Management Accounting: Systems, Reporting & Financial Solutions

This report provides a comprehensive overview of management accounting, emphasizing its role in organizational decision-making and financial management. It begins by explaining management accounting and its essential requirements, detailing various methods used for reporting, including budgeting documents, job pricing analysis, and productivity monitoring frameworks. The report includes a calculation of costs using different techniques, such as marginal and absorption costing, to prepare an income statement. It further analyzes the advantages and disadvantages of different planning tools used for budgetary control and assesses how organizations adapt management accounting systems to respond to financial problems. The case study of Nasty Gal Vintage illustrates the practical application of these concepts, highlighting how effective management accounting can lead organizations to sustainable success. This document provides valuable insights into the integration of management accounting within organizational processes and its impact on strategic decision-making.

Management
accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
P1. Explain management accounting and give the essential requirements of different types of
management accounting systems.................................................................................................1
P2. Explain different methods used for management accounting reporting................................3
M1. Evaluate the benefits of management accounting systems and their application within an
organisational context..................................................................................................................6
Critically evaluate how management accounting systems and management accounting
reporting is integrated within organisational processes...............................................................6
TASK 2............................................................................................................................................6
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................6
Absorption costing...........................................................................................................................8
Flexed Budget for the actual activity...........................................................................................9
M2. Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents.....................................................................................................9
PART B.........................................................................................................................................10
P4. Explain the advantages and disadvantages of different types of planning tools used for
budgetary control.......................................................................................................................10
M3. Analyse the use of different planning tools and their application for preparing and
forecasting budgets....................................................................................................................11
PART C.........................................................................................................................................11
P5. Compare how organisations are adapting management accounting systems to respond to
financial problems.....................................................................................................................11

M4. Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success..........................................................................................13
Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organisations to sustainable success..............................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Managerial accountancy is the act of evaluating a company's costs and activities by creating
quarterly data such as from an income statement, a capital structure, and a monetary statement,
among others (Ahadiat, 2013). It aids the company in understanding its existing fiscal place in
the industry, on the foundation of that which managers make subsequent decisions in attempt to
attain stated aims and targets. Administration is responsible for converting accounting
transactions into material should possess so that successful policies and initiatives may be
developed. Each company, regardless of company scale, must keep its general ledger in order to
portray information to its investors in the hopes of receiving the most monetary assistance
possible. The company which is discussed in the report is Nasty Gal Vintage which is named
after a Betty David record is selling vintage clothing on eBay and also engages in a lot of
activities apart from that and thus it is very crucial to analyse and evaluate all of its aspects as it
is a company which has covered a larger market share in terms of volume and thus is very
profitable and lucrative in the industry so far. The proposal covers a wide range of managerial
accountancy techniques as well as their key needs in company operations. In particular, the
managerial type of monitoring and several accounting methodologies for determining the income
statement performance are described in this study. In addition, the study specifically explains
multiple kinds of budgeting technology to enable managers in budgeting process, as well as their
benefits and drawbacks. Besides that, all other areas of managerial accountancy in the
framework of Nasty Gal Vintage are described in this document.
PART A
P1. Explain management accounting and give the essential requirements of different types of
management accounting systems
Managerial accountancy is the amount of available knowledge to enable managers
interprets fiscal facts into relevant and reliable statistics so that successful approaches and
strategies may be developed for the improvement of a company (Alleyne and Weekes-Marshall,
2011). As a result, managerial accountancy is an important aspect of a business that helps
companies recognise their real economic presence in the world by producing yearly fiscal
statements. For this reason, administration is made responsible for performing these activities
utilizing traditional managerial accountancy methods such as pricing optimization, stock

