Comprehensive Management Accounting Report: UCK Furniture Analysis

This report provides a comprehensive overview of management accounting, focusing on its application within the context of UCK Furniture. It begins by defining management accounting and its importance in organizational decision-making, differentiating it from financial accounting and highlighting key management principles like credibility and relevance. The report then explores various management accounting systems, including cost accounting, inventory management, and price optimization, detailing their essential requirements and applications within UCK Furniture. It further examines different management accounting methods, such as job costing and performance reports, and evaluates the benefits of these systems. The core of the report involves calculating different cost techniques, including absorption costing and marginal costing, to prepare income statements. It also includes variance analysis, covering material, labor, and overhead variances, to assess and control business performance. The report concludes by applying a range of management accounting techniques to produce financial reporting, demonstrating the practical use of these tools in managing and improving organizational efficiency.

Management
Accounting

INTRODUCTION
Management accounting refers to the provision used for making informed decision-
making using accounting information in order to fulfil the objectives of the organisation. They
decide the better way of doing the business and aid to the management for better performance to
execute the functions (Alsharari and Al-Shboul, 2019). In this report the organisation is UCK
furniture that produces one product that is desk and is trading two division of table and Drawer.
In this report, it is being discussed about the types of management accounting system and its
essential requirement for the organisation has been discussed. Different methods used for
accounting system and its application has been analysed for the firm and its benefits. Evaluating
the different types of cost and its techniques to prepare the financial statements such as marginal
cost and absorption costing to evaluating the different system. It is being determines the types of
budgetary tools and its advantages and disadvantages and comparing the accounting problems
faced by different organisation.
TASK 1
P1. Determining the management accounting system and their essential requirement and types of
management accounting system
Management accounting- This refers to the tool that is identified the managerial
accounting and financial statements which help them in providing best method to take the
decisions. In the context of UCK furniture, this system helps in understanding overall financial
positions to carefully carry out the activities and monetary function in the organisation.
Management principles- These are very basic principles which need to be follow and
adhere in order to enhance the organisational efficiency. To increase the overall performance of
the selected company, following principles are as follows-
 Credibility- This refers to the taking appropriate method to take the responsible decision
and shareholder and it is more likely to put the capital into the firm. For the UCK
furniture, this helps in improving the credibility of the organisation in the eyes of investor
and creditors (Ameen, Ahmed and Abd Hafez, 2018).
 Relevance- As, proper information is very important key to handle and monitor the
overall functions of the organisation and that leads to certain benefits to take informed

decisions. For the selected organisation, this relevance information principles helps in
taking effective decisions and avail all benefits.
Difference between financial accounting and management accounting
Basis Management accounting Financial accounting
Meaning This concern with dealing with
many financial activities such
as planning, organising all
financial information in the
organisation.
This termed as taking all
necessary financial
information which help the
company in taking informed
decision of the company.
Purpose The purpose of this
management accounting to
handle and regulate internal
process.
This useful in taking effective
decisions regarding the
external environment of the
company.
Uses This helps in taking effective
decision regarding the overall
business process which help in
determining the success of the
firm.
This is very useful for
externals such as investor,
shareholder and competitors.
Management system- This concern with improving the internal process that will lead to
improving the overall operational and financial activities to enhance the effectiveness. Some of
the system are as follows-
 Cost-accounting system- This kind of accounting system controls the all kind of cost
and expenses which is related to the different types of organisational functions. It
basically deals with handling all process of raw material that is used in the production
stages and turns it into finished goods and services (Azudin and Mansor, 2018). In the
context of UCK furniture, the essential requirement of this system is to controlling and
monitoring all kinds of cost which is optimized the cost information. This is also helping
the management in fixing the adequate cost to fulfil the ease in processes.

 Inventory management- This includes all aspects such as regulating and fixing the
purchases from the suppliers and customers. This basically depends on the different types
of products that concern with sell through channel. This controls end-to-end production
process that managing the business processes and forecasting the demands and other
accounting system (Fleischman and McLean, 2020). This promote and provide essential
requirement to the selected organisation in taking important decisions regarding the
production process and integrating all useful information which is beneficial for the
company. This gives the support to the management in taking essential improvement and
take effective analysis of the inventory management and gives the useful decisions for the
company.
 Price optimising system- This system useful in analysing and focusing the key areas
such as margin sales and monitoring the number of conversion which is useful in the
management process. This is important factor which is very important to consider by the
company and that influences the purchasing power of customers. It plays the necessary
role in monitoring and regulating the pricing decisions that decides the success and
failure of the firm. For the UCK Furniture, the essential requirement is to handle and
regulating the expansion of business and promote the effectiveness regarding the pricing
decision which is taken by organisation.
Management accounting
systems
Uses Application
Cost accounting system This helps in providing the
estimating cost and leads to
proper control of all expenses
in the management process.
UCK Furniture need to access
this system to successfully
implement the activities and
functions.
Price optimising system This gives proper control on
the pricing policies which is
decided by organisation. This
facilitates in evaluating the
maximising of profit for the
management (Gibassier and
UCK Furniture is also using
this to regulates the whole
process of pricing strategies to
enhance the profit of all types
of management.

