Analysis of Dell's Management Accounting Systems and Reports

This report provides a comprehensive analysis of Dell's management accounting practices. It begins with an introduction to management accounting and explores various systems, including cost accounting and inventory management. The report delves into different management accounting reporting methods, such as job costing and batch costing. It evaluates the benefits of these systems, including improved operational efficiency and cost reduction. Task 2 focuses on cost calculations, comparing absorption and marginal costing methods, and presents an income statement under marginal costing. Task 3 examines budgetary control, detailing advantages and disadvantages, and computes standard costs and variances. The report concludes with a comparison of Dell with another organization and analyzes Dell's response to financial problems. The report highlights the importance of management accounting in achieving organizational goals and objectives by enhancing skills and capabilities and by using various tools for planning and forecasting.

MANAGEMENT
ACCOUNTING
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Table of Contents
Introduction..........................................................................................................................................3
TASK 1.................................................................................................................................................3
P2 Explain the different methods used for management accounting reporting...............................4
M1 Evaluate the benefits of various management accounting systems...........................................4
D1 critically evaluate how management accounting systems and management accounting report
used in an organization....................................................................................................................5
TASK 2.................................................................................................................................................6
P3 Calculate costs per unit order under absorption and marginal costing.......................................6
TASK 3.................................................................................................................................................7
P4 Explain advantages and disadvantages of different types of budgetary control.........................7
A) Compute standard costs of PVC sheet and also determine difference between actual and
standard costs...................................................................................................................................8
B) Compute materials price and quantity variance..........................................................................8
M3 Analyze the use of different planning tools for forecasting budgets.........................................8
D3 Evaluate how planning tools helps in solving problems of Dell...............................................9
TASK 4.................................................................................................................................................9
P5 Comparison of Dell with another organization..........................................................................9
M4 Analyze how management of Dell will respond to financial problems in achieving
sustainable success...........................................................................................................................9
Conclusion..........................................................................................................................................10
References...........................................................................................................................................11
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INTRODUCTION
Manager’s role has increases as increasing complexities in the external market created
pressure on them to manage all the activities as without proper management an entity will not able
to earn its desired aims and the objectives. Dell has been selected for the given project report in
order to manage all their business activities in achieving desired aims and the objectives within a
given period. This project report is all about various management accounting systems and reporting
channel created in an entity. It also emphasises on two important technique such as marginal as well
as absorption costing to determine its overall significance in the business in handling variety of
challenges imposed on an entity. Budgetary controls are used in enhancing all the skills and the
capabilities along with the desired aims and the objectives develop by an entity in a prescribed time.
This project report is all about adopting tools and methods that helps in overcoming all the financial
problems incurred in the business as their desired aim is to accomplish all the goal and the
objectives in lesser time in order to remain ahead from all the market rivals currently giving tough
competition to an entity such as HP who fall under same sector.
TASK 1
P1Explain management accounting and states various kinds of management accounting systems
Management accounting is an important approach used by an entity owner in order to
accomplish all their aims and targets within a prescribed time. Attainment of all the goals and the
objectives in a particular time in order to beat all the competitors exists in the external market. It
can be defined as method that automates all the business functioning of Dell in providing all the
services and innovative products to its various customers who are currently falls in the overall
market share of Dell (Lal, 2009). They need to be retained in the business for the long time till an
entity makes higher business profit by charging lesser prices in order to seek their confidence and
loyalty that enhances overall skills and the capabilities of an entity.
Management accounting systems
Cost accounting systems- Cost is the primary concern for the management Dell which needs to be
ascertained in advance in order to provide ultimate advantage to an entity in accomplishing all the
goals and the objectives. Cost sheets are prepared by an entity in order to analyse the costs using
marginal or absorption costing which helps in accomplishing desired aims and the objectives within
a given time period.
Inventory management systems- Inventories play an integral role in the business in increasing
sales and the revenue of an enterprise as through this system all essential inventories will be
procured by the top management of Dell. Just in time used by Dell in which computers or laptops
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are purchased from the manufacture just to meet the orders of the customers as storing computers
required additional cost to be incurred by the business entity which decreases the overall income of
an entity. The stock valuation is also important using FIFO and LIFO method to ensure higher
income of an entity by selling out all their stuff held in the business.