administration, and standard costing, among others. Nasty Gal Vintage would be capable of
achieving potential development and intended targets once the administration has gathered more
trustworthy and useful information from finance statements produced by the accounting
supervisor. It is critical for Nasty Gal Vintage administration to determine if the company is
moving in the correct path or if adjustments to current programs and strategies are required. With
these bookkeeping methods, it could be simply obtained.
Use of managerial accountancy processes is crucial: Greater productivity: Utilizing various managerial accountancy techniques aids in
determining the firm's and industry's present positions. For instance, a cost optimization
technology can assists managers in determining how customers perceive the rates
imposed by a business for its goods and operations. This would aid managers in
formulating market strategy that would result in a large consumer foundation.
 Assessment of effectiveness: It assists in determining and assessing an organization's
total results by evaluating real to quality standards that aids administration in recognising
any discrepancies, if any, that limit the firm's ability to expand. It allows managers to
create efficient rules and strategies for managing and controlling corporate activities,
resulting in increased overall productivity (Bloom, Sadun and Van Reenen, 2016).
 Efficient managerial influence: Assist managers in monitoring and regulating company
transactions by creating efficient strategies for the future in order to accomplish stated
aims and targets within a certain period of timeline by evaluating operational expenses
and procedures.
Various accountancy methods for administration:
 Cost optimization methods: These processes assist managers in evaluating the
accordance with its terms of prospective consumers in relation to the cost the business is
charging for their solutions and goods at the moment. It aids managers in formulating
successful marketing approaches after calculating the overall responsibility of providing
goods to the desired audience. This would support the business in preventing committed
consumers from switching to competitors' goods and solutions. Nasty Gal Vintage for
instance, manufactures apparel and other products, and so confronts stiff rivalry in the
marketplace. As a result, implementing such a method can assist an organization in
maintaining devoted clients by establishing rates based on their desire to pay. Such a

method is much more useful in evaluating the purchase intention of prospective
consumers, on the basis of which price policy decisions are formed. It aids the
organisation in maintaining satisfied consumers for a prolonged length of duration by
increasing overall sense of happiness (Caglio and Ditillo, 2012).
 Stock control technology: It is a very efficient financial administration framework that
allows Nasty Gal Vintage mangers to determine the real stock on hand. This would allow
managers to determine whether or not the business has enough products to fulfil customer
necessities. Employing such a method enables the organisation save money on stock
because the sales management simply orders product from vendors whenever the
business needs it.
 Standard costing method: This is an accountancy method that informs control of the
project price involved in the production of particular goods and activities. For this, Nasty
Gal Vintage administration must initially evaluate the viability of creating goods and
their consumer expectations, on the foundation of which decisions on costing system to
make certain items with the goal of achieving optimum productivity must be established.
For instance, the need for apparel grows with the increase in festivities, therefore
allocating the highest expense to create clothes results in a lucrative conclusion for Nasty
Gal Vintage. Job pricing method: This type of accountancy scheme aids managers in allocating costs
to a single item or set of goods following determining potential results. Utilizing such a
method, knowledge about estimated expenses is communicated to a customer, and
expenses are compensated. It assists the finance director in determining the amount of
price that must be expended during the production cycle. Nasty Gal Vintage for
instance, manufactures apparels and other products which have a large customer base
both online and offline, resulting in a large number of clothing related items that are
produced in response to marketplace need, with correct standard costing facilitated
through the use of such an accountancy information framework (Chathurangani and
Madhusanka, 2019).
P2. Explain different methods used for management accounting reporting
Financial management reporting can help with strategy, judgement call, regulation, and
measurement and reporting. According to the regulations, such plans are produced on a regular

