Management Accounting Report: UK Dance Class and Event Organizer

This report delves into the core principles of management accounting, providing a detailed analysis of its application within the context of Big Swing, a UK-based dance class and event organizer. The report begins by outlining the essential requirements of management accounting systems, emphasizing their role in decision-making, financial planning, and organizational efficiency. It explores various methods used for management accounting reporting, including budget reporting, inventory and manufacturing reports, and accounts receivable reports, highlighting their significance in financial management and business expansion. The report then focuses on costing methods, specifically marginal and absorption costing, comparing their approaches and implications for price determination and profit analysis. Furthermore, the report examines the characteristics and drawbacks of budgetary control systems, assessing their impact on forecasting and decision-making. Finally, it discusses how different management accounting tools can be used to address financial challenges and enhance the overall performance of the business. The report concludes by summarizing the key findings and emphasizing the importance of management accounting in driving business success and long-term sustainability.

Management
Accounting
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1) Management accounting and different essential requirements of its systems.......................3
P2) Methods used for management accounting reporting...........................................................5
TASK 2............................................................................................................................................7
P3) Costing methods and differences between marginal and absorption pricing........................7
TASK 3..........................................................................................................................................11
P4) Characteristics and drawbacks of budgetary control system...............................................11
P5) Different management accounting to solve out financial problems....................................12
CONCLUSION..............................................................................................................................12
REFERENCE.................................................................................................................................13
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INTRODUCTION
Management accounting is provision of decision making process to carrying on business
organization effectively. It includes analysis of entity's performance and further preparing
strategies for implementation and proper management of activities. The present report is based
on understanding different management accounting tools of Big Swing. It is small scale dance
class and event organizer of UK. Several kinds of management accounting tools and methods are
to be understood. In this regard, costing methods for price determination and preparing income
statement is to be expressed. Moreover, through this assignment, learners are able to understand
critical evaluation of budgetary control system to forecasting and decision making to implement
action plans efficiently. Hence, significance of management accounting systems are to be
presented through this study.
TASK 1
P1) Management accounting and different essential requirements of its systems
It is composition of entire accounting related to business operations including costing,
budgeting and ratio analysis to present organizational structure and remains helpful for
enlargement of small business business unit. Under this system, management accountant of
organization analyzes entire business activities and further prepares budget through forecasting
and decision making tool (Amdee and et.al., 2014). Therefore, adequate management of
organization is gained including financial, inventory and performance bases. In this regard,
several tools and techniques are used for expansion of entity as well considered as decision
making process for further years. However, by applying management accounting components
balance of production and distribution of products as well efficiency related to enhancing service
qualities is achieved. In addition to this, positive environment of firm is created for getting
contribution of employees in performing their job effectively. In this process, large number of
ideas are generated for expansion of entity and improving service qualities of organization.
However, risks occur at workplace also get reduced by preparing systematic planning procedure.
It is interrelated with cost effectiveness and effectiveness of small business enterprise to achieve
positive attitude of customers towards services provided by Big Swing Ltd. Hence, management
accounting plays crucial role to gain effective fund allocation and systematic supplement of
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services to meet customer satisfaction (Carlton and et.al., 2015). Along with this, optimum
utilization of resources and fund is obtained through management accounting to gain
effectiveness of entity and its good position in market that impacts on business and competitive
strategies of firm at high level.
Thus, management accounting is crucial for Big Swing Ltd to carrying on enterprise
value in market as well proper management of entire business operations. It impacts on market
position and strategies of business organization to make place in market for long term
sustainability. In this process, management accountant of small business unit makes decision for
further business operations and also entity's implementation can be achieved. It is interrelated
with performance of organization and employees regarding coordination for working in group to
create positive environment of firm. In addition to this, management accounting is beneficial for
keeping inventories safe and preparing strategies for its effectiveness (Chenhall and Moers,
2015). Therefore, production and distribution of goods of entity can be effective for long term
sustainability. It influences costing and different financial tools such as income statement, cost
analysis, budgeting and identifying various ratio related to profitability and liquidity position of
firm. Apart from this, management accounting is required for enlargement of small business unit
and increasing efficiency of entity at large scale. Thus, management accounting is
interdisciplinary approach that includes different systems therefore their requirements can be
described as below:- Costing:- It includes different costing for manufacturing, producing and distributing
products such as job order, processing and throughput methods. In this process, job order
involves expenses incurred for manufacturing of products including purchasing raw
materials, labor cost and so on. Furthermore, processing costing covers pricing related to
production and distribution of goods that impacts on price determination to meet
customer expectations effectively. It including expenditure spent for launching products
in market. Moreover, throughput costing includes price determination for advertisement
and promoting products that affects competitive strategy of small business unit for long
term effectiveness of organization efficiently (Chhatwal and et.al., 2015). Therefore,
management accounting tool as costing is useful for adequate price determination to
maintain market value of entity effectively.