P2 Explain the different methods used for management accounting reporting
Reporting is essential principle of the management of Dell as in order to communicate
important information from one department to another in completing all the tasks and duties in a
given period of time. Important aspects of the business controlling is the preparation of reports in
order to record all the transactions in the business for the beneficial of the business entity as their
desired aim is to achieve desired aims and targets within a given period. The basic objective of an
entity owner is to prepare reports in regulating current business performance of the business as
eliminating frauds is essential aim of an enterprise (SHAO, LIU and KONG, 2008). There are
various management accounting reports prepared by an entity owner in conveying important
information from top management level to the lower level of management is given as below:
Job costing- It is that approach in which job costing will be prepared by an entity for various
batches or units of production included in an entity which is essential in order to determine the
selling price o all these separate job costs just like a separate product manufactured by an entity.
The preparation of job costing will be helpful for an entity in order to convey all important
information regarding a particular product which is essential in order to grab higher market
opportunities in the external business entity.
Batch costing- Costing of all the products classified into various batches such as the computers of
Dell are classified into various batches so all the costs are separately determined in selling price of
different products or services of the business which needs to be enhanced with the passage of time
to benefit its variety of users.
M1 Evaluate the benefits of various management accounting systems
Basic advantage of utilising different kinds of management accounting principles in
analysing the current resources used in the business as cost incurred in the business will be
determined by the business enterprise (Choi, Kulick and Mayer, 2009). Marginal or absorption
costing technique will be used in order to determine the costs incurred in the business which in turn
helps an entity in order to gain desired aims and the objectives within a prescribed time period.
Operational efficiency of the management functions of Dell will get improved in order to
gain higher market advantage over its variety of competitors who held responsible for
accomplishing all desired aims and the objectives in eliminating all the threats located in the
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external market.
Reduction of all the current expenditures in the business will help an entity owner in order to
increase its overall income generated by them within a particular time period. Expenses are
recognised in advance using budgets. This will help an entity owner in order cut all less important
costs incurred in the business by increasing cash flow in the business from variety of sources to
attain all the goals and the objectives in a given time.
Cash flow generated by an entity will get improved with the passage of time as increasing
cash flow is the desired aim of the business as it is essential in order to enhance overall skills and
the capabilities of an entity (Chow and Van, 2006). Budgets are prepared for each and every
component in the business will increase the efficiency of all the singular components in order to
grab higher market opportunities in the external business environment where they face lots of
challenges which inspire an entity in order to beat all their competitors. The decisions based on the
results generated by the budgets in an entity will help an individual in generating higher market
return over the period.
D1 critically evaluate how management accounting systems and management accounting report
used in an organization
Systems and management accounting reports emphasises on recognising skills bad the
capabilities of Dell in order to communicate important information from one end to another by
streamlining the overall process in order to attain the entire goal and the objectives within a
prescribed period. There are various parameters used by an entity owner in order to enhance all the
skills and the capabilities in order to grab higher market opportunities are given as below:
Quality of services- The services offered by an entity to its variety of customers to gain their trust
and confidence in retain with the business for long time period. The wastage of resources will be
reduces as it increases cash flows and decreases additional expenditure incurred by the business
enterprise in operating their business (Ball, Kothari and Robin, 2000). Cost reduction strategies will
be adopted to regulate overall performance of an entity. Six sigma techniques will be used by an
entity in order to improve overall quality of all the business functions.
Aims and targets – Goals and the objectives framed by an entity will help in achieving desired
aims and the objectives in given a time period that helps in accomplishing desired objectives by
enhancing all the skills and the capabilities of an entity.
Competition- Reducing existing market competition by nurturing current skills of individuals in
order to face external market complexities imposed on an entity. The external burden will get
reduce by emphasises on the strengths and weaknesses of an entity in order to work upon their
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weaknesses to transform them into its core competencies in generating higher business outcome in
uplifting the current status of the business in the external industry.