schedule all through the budgeting and forecasting cycle. Even though a lot of important choices
rest on the accuracy of such a study. Such data are evaluated by managers, who transform them
into meaningful data for the company. Nasty Gal Vantage employs a variety of techniques for
creating financial statements, including the following:
 Budgeting document: This type of management accounting is particularly useful for
assessing a financial operations and helping managers review their divisions' activities
and keep costs under line. To comprehend the strategies of their firm, the firm creates a
bigger plan. The predicted cost is based on real spending from prior seasons. The budget
of a company is made up of all of the company's performance and expenses. Nasty Gal
Vantage must meet its respective aims and targets within the allocated cost. Management
accountancy reports are linked to budgets and assist managers in providing rewards,
awards, and efficiency gains to staff as well as negotiating a deal with customers and
subcontractors. As a result, a financial plan is critical for any business (Christensen and
et, 2015).
 Job pricing analysis: This study details all costs associated with a certain program that
was sponsored by the company. They're usually paired with an expected earnings figure
so that the management may assess the company's effectiveness. It aids in the
identification of the company's higher-earning regions, allowing managers to focus on
extra requirements instead of spending energy and money on jobs with lower
profitability. Job pricing reports are also useful for tracking spending as a program
progresses, allowing you to identify and eliminate inefficiency as expenditures run out of
hand. Nasty Gal Vantage's administration may simply examine the recordings of jobs
completed as well as the overall productivity of team members using this application in a
methodical and effective manner.
 Productivity monitoring framework: At the time of termination, such sort of analysis is
generated to evaluate the organizational effectiveness as a group rather than for each
individual worker. Managers at Nasty Gal Vantage utilize this information to make
important policy options about the team's growth. This type of analysis provides a
detailed look into a company's operations. In order to preserve detailed measurements of
their approach against the company's goal, success reports serve a crucial part in a

company. The primary emphasis of this research is on fiscal conflicts that aid in
evaluating and controlling an organization's true quality (Cinquini and Tenucci, 2010).
 Production and stock document: This is an essential summary that aids in the
productive and successful management of actual count and production methods. Direct
labour expenses, stock wastage, and per-unit operating expenses are all included in this
analysis. Nasty Gal Vantage's management analyze the firm's numerous parts and
components to discover opportunities for development, and reward the best-performing
departments with rewards and compensation.
 Accounts receivables ageing analysis: If a firm expands credits to its customers, this
analysis is a comprehensive method of controlling working capital. Nasty Gal Vantage's
management uses an accounts receivables ageing analysis to discover problems with the
firm's recovery technique. Whenever a large percentage of customers are unable to repay
their loans, the lending rules of the company must be tightened. Periodic accounts
receivables ageing method is highly helpful in preventing the collecting team from
neglecting older receivables.
 Price management accountancy indicates: This analysis is important when a
management wants to figure out how much an item costs in their company. Outgoings,
natural resources, personnel, or any additional costs are considered. The statistics are split
by the price of the completed article. These price sections highlight all of the data
pertaining to the manufacturing method. The ability to realise the stock's pricing as well
as its market value is provided by the expense management analysis. Calculation of
profitability and tracking via such analysis provide a comprehensive overview of the
costs associated with the study's manufacturing and purchase. This study includes weekly
employment prices, stock wastage, and operating prices since it provides an accurate
picture of all expenditures that is critical for maximum capacity utilization across all
divisions (da Silva, Llewellyn and Anderson-Gough, 2017).
It is critical for managers to utilize such techniques in order to make sure that the company
operates effectively and efficiently. Such strategies are suitable for examining manufacturing
costs and estimating profitability. It's critical for Nasty Gal Vantage's success. To develop a
financial statement that will aid in the achievement of specific goals within the allocated
expenditure.

M1. Evaluate the benefits of management accounting systems and their application within an
organisational context
Accountancy for administration serves a critical function in effectively controlling and
maintaining monetary operations. It is critical for a company to use a variety of financial
reporting, like task bookkeeping methods and pricing optimization, to achieve optimal and
productive valued outcomes. This form of accountancy information methodology is utilised with
the goal of boosting a firm's revenue and efficiency so that it would achieve a long-term place in
the market in which it is operational. Managerial accountancy aids managers in the creation of
statistics relating to employee productivity. The gathering of precise and reliable data aids
managers in carrying out all company activities and tasks efficiently.
Critically evaluate how management accounting systems and management accounting reporting
is integrated within organisational processes
It is critical for Nasty Gal Vantage's management to develop presentations using necessary
details and historical statistics in necessary for the firm to work effectively and efficiently.
Managers could also assess an entire efficiency of the system. This is indeed critical while
making investing selections. Another of the key goals of utilizing a reporting platform is to
enhance the company's development. Nasty Gal Vantage uses a variety of monitoring
methodologies and approaches, including progress reports, budgeting reports, accounts
receivables reports, job pricing reports, and stock and distribution reports. Such techniques aid in
reducing waste and increasing profitability (Galinova, 2017).
TASK 2
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income statement
using marginal and absorption costs
Cost: It relates to the quantity of money spent to create or purchase anything in addition to
make a gain from the sale of those commodities. To put it another way, expense is primarily a
value of the energy, money, duration and commodities, liabilities, as well as other factors that
must be spent in the implementation of various company operations. These costs are associated
to the materials, personnel, running costs, and other costs involved in the manufacturing
processes. The organization has three ways for determining net income throughout this case.
Nasty Gal Vantage is a producing firm; therefore it must calculate the expenses associated with