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 Quantitative accounting information:- Management accounting quantitative components
such as budgeting, income statement analysis is useful to present financial position of
organization. On the basis of which different ideas are generated for further business
operations. In accordance to this, management accountant of Big Swing interprets these
data that are valuable for making decision related to business organization's
implementation. It impacts on productivity and profitability of firm to gain systematic
management of business operations (Colasse and Durand, 2014). In this regard,
forecasting is generated effectively to make decisions for developing action plan to create
organizational structure. Hence, costing, budgeting, financial statement analysis to
increase efficiency of firm at high level.
P2) Methods used for management accounting reporting
Reporting of management accounting is considered as systematic data to be interpreted
for decision making process regarding economic growth and implementing action plans for
enhancing efficiency of small business enterprise. However, management accountant of firm
records data related to business operations (COUNCIL, 2016). On behalf of these records
decisions are made for development of entity. In addition to this, various tools and techniques are
used for management accounting reports therefore small business entity can enlarge its
organization as well efficiency of firm can be enhanced. In this regard, some of the main
management accounting reports can be described as below:- Budget reporting:- It is management accounting tool for forecasting and decision
making process related to business activities. It aims to increase productivity and
profitability of Big Swing to get adequate utilization of resources. Including this,
effective financial management and different ideas for further implementation is gained
through applying this system. However, by foreseeing and preparing planning procedure
systematic steps are obtained related to organization's efficiency (Firouzi, Baglieri and
Jaber, 2014). In this regard, budget report is useful for small business unit to increase its
profitability at large scale. Thus, reporting for budgeting and budgetary system is
interrelated with overall management of entire business operations to increase its
business and competitive strategies efficiently. However, by preparing budget report,
varieties of business elements get focused for set target to gain adequacy in production
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and distribution system of products. Along with this, budget is beneficial for carrying on
business entity efficiently therefore entire factors of organization can be analyzed to
increase efficiency through using different techniques related to implementation of event
organizer entity. In accordance to this, budgetary control system is helpful for controlling
over excess of expenditures also remains helpful to meet customer satisfaction that
affects productivity and profit earning capacities of organization for long term
sustainability. Including this, different strategies are prepared to build employee-
employer relationship that impacts on environment of organization (Fullerton, Kennedy
and Widener, 2013). Hence, budgeting reporting as management accounting tool is
valuable for expansion of small business unit and increasing quality services of
organization. Similarly, it remains useful to achieve optimum allocation of resources and
fund effectively. Inventory and manufacturing report:- This management accounting tool presents cash
and liquidity of organization that is key tool for gaining financial position of entity. In
this process, management accountant of Big Swing analysis inventories and reserved
stock. Hence, appropriate ideas are created to use stock and in case of excess material, by
selling these reserved inventories economic profile of organization will be increased
effectively. Hence, proper inventory management is gained through system that impacts
on overall business operations. In this regard, productivity and profitability of firm get
affected as well proper report is prepared for increasing in production and earning level.
Thus, management accounting tool as inventory and manufacturing report is beneficial
for presenting liquidity reserved at workplace (Henderson and et.al., 2015). Including
this, stores, warehouses and different places where company reserved goods and fund are
recognized efficiently. In addition to this, inventory management and cost effectiveness is
gained that is useful for preparing further manufacturing report. Moreover, through
utilizing this tool, an effective idea is created for further investment and enhancing
efficiency of small business unit at large scale. Thus, inventory and manufacturing report
is helpful for implementation of small business entity and utilizing reserved fund as well
stock for further business operations effectively.
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 Account receivable reports:- It is related to cash flow management to gain effectiveness
of small scale entity. In accordance to this, account receivable receipts and balance
between expenses and income is determined. Moreover, flow of cash is obtained through
this system that creates different ideas for investment and getting source for funding.