TASK 2
P3 Calculate costs per unit order under absorption and marginal costing
Computation of unit production cost
Particulars Absorption costing Marginal costing
Direct materials 20 20
Direct labour 8 8
Variable manufacturing
overhead
4 4
Fixed manufacturing
overhead
10(500000/50000) -
Per unit cost 42 32
M2 Prepare income statement under marginal costing
Sales 2700000
Less variable cost
Opening inventory 0
Production 1600000
Closing inventory 320000
Variable selling 240000
Contribution 540000
Less Fixed cost
Fixed manufacturing 500000
Fixed Admin and selling 600000
Loss -560000
Particulars Marginal costing
Direct materials 20
Direct labour 8
Variable manufacturing
overhead
4
Fixed manufacturing
overhead
-
Per unit cost 32
Working notes
Opening inventory 0
Production 1600000
Closing inventory 320000
Interpretations
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Marginal costing is regarded as one of the important approach used in the business in
ascertaining the cost in the business. This technique emphasises on the variable costing that it
emphasises on developing all the sales mix of various products offered by an entity to its variety of
users takes places in the external market. This is also regarded as the contribution costing as in this
particular approach (DRURY, 2013). The contribution generated by a particular products will be
considered by an entity to be offered to the variety of customers in attaining all the goals and the
objectives in a particular business. The basic objective of an entity is to gain higher competitive
advantage over its variety of customers exists in the external market.
The marginal costing adopted by an entity that helps in generating higher sales and the
revenue in the near future for the betterment of the business. In this particular approach, only
variable cost is considered by the business without considering fixed costs excluding in the business
within a particular time period. This kind of costing will emphasises on variable costs as major role
in determining the overall costs incurred in the business. Fixed costs are taken as period costs which
are deducted from the total sales and the revenue of the business in a particular year in order to grab
higher market share.
TASK 3
P4 Explain advantages and disadvantages of different types of budgetary control
Budgets play an important role in the business for the betterment of the organisation as this
will emphasises on identifying all the skills and the capabilities of an entity. Budgets are prepared
by an individual for each and every component included in the business as their main motive is to
grab higher market opportunities in the external market. Budgets can be also be used as one of the
important tool of forecasting which helps in analysing the current financial resources in order to
predict the financial performance of an entity (Yigitbasioglu, 2017). Strengths and weaknesses of an
entity will help in enhancing current skills and the capabilities of the business. There are various
kinds of tools used under budgetary control in order to regulate performance of the corporation are
given as below:
Cash budget- This kind of budget prepared by an entity will focus on determining the position of
cash in the business which helps in eliminating all the short term obligations in an entity. Cash is
regarded as important component in the business which is essential factor in order to maintain
liquidity of the firm. Deficits and surplus generated in cash will helps in knowing the actual strength
of an entity owner in order to grab higher market advantage in the external market.
Advantages
 It helps in determining the market position of an entity in relation to the cash held in the
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business.
 Eliminating higher expenses in an entity by compensating the same with the available cash
in organisation.
Disadvantages
 It has lack of flexibility as cash budget prepared by an entity owner which decreases the overall
cash inflow in the business which needs to be analysed properly in order to gain higher market
advantage.
 Data can be manipulated by the middle managers in order to reflect true performance of an
entity in order to showcase its artificial financial performance.
A) Compute standard costs of PVC sheet and also determine difference between actual and standard
costs
Standard cost of PVC sheet= 11000/2.5*3.60= 15840
Difference= Standard cost-Actual cost
= 37400-15840
=21560
B) Compute materials price and quantity variance
Material price= (Standard price-Actual price)*Actual quantity
= (3.60-3.40)*11000
= 0.2*11000= 2200 F
Material quantity variance
= (Standard Quantity- Actual Quantity) *Standard price
= (10000-11000)*3.60
= -1000*3.60
=-3600 Adverse
M3 Analyze the use of different planning tools for forecasting budgets
Forecasting is one of the important tools used by an entity owner in order to predict the
future performance of an entity in order to grab higher market opportunity. Current financial
resources kept in an enterprise will be analysed using various parameters such as quality, returns,
credibility as all these factors are essential in order to maintain current performance of an entity as it
is important to create good brand image of the business in the external business enterprise.
Trend line created in order to showcase the performance of an entity in predicting the future
sales and the revenue generated by the business in a particular year (DRURY, 2013). This particular
approach is highly concerned with the statistical tool such as regression analysis. The intercept and
equation will help in predicting the future condition of an entity in order to determine the current
business of the business. Dell uses trend line in order to predict its future sales and the revenue
generated by them in the near future by considering each and every factor that are essential for the
business in accomplishing their desired aims and the objectives.