various commercial efforts to attain good financial performance and long-term viability. It
instructs managers to reduce waste as much as possible to maximize revenues. Marginal costing
and absorption costing are the 2 most used pricing approaches. It is also described in the
following sections:
 Marginal pricing is a way of calculating net efficiency that only considers variable
expenses. When an organisation produces one additional piece of production in addition
to the original production, this strategy is helpful. Sometimes it raises or lowers the
overall price of manufacturing, depending on the amount of products generated. Marginal
cost, often called as variable cost, comprises personnel and commodity expenses, as well
as a fraction of the set rate that is projected (Harper and Dunn, 2018).
 Absorption pricing is yet another useful accounting system that incorporates all sorts of
expenses, including adjustable and permanent expenses that have an impact on net
income. When calculating net income, it takes into account both dynamic and permanent
costs. For instance, direct expenses comprise the price of labour, the price of basic
commodities, and the expense of maintenance. Owing to the existence of permanent
costs, the net income of the firm diminishes, making it a little less appealing to most
businesses.
Cost Cards
November
Sales = 70* 10000 = £ 700000
Direct Materials = £100000
Direct Labour = £ 150000
Fixed Overheads = £ 250000
December
Sales = 70* 8000 = £ 560000
Direct Materials = £100000
Direct Labour = £ 150000
Fixed Overheads = £ 250000
Inventory = £ 2000 units

Absorption costing
Profit as Per
absorption costing
£s November
£s
£s December
£s
Turnover 700000 560000
Less Full cost of sales 500000 400000
Direct Material cost 100000 100000
Direct Labour cost 150000 150000
Fixed manufacturing
overhead
250000 250000
Less:Closing Stock 100000
Gross Profit 200000 160000
Less: Under
absorption
0 50000
Profit 110000
Marginal costing
Profit as Per
absorption costing
£s November
£s
£s December
£s
Turnover 700000 560000
Less Full cost of sales 500000 400000
Direct Material cost 100000 100000
Direct Labour cost 150000 150000
Fixed manufacturing
overhead
250000 250000

Less:Closing Stock 100000
Gross Profit 200000 160000
Flexed Budget for the actual activity
Particulars Budget Actual Variances Variances (%)
Sales 100000 122000 22000 22.00%
Less: Cost of
Goods sold
87500 114500 27000 30.86%
Direct Material 50000 60000 10000 20.00%
Direct Labour 25000 28500 3500 14.00%
Variable
Overhead
12500 15000 2500 20.00%
Gross Profit 12500 7500 -5000 -40.00%
Less: Fixed
Overhead
10000 11000 1000 10.00%
Net Profit 2500 -3500 -6000 -240.00%
M2. Accurately apply a range of management accounting techniques and produce appropriate
financial reporting documents
Accountancy procedures can be divided into 2 categories:
 Standard costing is a good strategy for determining prospective viability by taking into
account a variety of factors such as potential sales, expenditures, and desire. Several
businesses favour this strategy for accurately predicting results.
 Nearly every single organisation, particularly Nasty Gal Vantage, uses marginal costs. So
that only changeable expenses are taken into account when calculating net earnings
(Heinzelmann, 2016).