However, this management accounting tool is useful for enhancing productivity and
profitability of firm. In addition to this, effective financial management is gained through
this system to process implementation as well utilizing management accounting approach
related to increasing different strategies for expansion of small business unit (Klychova,
Faskhutdinova and Sadrieva, 2014). Thus, account receivable report is useful for
systematic management of monetary tools and funding to operate business activities
efficiently.
Thus, above mentioned management accounting reports are significant for utilizing
management accounting tools. It is interrelated with creating environment of enterprise for long
term sustainability at high level. Methods used for management accounting system are beneficial
for generating several kinds of ideas to implement action plans effectively. However, good
relationship between employee and employer can be obtained through utilizing these expressed
through mentioned management accounting components.
TASK 2
P3) Costing methods and differences between marginal and absorption pricing
Costing is considered as calculating price and expenses to implement business operations.
Therefore, costing technique is useful for deciding price of products related to production and
distribution system. In accordance to this, several costing methods are utilized for evaluating
price as well using market essential to reach out customer satisfaction. However, some of the
main costing methods can be described as below:-
Marginal costing:- under this costing method, management accountant of Big Swing
determines net profit through deducting gross profit margin to cost incurred on variable
expenses. Under this system, it is believed that decision making for short term period can be
processed to increase efficiency of small business unit at high level (Mete, Ünal and Bilen,
2014). Thus, marginal costing is helpful for calculating price as per purchasing raw material and
quality used in production system. In addition to this, it leads to prepare income statement that is
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beneficial to present financial performance of organization. On the basis of this tool,
organization can increase its effectiveness of entity. Thus, marginal costing is useful for short
term decision making process.
Interpretation:- Through marginal costing, income statement is prepared as well net
profit margin is evaluated. As per calculation, it is interpreted that Big Swing has incurred
expenses on business operations as 6600 and earned income for operating business activities as
21000. Therefore, gross profit is calculated as 14400. Therefore, it has been analyzed that
company has earned profit effectively as per which by applying different techniques,
organization can enhance its profitability at high level. Further, after evaluating gross profit, net
profit margin is to be measured by deducting it with variable expenses as 1800. Thus, net profit
margin is gained as 12600. Hence, it can be foretasted for further years that entity can increase
its profit earning capacity in further years that is useful for long term sustainability in market by
facing cut throat competition. In this process, it is useful for implementation and increasing
efficiency at large scale.
Absorption costing method:- This method is different from marginal costing because of
profit variation. It is because for calculating net profit, gross profit is deducted by total expenses
including variable and fixed overhead. However, it is beneficial for long term decision-making
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process. It is interrelated with maintaining business operations for making place of products in
market for long time periodicity (Oh and et.al., 2014). Therefore, heavy investment and large
size expenses can be incurred through this process. In this regard, absorption costing is related to
preparing income statement by gaining net profit margin for long term periodicity.
Interpretation:- Under this process, gross profit is earned as 14400. After that net profit
margin is earned by deducting gross profit to total expenses as variable overhead (1800) and
fixed overhead (3300). Therefore, total expenses incurred is 5100. Thus, net profit is measured as
9300. Therefore, absorption costing method is useful for measuring net profit through deducting
gross profit to total expenses incurred on business operations. In this regard, through this costing
method, it can be obtained that Big Swing can expand its business organization and increase its
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efficiency for long term sustainability. Thus, decisions can be made related to long time period
therefore effectiveness of firm is able to gain through this process.
Differences between marginal and absorption costing:- The main difference between
marginal and absorption costing is profit variation. Therefore, comparison between both costing
methods can be described as follows:- Profitability:- For preparation of net profit margin through marginal costing, gross profit
is deducted by variable expenses. While, on the other side, for absorption costing, net
profit is measured as deducting gross profit to total cost including expenses incurred on
variable and fixed overheads (Raviv and Kolka, 2013). Therefore, profit variation is one
of the compared tool for marginal and absorption costing.
 Time periodicity:- Decision-making process is done for both costing method is different.
In this regard, marginal costing is useful for short term period while absorption costing is
beneficial for long term decision-making process. Therefore, time periodicity is different
in both costing methods for processing decision and preparing strategies (Schmeisser and
et.al., 2014).
Hence, marginal and absorption costing methods are different from each other due to
profit variation and decision making tools. In addition to this, marginal and absorption costing is
different from each other for decision-making process (Umeji and Obi, 2014). However, income
statement is prepared by using both costing methods in different ways.
