
M2 Apply range of MA techniques.......................................................................................................11
D2 Accurately apply and interpretation of data.....................................................................................12
TASK 3.....................................................................................................................................................12
P3 Advantages and disadvantages of planning tools..............................................................................12
M3 Use of planning tools with their application....................................................................................14
TASK 4.....................................................................................................................................................14
P5 Comparison showing the ways organizations adapts accounting systems for responding financial
problems................................................................................................................................................14
M4 Analysis of the aspects in which management accounting lead firms to sustain success.................17
D3 Evaluation of planning tools responding financial issues.................................................................17
CONCLUSION.........................................................................................................................................18
REFERENCES..........................................................................................................................................19

INTRODUCTION
Management accounting is implemented technique, concept accession to knowledge from
preparing bookkeeping information that assist supervisors to devise policies, controlling
surgeries, optimizing resource utilization, protecting assets and earning critical decisions. The
purpose of management accounting would be to introduce relevant accounting in addition to
financial data which further assists in operation investigation, which makes comparisons,
forecasting, establishing budgets and assessing industry standing in competitive sector (Storey,
2014). This type of accounting has been utilized of every type of organization whether small and
large in order to collect all the relevant information in details. To better understand of this report
select Warburton that is established in United Kingdom. It is family owned baker business in the
country and employs around 4500 staff members across 12 bakeries and 14 depots across the
UK. This report presents details regarding handling accounting with its associated strategies and
bookkeeping reports, use of methods to organize income statements and also use of different
preparation tools. Additionally, it has contrast one of two firms in circumstance to the manners
they uses accounting techniques for reacting financial issues.
TASK 1
P1 Management accounting and their essential requirement
Management accounting system contemplates as internal system which helps to earn
business profits by employing several forms of management accounting strategy. System would
be the coverage’s that help business enterprises to conduct a small business and it restrain small
business information that contributes to organizational objectives. Such as, Warburton mangers
uses several kinds of management accounting software which can be crucial for business since it
can help to keep the company info and work so. The Different Kinds of management accounting
systems are the Following:
Inventory Management system: This method is a mix of technology which involves
procedure and processes for tracking or maintaining the stock. By employing this procedure is
platform Warburton can handle inventory that helps place order so. It really is require handling
the stock within company and tracking them affectively. It's employed by most of company

where number of services and products are willing and will need to track inventory. Inventory is
tracking with way of a platform that's used by company to take care of the predetermined
limitation of stock and create profits for company. It looks at various Procedures that are defined:
 FIFO: This way can be utilized to sell the stock exchange that is arranged firstly.
 LIFO: It's used by company to sold good that will be purchased recently.
 AVCO: This Unique procedure can be utilized by Company to sold items in average
price.
Cost accounting system: this technique is helpful for company as it can help to find the
price of business pursuits along with other expenses that are incurred by company. It really is
require in Warburton company to find cost information regarding production of cakes and
biscuits. It is helpful to choose the fee of fruit-juice based by assessing the expenses. Accountant
of Warburton records, categorize, outline and research the price of goods and services which
helps to keep adulthood. What's more, it's require to restrain the financial cost by which limited
funds of special projects are contemplated plus it can help to find cost of company (Seow and
Wong, 2016).
Price Optimization system: Each company wanted to establish the price ranges of services
and products that can be render on their own. As stated by direction prices of merchandise and
services needs to be reasonable which may pay for most cost of fabricating services and product
and ought to be optimal for clients. It really is require for Warburton as a way to place the price
ranges of various items which helps earn profits. For that reason, this technique is great for
company to establish the price ranges of merchandise and maintain sustainability. The managing
of selected company brings clients by picking the selling prices of different products which helps
get more profits.
Job order costing system: To allocate the cost using special batch of merchandise are
demand in job order costing system. The Primary purpose of these method is buildup of Cost
particularly batch that are not the same as different batches. This make certain that incurred price
of goods is reasonable whilst comparing cost of different services and products. It's necessary for
various products to split the fee in to certain batches and keep maintaining profits. Consequently,

direction of cakes and biscuit assign the Price of items into to certain batch and bring in higher
profits.
P2 Different methods used for management accounting reporting
Management accounting reporting: It believe financial info, extracted from the
bookkeeping listing of an organization. It is helpful to keep all records of economic trade that are
crucial for company. The managing of Warburton centers on financial transactions and prohibits
accounting accounts by considering all trades. That really is essential for company to do
accounting accounts ending of this year and quarter which really helps you to produce business
decision so. In Warburton, director prepares such reports with their abilities and work experience
that really helps maintain business performance effortlessly and says profitability. The
explanation for management accounting reports is mentioned:
Inventory management report: Such an inventory report is generated by fabricating
organizations as a way to maintain background of inventory (Rudman and Kruger, 2014). In
Warburton it's generated by the managers to stay thorough advice about stocks which can be
used by the enterprise to run its own operations. It's quite good for the direction as it can
certainly help analyze the status of stock whether it's in transit or at store. For many the
businesses such as Warburton it's crucial build this kind of accounts as it can certainly help run
the company inappropriate and beneficial method. All form of information linked to inventory is
listed within this report.
Performance report: In the Majority of the businesses such a record can be utilized to
track operation of whole company in addition to those individuals that are doing work for the
business. In Warburton such form of record is devised with the managers to assess the efforts
which are produced by the employees so as to perform all of the delegated tasks successfully.
This report can be utilized by the direction to give incentives and bonus into the workers
depending on their overall performance. Market image and condition of the firm may be
evaluated with the assistance of this. It is beneficial for the company as it might direct the
managers to test their thing is acting well or maybe not.
Budget report: This record is made by the supervisors to compare sustainable
projections and exact functioning of the provider. It's an internal record that's largely employed