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D3 Evaluate how planning tools helps in solving problems of Dell
It is essential for Dell to determine its current business objectives as this will help in
achieving desired aims and the objectives in lesser time period as compared to its competitors. The
aim of Dell is to increase its current profitability by 10% top satisfy all the customers of an entity
by focuses on all its strengths and weaknesses (Otley and Emmanuel, 2013). The current business
practices are improved by removing all the weaknesses of an entity in order to grab higher market
share. Quality technique will be used in the current business of Dell as their current costs incurred
in the business are higher which needs to be removed to enhance the skills and the capabilities of
the organisation. There are various ways which needs to be adopted by an entity in order to grab
higher market aims and targets which is essential in expanding their current business aims and
targets are given as below:
Expanding sales- Sales generated by an entity will be increases by enhancing all the skills which is
important aspects in the organisation. The basic factor required to generate higher share of sales and
the revenue in increasing popularity of the current business of Dell.
TASK 4
P5 Comparison of Dell with another organization
The biggest competitor of Dell is Hp who is giving tough competition to the current business
enterprise by gaining higher market share. The comparison among both the entity will be made on a
common topic that includes cost factor regarded as the essential factor in an enterprise. The cost
incurred in the business of Dell is higher as compared to their competitors Hp which is making
higher difference in the generation of higher profit (Renz, 2016). Cost is ascertained by Del using
marginal is not enough as they are ignoring the fixed cost that is essential factor in an enterprise.
The narrow aspects of an entity will restrict an entity’s performance in generating higher outcome
for their business in the near future. Apart from cost factor, Dell is required to emphasise on other
aspects of their firm such as administrative expenses as higher inclusion of these expenses will
decrease all the cash flows in an enterprise.
M4 Analyze how management of Dell will respond to financial problems in achieving sustainable
success
Balance score card- It is important tool of strategic performance metric used to determine the
current performance of an entity in order to grab higher market opportunities in the external
business environment. It has four important success pillars such as financial perspective, internal
business process, customer’s perspective and learning and growth. All these parameters will help in
building strong and the best suitable model.
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Value chain analysis-This kind of analysis adopted by an entity owner in order to recognise its core
competencies which increases their skills and the capabilities in order to grab higher competitive
advantage in order to achieve desired aims and the objectives (Kaplan and Atkinson, 2015). This
can be used to analyse the overall logistics of a particular business in order to manage all the
business activities of the business in order to grab higher market advantages for the beneficial of the
business enterprise of Dell organisation.
CONCLUSION
It can be concluded from the above assignment that management accounting tools and
techniques play a significant role in crating perfect balance in an entity. This project report stresses
on the preparation of income statements under marginal to comment on the results generated from
the techniques. The utilisation of all techniques helps in ascertaining the cost per unit of product
which is essential to determine for enhancing the overall efficiency of the business enterprise. This
report emphasises on preparing variance report using standard costing to analyse the current
performance o an entity in order to improve its overall business performance within a given period
to achieve all desired aims and the objectives in a given time.
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REFERENCES
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Springer.
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production system from a strategic management, management accounting, operations
management and performance measurement dimension. International Journal of Production
Research. 53(2). pp.590-606.
DRURY, C. M., 2013. Management and cost accounting. Springer.
Yigitbasioglu, O., 2017. Drivers of management accounting adaptability: The agility lens. Journal
of Accounting & Organizational Change.
Ball, R., Kothari, S.P. and Robin, A., 2000. The effect of international institutional factors on
properties of accounting earnings. Journal of accounting and economics. 29(1). pp.1-51.
Chow, C. W. and Van, W. A., 2006. The Use and Usefulness.
SHAO, P., LIU, L. and KONG, A. G., 2008. Analysis on the Sensitive Factors between Executive
Officer’s Payment and Corporate Performance [J]. Journal of Finance and Economics. 1. p.010.
Choi, N. G., Kulick, D.B. and Mayer, J., 2009. Financial exploitation of elders: Analysis of risk
factors based on county adult protective services data. Journal of Elder Abuse & Neglect. 10(3-
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Lal, J., 2009. Cost Accounting 4E. Tata McGraw-Hill Education.
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Online
Sales Volume Variance, 2013. Available through: <
http://accountingexplained.com/managerial/standard-costing/sales-volume-variance> [Accessed on
16th April 2017].
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