Management Accounting Report: Cost Analysis, Budgeting, and Techniques

This report provides a comprehensive overview of management accounting, beginning with its core principles and the importance of integrating management accounting systems within an organization. It then delves into various techniques and methods used for management accounting reporting, including variance analysis, different costing methods (job, batch, process, target, overhead allocation, marginal, absorption, life cycle, throughput, standard, activity-based, and time-driven ABC costing), and integrated cost and financial accounts. The report also includes practical applications, such as calculating costs using cost analysis techniques to prepare an income statement under both marginal and absorption costing. Furthermore, it explores the advantages and disadvantages of different types of planning tools used for budgetary control. The report is supported by annexes with calculations and examples to illustrate the concepts discussed, and it concludes by emphasizing the significance of management accounting in organizational decision-making.

Management Account

Table of Content
• Introduction
• Management accounting system
• Main function of management accounting
• Different techniques and methods used for management accounting
reporting.
• Management accounting system and management accounting reporting
• Benefits of management accounting systems
• Conclusion
• References

Introduction
Cost or managerial accounting start with the determining, evaluating, measuring,
examining, interpreting and transferring of useful financial data with manager that
support them to attain the predefined goals within specific time period. In various
system and effective report of management accounting with there importance and
value for integrated business system have been discussed. Additional, the report
describe the valuable costing techniques to calculate and evaluate net profit and
proper cost analysis.
Management accounting, is referred to the procedure of monitoring, controlling,
recording, analysing, evaluating and reporting of crucial financial data in order to
take decision according to business need and make it productive and profitable.

Management accounting system
In business scenario, different type of management accounting system are applied by
manager in order to evaluate and calculate the overall performance during a specific
time frame. These system are mainly focused to evaluate and record the cost linked
with manufacture of goods, set the best price of produced goods, make record for each
job related to manufacture of goods so that valuable decision are made for better
functioning of business operation and maximize result. Significant management
accounting system are discussed underneath:

Continue
Price optimisation system: This in also an important system used by management of
company that is related to fixing price of manufacture goods as per the responses
and demands of customer. It is also used by company to evaluate and ascertain the
best selling price of their product that will help them to recover the production cost
and maximize profit to meet the desired objective. Thus the price optimisation
system is crucial component of entire price management that is effective and
essential for profitability of company during a year. In Bentley, manager uses this
system to fix the best price of their hand dryer on the responses of customer. They
also keeps in mind to recover the overall cost involved in production of hand dryer
and ascertain profit to meet the actual objective of company.

Main function of management
accounting:
There are important function of this accounting some of these are discussed underneath:
Margin Analysis: Is is related to figuring out of total sum of profit that company
develop from specific activity or product line, customer etc. In Bentley, manager
determine the total revenue and cash flow generated by selling hand dryer.
Break-even analysis: It help to calculate the actual mix and margin for company and
determine the price where Bentley will face a situation of no profit no loss.
Inventory valuation: This is the main function of managerial accounting that support in
determining of direct cost linked with cost of good sold and other stock items. It is
also related with allocating of total overheads costs to the hand dryer manufacture
within Bentley.

Different techniques and methods
used for management accounting
reporting.
In business scenario, companies proper various report throughout the year to keep a
systematic record of financial transaction of company. These report are prepare by
internal manager that give a detail information about overall business and financial
position of company in competitive world. Management accounting report and
techniques are mainly prepared by manager of Bentley to formulate useful decision
for better functioning. Following are the various methods which are used by the
managers for management accounting reporting:

Management accounting system
and management accounting
reportingBudget Report – This is a report which help Bentley motors in making the estimate of
future expenses and incomes from their operations. These reports also help
management of Bentley to identify the problems due to which their budget
exceeded and it also helps to deduct the upcoming risks from budget and create
reserve funds for financial problems.
Cost managerial accounting report – It is integrated with the organisational
process as it shows actual cost structure of Bentley Motors Limited which is related
their production process. This process includes different types of cost in order to
present the actual value of every car such as direct cost, over head cost and indirect
cost.

Benefits of management
accounting systemsDifferent accounting systems Benefits
Inventory management system  This system benefit company in best utilisation of goods and available raw material for better
result.
 It is a system that support in tracking of stock and placing of order on request of supplier that
further help company to grow profit.
Job Costing system  The main benefit of this system to to provide proper stability in analysing and reducing assorted
cost related to particular job within Bentley.
 Job costing system aid management of respective company by keep record of performances of
employees so that meaningful decision are made.
Cost accounting system  This system mainly support in evaluating raw material cost, direct labour and overhead costs that
gives proper checks to the material used in making of Luxury cars.
 Cost accounting system assist in formulation of assorted business policies and alternative other
effective methods to ascertain befitting message about the profit making and non profit activity of
Bentley.
Price optimization system  These system provide effective support by giving a concise idea in respect to consumer
perceptions related to Bentley product.
 The main importance of this system is to give management a framework that help them to fix the
price of SUVs and other cars that are suitable for customer as well as company.

Annex (A)
Budget 2019 2020 2021
Cost
Centre
Budgeted
production
overhead costs
in £)
Basis of production
(overhead
absorption)
Cost per
Hour Hours Cost Hours Cost Hours Cost
A 66000 22000 3 24200 72600 26620 79860 27500 82500
B 75000 15000 5 16500 82500 18150 90750 19500 97500
C 83600 41800 2 45980 91960 50578 101156 51500 103000

Annex (B)
(a) Labour hour: -
Product X = £6000*1 = £6000
Product Y = £8000*2 = £16000
Labour hour = £2,64,000
------------
22,000
= £12 per hour.
Overhead absorption on labour hour: -
X Y
Overhead absorption = 1*12 = 2*12
= 12 = 24
Total Overheads = £6000*12 = £8000*24
= £72,000 = £192,000
(b) Using ABC approach: -

CONCLUSION
From the above report, This process enables the internal manager of company to make
effective short and long term decision and applies the best system for maximizing
result within an organisation. The crucial management accounting system like
inventory, cost, price optimisation are applied by manager of Bentley, as per the
situations and business activities so that each and every business dealing are
recorded and measured in effective way. Different kind of accounting report are
prepared and presented to internal and external stakeholders to show the overall
performance of company that help them to take decision after analysing the success
in specific time period.