by the direction so as to investigate that company can fulfill its aims or perhaps not. In
Warburton all these are generated by the executives of this enterprise to be certain all the
operational and exceptional tasks are performed from the projected budget or perhaps not. It's
advantageous for your organization as it helps the managers to make appropriate monetary
decision for your enhancement of their company (Nakajima, Kimura and Wagner, 2015).
M1 Benefits of these systems along with application in organization
Systems Benefits and application
Cost accounting system It is beneficial for organization as to assess the production's cost
and other cost which is arises while working. Warburton applying
such system to monitor and control the cost of business activities.
Price optimization It is helpful to set the prices of products and services within
organization that gives more advantages to business. By applying
such system Warburton set prices of cakes and biscuits that help
to increase number of customers and make profits.
Inventory management
system
This system is helpful for track all the records in particular period
of time. Warburton apply this system which is beneficial for the
company to manage all the resources effectively.
Job order costing system It is beneficial for the organization as it can help the managers to
analyze the cost of jobs that are performed according
specifications of customers
D1 Critically evaluation of systems and reports in organizational process
In Warburton several kinds of system are followed closely along with differing sorts of
reports have been generated as a way to fortify the place of the business on the marketplace.
Price marketing process is employed for its organizational process where most useful suited cost
for those components of the provider. Job costing system is utilized by the managers to
investigate the expense of unique tasks which can be performed by the company in line with the
requirements of their customers. Account receivable reports are mainly utilized to fortify the
credit policies of the business by analyzing overall owed level by the customers. Performance

reports are created by the direction to ascertain the business thing is acting well from the sector
or maybe not. It's also utilized to track performance of their team members (Larsson, 2015).
TASK 2
Appropriate techniques of cost analysis to prepare income statement
Absorption Costing: It is used to analyze absorption costs for the organization. In
addition breaking, the merchandise price is figured through adding guide labor cost per unit,
Variable manufacturing overhead price, indirect material cost and aerodynamic production
overhead. Additionally, inventory vales are calculated during involving direct labor, functional
overhead and guide material.
Marginal costing: This method is used to determine marginal cost of the company.
While using this method only variable costs are considered and fixed costs are ignored. It's
frequently calculated if enough items are produced to pay the fixed costs and production are in a
pre-determined point, where in fact the sole expenses moving forward are direct or variable
expenses. When ordinary costs are steady, rather than situations where material prices differ as a
result of lack difficulties, marginal cost is typically the exact same as ordinary price.
Standard Costing: This costing is stated to differentiating gaps one of variances in real
price and also the happened costs. With this application, managers of Jackson Fencing prepares
together side applications standard expenses and compares them using the real costs therefore to
analyze any sort of variance. It can help in correctly discovering costs through preparing
statistical data.
Variance analysis: Analysis about the gaps among actual in addition to intended
behavior. Through this procedure, correct control on all small business tasks are maintained with
the directors of Jacksons fencing. It's central preparation tool applied by government group of
business for spot factors behind their wide variations within expenses and income in budgeted
values.
Break even analysis: A break even based on investigation that is really a financial tool
and will help to ascertain what point organization, or perhaps a brand new provider or a

commodity, will probably soon is profitable. To Put it differently, it is a fiscal calculation for
determining the number of Products that a firm must market to pay its own prices (especially
fixed prices)
Particulars AMOUNT
Sales..... 2400000
Less: variable cost.....
Direct labour..... (20*20000) 400000
Direct material..... (45*2000) 90000
Variable production.....
( 15*2000) 45000
Variable 10% of sales value..... 42750 252750
Less: direct labour..... (15*500) 7500
Direct material..... ( 18*500) 9000
Variable prod..... (9*500) 4500 -21000
Contribution..... 195750 195750
Less: fixed exp...... (180000/4) -45000
Profit for the year 150750 150750
Marginal method
Particulars AMOUNT

Sales..... (4500*95) 427500 427500
Variable cost.....
(15+18+9*5000) 252750
Variable cost..... (15+18+9*500) -21000 231750
Cost of goods sold..... 276750
Gross profit before
absorption..... 150750
Under/over absorption..... 6819
Gross profit after
absorption..... 157569
Less: Fixed expenses..... -45000
Net profit..... 112569

M2 Apply range of MA techniques
Several methods can be obtained with financial accountants to figure profits. Accounting
methods are tips which aid associations to continue to keep financial records in addition to
preparing reports. It aids in Assessing, categorizing, recording, and maintaining along with
controlling business operations. In Warburton, absorption breaking technique can be used in
combination with the intention to help conclusions of pricing together side organizing
confidential fiscal reporting records. Additionally, marginal costing procedure can be employed
in making computing and decisions violate even manufacturing amount, controlling cost and
abandoning unsuccessful small business lines.
D2 Accurately apply and interpretation of data
Financial statements aid in the study of cash flow-related trends, company performance
and financial position. Executive team is also collecting details about company health with these