A Comprehensive Report on Management Accounting at Burberry Group
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This report provides a comprehensive analysis of management accounting systems, focusing on Burberry Group PLC. It explores the essential requirements of different management accounting systems, including cost management, job costing, inventory management, and price optimization. Various methods used for management accounting reporting, such as sales reports, budget reports, and performance reports, are explained. The report evaluates the benefits of management accounting systems within an organizational context, emphasizing planning, controlling, organizing, and decision-making. It also critically assesses the integration of management accounting systems and reporting within organizational processes. Furthermore, the report discusses benchmarking, cash flow budgeting, and discounted cash flow analysis as key components of effective management accounting practices for enhancing profitability and efficiency within organizations like Burberry Group PLC.
Accounting Management
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Table of Contents
Task 1...............................................................................................................................................4
Task 2.............................................................................................................................................10
References......................................................................................................................................20
3
Task 1...............................................................................................................................................4
Task 2.............................................................................................................................................10
References......................................................................................................................................20
3
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Task 1
Introduction
We all know that in a management system internal system is one of the most important things to
maintain. In order to maintain the proper management, internal information administration needs
to be maintained in a proper way. To improve the profit in any administration various methods
and techniques are used in a management accounting and it tracks the internal information. We
have many advantages in a management accounting system, but making resources work in the
administration is one of the prime advantages of management accounting. With the efficiency of
the resources, the profitability can be enlarged. To enlarge the effective expenses and diminish
the costing reports can be written on based of several departments.
Analysis will be done by Burberry group plc in this report as per the profitability and the
relevance of management accounting. Thomas Burberry is the founder of this company and this
company was established in the year 1863. In this company latest administration revenue is GBP
2732.8 million and headquarters of the company is situated in London. The comprehensive
analysis of the management accounting will be shown in this assignment.
Part 1
A. Explain management accounting and give the essential requirements of different types
of management accounting systems.
For tracking the internal information of the company about their financial background,
management is one of the finest systems. We all know that there are several different systems; by
this sense, we can say management system is an amalgamation of a diverse range of systems. It
will be discussed here-
Cost management –
Cost management can be defined as a procedure to make plan and control the budget of the
company. It is process of management accounting that gives a company to presage impending
expenses to support decline the chance of dealing over budget. The expenses can be decreased by
managing the profitability and the cost of the various production processes can be managed by
cost management system.
4
Introduction
We all know that in a management system internal system is one of the most important things to
maintain. In order to maintain the proper management, internal information administration needs
to be maintained in a proper way. To improve the profit in any administration various methods
and techniques are used in a management accounting and it tracks the internal information. We
have many advantages in a management accounting system, but making resources work in the
administration is one of the prime advantages of management accounting. With the efficiency of
the resources, the profitability can be enlarged. To enlarge the effective expenses and diminish
the costing reports can be written on based of several departments.
Analysis will be done by Burberry group plc in this report as per the profitability and the
relevance of management accounting. Thomas Burberry is the founder of this company and this
company was established in the year 1863. In this company latest administration revenue is GBP
2732.8 million and headquarters of the company is situated in London. The comprehensive
analysis of the management accounting will be shown in this assignment.
Part 1
A. Explain management accounting and give the essential requirements of different types
of management accounting systems.
For tracking the internal information of the company about their financial background,
management is one of the finest systems. We all know that there are several different systems; by
this sense, we can say management system is an amalgamation of a diverse range of systems. It
will be discussed here-
Cost management –
Cost management can be defined as a procedure to make plan and control the budget of the
company. It is process of management accounting that gives a company to presage impending
expenses to support decline the chance of dealing over budget. The expenses can be decreased by
managing the profitability and the cost of the various production processes can be managed by
cost management system.
4
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Job costing-
In the various jobs of that are available in the production process, the cost is allotted with this
system. The various types of job can be pooled with this system and the nature of various jobs
can be understood. The overall expenditure can be reduced by this system.
Inventory management system –
In the administrations to manage the stock, various systems of managing inventory are used.
The usefulness of the resources can be enhanced by this system and it has the efficiency to
maintain proper system of managing inventory augments. With this system a company can see
completely small moving parts of its operations, allows making better decisions. Various
inventory managers’ focuses on different sections of chain –but small companies are usually
interested in sales end of its line.
Price optimization system –
By this procedure, the enthusiasm of the clients can be recognized with the help of this system in
the market; the worth of the product can be understood. To decreases all the expenses and
strengthen the profitability this system is used mainly.
B. Explain different methods used for management accounting reporting.
Sales report
From various other departments’ value of total sales can be consolidated in details. It can be seen
the various trends going in sales volume over specific time , but it analyzes its sales volume on
a certain time and analyzes the various steps of the selling process and the performance of the
sales dealer. To measure and calculate the performance of various products, several strategies
need to be implemented. It helps to restructure the entire budget report in an easy manner.