Alcouffe, 2018).
Inventory-management
system
This helps in monitoring and
regulating the process of raw
material that is converted to
the finishes goods.
In UCK Furniture, this system
will help in handling all
inventory system and that
gives benefits to the
organisation at greater level.
P2. Explaining types of management accounting methods
In organisation, reports are playing important part in recording the essential transaction
which help in taking decisions regarding the many operational activities such as regional sales
and profitability activities (Gunarathne, Lee and Hitigala Kaluarachchilage, 2021). This is
important for all managers to execute and formulate necessary business decisions which will
help in taking necessary business decisions which will lead to growth and success of an
organisation. In the context of selected organisation, this report will help in undertaking the
strategical and analytical functions and provide necessary informations. Followings reports area
as follows-
 Job costing reports- This reports useful in analysing the right way to conduct the
activities of job so that they provide meaningful output to the organisation. This define
the problem during the job and completed after and need to find the error in accesory. In
the context of UCK Furniture, they help in comparing the actual budget cost and helps
the manager in taking appropriate decisions regarding job schedule. It is benefits to the
company to make extra effort in achieving the objectives and goals.
 Performance report- Business report is very important way of handling the valuable for
the organisation and provide help in analysing the forecasting revenue and expenses for
the management. This facilitates in assisting to the top managers who were required to
evaluating the performance of the employees and gives the adequate decision regarding
them. In the context of selected organisation, this report help in giving proper help in
achieving the organisational objectives of the company and measuring the report
parameters of the employees performance.

M1. Evaluating benefits of management accounting system and application
Management accounting system helps in evaluating the overall efficiency of the company
that provide numerous benefits to the management system (Hiebl and Richter, 2018). In cost
system they provide support to the company in deciding the cost of activities for the selected
organisation. Price optimising is also very beneficial in providing effective decisions regarding
the establishing of the price and increase the effectiveness. Inventory management system is
useful in promoting and monitoring the process of raw material and its applications are useful in
UCK Furniture also enhance the efficiency of the management. This is very effective in the form
of understanding the requirement and needs of an organisation an accordingly formulating the
policies and regulating them effectively.
TASK 2
P3. Calculating different cost techniques to prepare income statements
Cost is amount that determining the money that required to spend on the creation and
production of product and services for the company. It helps in evaluating the actual expenditure
and cost that values the money which need to pay by customer. This provide very effective in
identifying the status of cost structure which gives the maximising the order of company and
increase the profitability. In the UCK Furniture, this will help in understanding the efficiency and
effectiveness of the organisation. This tells the how much cost should be charged to regulate it
thoroughly for the management of the firm and leads to improving the profitability.
Absorption costing- This refers to costing techniques that depicts all kinds of
manufacturing cost which is used to absorbed the units produced. This costing technique is very
useful in managing and controlling the risk associated with the management of the company. In
the context of UCK Furniture, this helps in formulating the cost of manufacturing cost that will
be beneficial in running the task and objectives of the organisation (Khosiev and et.al, 2019).
Marginal Costing- This technique is charged to unit cost as fixed cost for the period by
completing the period by completing and written off against the useful and managing the
analysis of operational functions. In the context of selected organisation, this is very beneficial in
managing the cost analysis and gives the optimum results to the management of the company.
This methods helps in understanding the overall effectiveness of the functions of the company.

January February
Particulars Details Amount
(Pounds) Details Amount
(Pounds)
a) Units
produced 11000 9500
b) Direct
Material (4kg*3pound/kg*11000) 132000 (4kg*3pound/kg*9500) 114000
c) Direct Labor (4 hrs* 2pound/hr*11000) 88000 (4 hrs* 2pound/hr*9500) 76000
d) Variable
Overhead (5pounds/desk*11000) 55000 (5pounds/desk*9500) 47500
e) Prime Cost 275000 237500
f) Production
overhead 20000 20000
g) Cost of goods
produced 295000 257500
h) Variable sales
cost (1pound/desk*11000) 11000 (1pound/desk*9500) 9500
i) fixed selling
cost 2000 2000
j) Cost of
Goods sold 308000 269000
k) Profit= l-j 77000 63500
l) Sales (35 pounds/desk*11000) 385000 (35 pounds/desk*9500) 332500

Cost Card Using Marginal costing
January February
Particulars Details Amount
(Pounds) Details Amount
(Pounds)