TASK 3
P4) Characteristics and drawbacks of budgetary control system
Budgeting and budgetary control system are useful for forecasting and decision-making
process related to further business operations. In this process, management accountant of Big
Swing recognizes entire business activities and further forecasts as well prepares strategy to
achieve enhancement of organization at high level (Amdee and et.al., 2014). Therefore, critical
evaluation is obtained for budgeting and preparing agenda related to effectiveness of entity. A
deep study including positive and negative aspects of budgetary control system can be explained
as follows:-
Merits of budgetary system:- As per critical evaluation of overall business operations
through financial and non economic tools. Therefore, different characteristics of budgeting is:-
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 Actual business performance is recognized by using financial and other tools.
 Different ideas are generated for strategic and risk management
 To enhance productivity and profitability of organization
 Useful to expand small scale entity including incinerating efficiency of firm.
 Helpful in maintaining and sustaining good reputation of entity for long term period.
 Able to increase business and competitive strategies of firm that is interrelated with
strength to face competition.
 Valuable for effectiveness of organization and gaining customer satisfaction at high level.
Drawbacks of budgeting:- Wrong prediction of business performance is critical for
effective planning procedure and preparing agenda for further implementation. Therefore, it is
risky to analyze actual business performance because of inaccurate calculation and inefficient
data that is interrelated with decision making in further years. In addition to this, it is costly to
prepare budget and preparing strategies regarding entire business operations. Thus, overall
business activities including economy and other sector's activities. In this regard, it is considered
as challenge for management accountant to prepare strategy related to coordination of all
organizational functions that affects entity's effectiveness (Carlton and et.al., 2015). Therefore, it
is determined that preparing budgeting is difficult due to focusing on overall business operations.
Hence, drawbacks and difficulties occur for budgeting can be understood as:-
 Wrong predictions over entire business operations.
 Costly to prepare budget because of multidisciplinary approach.
 Lack of coordination among organizational departments.
 Uncertain changes occur for operating business activities.
 Inefficient resources and fund to implement action plans and preparing strategies for
further business operations.
 Lack of coordination between employees and employer of firm.
Thus, it is required for management accountant of Big Swing to recognize all business
operations and preparing effective strategies for expansion of entity. It will be useful to enhance
service qualities of entity and increasing in demand for services. However, best use of resources
related to adequate allocation of resources and fund can be obtained. In addition to this, proper
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forecasting and decision making process is valuable for systematic management of overall
business performance. Moreover, positive and effective environment of small scale enterprise
can be created related to long term sustainability (Chenhall and Moers, 2015). Therefore, it is
necessary for management accountant of firm to analyze business performance and making
decisions related to proper management of entire business operations at high level. Thus, a
systematic planning procedure is able to create that affects organizational structure of the firm.
Hence, budgeting is considered as management accounting tool for forecasting and decision-
making process to achieve effective business performance. Hence, budgeting is useful approach
for forecasting and decision-making process related to further business operations. It influences
different factors of business entity to enhance service qualities and achieving effectiveness of
firm at high level. Therefore, systematic management as well optimum utilization of resources
and fund can be obtained effectively through this system.
Different budgetary systems are fixed, variable, semi-variable, cash, purchase and sales
are prepared for analyzing actual performance of entity and further making decisions for further
implementation. However, under cash budget, all information regarding cash transactions and
liquidity position entity is gained. It generated different ideas for production and distribution of
goods. In addition to this, for fixed budget, decisions which will be fluctuated according to
changes in production system are presented. On the other side, for variable budget, decisions and
strategies get changed according to flexible production and distribution of product services
provided by firm. Thus, budgetary systems are useful for preparing strategies and different
decisions regarding business operations. It is beneficial for optimum allocation of resources and
fund adequately.
P5) Different management accounting systems to solve out financial problems
There are various management accounting systems are presented that affects business
performance and provides tool for expansion of small scale entity as well enhancing service
qualities of firm. It includes financial, cost, inventory, performance and budgeting that is related
to increase efficiency of entity. In this regard, overall management of entire business activities
including economic, production of goods and inventory management can be obtained effectively
(Firouzi, Baglieri and Jaber, 2014). Thus, management accounting is multidisciplinary approach
that focuses on different components for effectiveness of Big Swing and making place in market
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