Budget report-
The performance of the administration can be compared by using this report. This is specially
made to calculate the expenditure and make a proper pale to maintain the expenses of the
5
In the various jobs of that are available in the production process, the cost is allotted with this
system. The various types of job can be pooled with this system and the nature of various jobs
can be understood. The overall expenditure can be reduced by this system.
Inventory management system –
In the administrations to manage the stock, various systems of managing inventory are used.
The usefulness of the resources can be enhanced by this system and it has the efficiency to
maintain proper system of managing inventory augments. With this system a company can see
completely small moving parts of its operations, allows making better decisions. Various
inventory managers’ focuses on different sections of chain –but small companies are usually
interested in sales end of its line.
Price optimization system –
By this procedure, the enthusiasm of the clients can be recognized with the help of this system in
the market; the worth of the product can be understood. To decreases all the expenses and
strengthen the profitability this system is used mainly.
B. Explain different methods used for management accounting reporting.
Sales report
From various other departments’ value of total sales can be consolidated in details. It can be seen
the various trends going in sales volume over specific time , but it analyzes its sales volume on
a certain time and analyzes the various steps of the selling process and the performance of the
sales dealer. To measure and calculate the performance of various products, several strategies
need to be implemented. It helps to restructure the entire budget report in an easy manner.
Budget report-
The performance of the administration can be compared by using this report. This is specially
made to calculate the expenditure and make a proper pale to maintain the expenses of the
5
administration. For any administration, it is valuable to have power over the performances in
several ways. In this report, communication within the segments can be augmented.
Performance report-
With this report, employee performance appraisal can be made and in this report with the help of
various presentation of segments that are enlisted. For controlling purposes, it is very useful. In
this report, employee motivation along with their efficiency of the resources can be managed.
Performance report statement that counts the results of few activity of its achievement over a
certain time frame. For example, the final performance report may be shown for each workers of
a company, or such a document may help management and the success in a project how good
budgetary constraints had been adhered.
C. Evaluate the benefits of management accounting systems and their application within an
organizational context.
The performance and the effectiveness of the administration can be augmented with this
management accounting system. It also provides several benefits. Those are given below-
Planning
Planning the goal of an administration management accounting is necessary. By this system,
lucidity of different processes in the administration can be improved. The goals for the future and
the allocation of resources can be done more successfully along with planning.
Controlling
By the system of management accounting, performance of the resources can be controlled and
quantified. The effectiveness of the administrative processes can be amplified by controlling. By
monitoring the performance, unproductive processes of any administration can be eliminated.
Organizing
Within different departments, it also helps to improve the administration. In various departments,
synchronization of the goal can be augmented with this system. The smoothness of different
departments can be augmented also by this system.
6
several ways. In this report, communication within the segments can be augmented.
Performance report-
With this report, employee performance appraisal can be made and in this report with the help of
various presentation of segments that are enlisted. For controlling purposes, it is very useful. In
this report, employee motivation along with their efficiency of the resources can be managed.
Performance report statement that counts the results of few activity of its achievement over a
certain time frame. For example, the final performance report may be shown for each workers of
a company, or such a document may help management and the success in a project how good
budgetary constraints had been adhered.
C. Evaluate the benefits of management accounting systems and their application within an
organizational context.
The performance and the effectiveness of the administration can be augmented with this
management accounting system. It also provides several benefits. Those are given below-
Planning
Planning the goal of an administration management accounting is necessary. By this system,
lucidity of different processes in the administration can be improved. The goals for the future and
the allocation of resources can be done more successfully along with planning.
Controlling
By the system of management accounting, performance of the resources can be controlled and
quantified. The effectiveness of the administrative processes can be amplified by controlling. By
monitoring the performance, unproductive processes of any administration can be eliminated.
Organizing
Within different departments, it also helps to improve the administration. In various departments,
synchronization of the goal can be augmented with this system. The smoothness of different
departments can be augmented also by this system.
6
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Decision –making
For any organization, monitoring and tracking performance are the most important advantages.
The expenditure of the administration can be reduced by using this system and these factors also
helps in decision-making, strategy planning of the organization.
D. critically evaluates how management accounting systems and management accounting
reporting is integrated within organizational processes.
For an administration, both the system of reporting and accounting are interrelated and they are
uniformly important according to Harrison and Lock (2017). To augment the profitability all
these systems are very useful. To reduce the expenses and strengthen the effectiveness,
efficiency of all the resources these systems are always helpful. Processes and prosperity of the
administration can be increased in this way. The internal processes can be monitored perfectly by
management accounting. Cost management implementing different systems in administration
and reduces the risk appetite of the administration –George stated that on the other hand. Not all
the administrations are allowed to apply the systems for getting the advantages. More labor is
needed to be integrated because some of the systems are highly structured. Costing management
of administrations used to increase this way.
Part 2 –
Benchmarking
Benchmarking is one of strategic system that allows a company to set missions and count
productivity. This particular basis of the best company practices. This is a practice in which
measurement level has used as a point of reference to evaluate things by making a comparison.
As per the standard of the administration, one of the performances is set as the standard and the
others factors in a technique.
It researches the areas, which need change, and this is the first step of this method. The goal is to
set to target the particular area. To achieve its mission the resources allocation and the planning
is done.
7
For any organization, monitoring and tracking performance are the most important advantages.
The expenditure of the administration can be reduced by using this system and these factors also
helps in decision-making, strategy planning of the organization.
D. critically evaluates how management accounting systems and management accounting
reporting is integrated within organizational processes.
For an administration, both the system of reporting and accounting are interrelated and they are
uniformly important according to Harrison and Lock (2017). To augment the profitability all
these systems are very useful. To reduce the expenses and strengthen the effectiveness,
efficiency of all the resources these systems are always helpful. Processes and prosperity of the
administration can be increased in this way. The internal processes can be monitored perfectly by
management accounting. Cost management implementing different systems in administration
and reduces the risk appetite of the administration –George stated that on the other hand. Not all
the administrations are allowed to apply the systems for getting the advantages. More labor is
needed to be integrated because some of the systems are highly structured. Costing management
of administrations used to increase this way.
Part 2 –
Benchmarking
Benchmarking is one of strategic system that allows a company to set missions and count
productivity. This particular basis of the best company practices. This is a practice in which
measurement level has used as a point of reference to evaluate things by making a comparison.
As per the standard of the administration, one of the performances is set as the standard and the
others factors in a technique.
It researches the areas, which need change, and this is the first step of this method. The goal is to
set to target the particular area. To achieve its mission the resources allocation and the planning
is done.
7
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In the second step of this process, the resources in the administration and the financial data are
analyzed (Propa et al., 2015). In this stage the growth and the profit is also analyzed and in this
stage, it has the ability to bear the expenses that can be determined by this process.
In the administration, the factors, which are affecting the profitability, are being analyzed and
that from the process that factors effectively eliminated. By the technique of internal data
analysis, the elimination process is done and finds the poor quality of any product
By applying this method in the administration the source, the scope of the market can be found.
It also gives the opportunity to find the different external environment analysis. In addition, the
competitor analysis is done.
These processes are taken, for the process of benchmarking to be done. The performance of the
administration and the efficiency of the administration can be augmented by this process. The
internal benchmarking and the competitive benchmarking these are two different, which can be
divided for benchmarking.
The internal processes and the similar processes of the internal administration both are compared
in the internal benchmarking process. In the administration, we can find the fault, loss and etc. in
this system it is very helpful to find out the reason behind it, and after that the competitive
benchmarking is finished (Roberts and Piller, 2016). The analysis of the competitors can be done
also in this stage. In an administration, there is lots of opportunity. By this system, opportunity
can be found also, it helps to find that. With the help of functional benchmarking, the similar
process can be measured and the profitability of the administration can be augmented.
Cash flow budgeting –
Most industries are profitable on notes, still involve into problem because they have not the cash
in hand to fund the operations. The owners in these companies might be familiar along their
salary statement, but they do not have any idea their salary balance. By this method cash inflow
and cash outflow can be managed. By this budgeting method, the estimated cash flow can be
determined (parmenter, 2015). To check the position of liquidity it is operated in the
administration. By quantifying the last cash flow in the administration, the assumptions of the
8
analyzed (Propa et al., 2015). In this stage the growth and the profit is also analyzed and in this
stage, it has the ability to bear the expenses that can be determined by this process.
In the administration, the factors, which are affecting the profitability, are being analyzed and
that from the process that factors effectively eliminated. By the technique of internal data
analysis, the elimination process is done and finds the poor quality of any product
By applying this method in the administration the source, the scope of the market can be found.
It also gives the opportunity to find the different external environment analysis. In addition, the
competitor analysis is done.
These processes are taken, for the process of benchmarking to be done. The performance of the
administration and the efficiency of the administration can be augmented by this process. The
internal benchmarking and the competitive benchmarking these are two different, which can be
divided for benchmarking.
The internal processes and the similar processes of the internal administration both are compared
in the internal benchmarking process. In the administration, we can find the fault, loss and etc. in
this system it is very helpful to find out the reason behind it, and after that the competitive
benchmarking is finished (Roberts and Piller, 2016). The analysis of the competitors can be done
also in this stage. In an administration, there is lots of opportunity. By this system, opportunity
can be found also, it helps to find that. With the help of functional benchmarking, the similar
process can be measured and the profitability of the administration can be augmented.
Cash flow budgeting –
Most industries are profitable on notes, still involve into problem because they have not the cash
in hand to fund the operations. The owners in these companies might be familiar along their
salary statement, but they do not have any idea their salary balance. By this method cash inflow
and cash outflow can be managed. By this budgeting method, the estimated cash flow can be
determined (parmenter, 2015). To check the position of liquidity it is operated in the
administration. By quantifying the last cash flow in the administration, the assumptions of the
8
cash flow can be done. In the administration for estimating the future amount of cash flow , the
data of the last cash flow is analyzed.
By this method, the uncertainly future can be handled and this method helps to quantify the total
cash Inflow and outflow. The real time expenditure of the administration should be
simultaneously with this budget. Operating, investing and financing –these are the main three
activities are outlined in this budget. The amount of outflow and inflow can be estimated by
these major activities. The effectiveness of the recourses can be augmented by this system. The
liquidity of cash flows budgeting and the profitability of the administration can be augmented
also.
Discounted cash flow analysis –
Different sub methods have been included in these methods. We can call it investment appraisal
techniques or it can be called modern method (pavlatos and kostakis, 2015). Profitability index,
discounted payback period, internal rate of return and net present value – there are the four major
techniques under this analysis.
The amount of return throughout the life cycle of the assets can be considered in the net present
value method. The future value of money is worthy to consider. By this method, profitability can
be determined and by this method, entire cash flow is used to calculate.
The attractiveness of the project has been quantified by the internal rate of return. The cost of
money may be compared to the rate of the return. If the cost of the capital is less than the rate,
the investment will be considered as to be profitable and attractive. The other methods can are
more difficult, it means it is simpler to calculate under this method.
The updated version of the payback method is discounted method. The total time to repay the
loan with the value in this method, the value can be calculated. From this method, the time and
the value both can be understood, so we can say it is helpful to us. Under this method, the actual
are being considered. Whether to accept or reject a project, profitability index plays the role of
deciding. The budget of the administration needs to be fitted with the project, for that to choose
the project this method is very useful. In this method, it is not possible to determine the required
date of return and for the sunk cost of the administration, it is not helpful.
9
data of the last cash flow is analyzed.
By this method, the uncertainly future can be handled and this method helps to quantify the total
cash Inflow and outflow. The real time expenditure of the administration should be
simultaneously with this budget. Operating, investing and financing –these are the main three
activities are outlined in this budget. The amount of outflow and inflow can be estimated by
these major activities. The effectiveness of the recourses can be augmented by this system. The
liquidity of cash flows budgeting and the profitability of the administration can be augmented
also.
Discounted cash flow analysis –
Different sub methods have been included in these methods. We can call it investment appraisal
techniques or it can be called modern method (pavlatos and kostakis, 2015). Profitability index,
discounted payback period, internal rate of return and net present value – there are the four major
techniques under this analysis.
The amount of return throughout the life cycle of the assets can be considered in the net present
value method. The future value of money is worthy to consider. By this method, profitability can
be determined and by this method, entire cash flow is used to calculate.
The attractiveness of the project has been quantified by the internal rate of return. The cost of
money may be compared to the rate of the return. If the cost of the capital is less than the rate,
the investment will be considered as to be profitable and attractive. The other methods can are
more difficult, it means it is simpler to calculate under this method.
The updated version of the payback method is discounted method. The total time to repay the
loan with the value in this method, the value can be calculated. From this method, the time and
the value both can be understood, so we can say it is helpful to us. Under this method, the actual
are being considered. Whether to accept or reject a project, profitability index plays the role of
deciding. The budget of the administration needs to be fitted with the project, for that to choose
the project this method is very useful. In this method, it is not possible to determine the required
date of return and for the sunk cost of the administration, it is not helpful.
9
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Conclusion
From the above analysis, the different situations in the administration can be understood with the
help of management accounting. In the above portion of the detailed report, analysis of costing
has been described. The different areas had been served by management accounting with various
systems. The reporting system, which are reporting and analysis have been given by the
management accounting it can be described from the above analysis the management accounting
is necessary for the administration. The profitability of administration can be augmented by
proper application of these systems.
Task 2
Part 1
Methods of Costing
Cost evaluation is an indispensible part of the administration. Proper application of cost
management techniques can be helpful in terms of expenditure reduction. As opined by (Roberts
and Piller, 2016), there are different techniques of costing applied in accordance with the
necessity of that particular administrative system. Three different kinds of costing have been
described below.
Expenditure of Job Order
Job order costing method includes the allocated cost according to the particular job completion.
As per Roberts and Armitage (2017), this method helps towards the minimization of the
manufacturing cost.
Batch costing
The cost of batch costing method, can be calculated as the production batch required. This
method is beneficial for determining the efficiency and the usefulness of the internal resources.
Batch costing is required to merge the money wastage, system of quality controller and
registration of data in a particular administrative system.
Process costing
10
From the above analysis, the different situations in the administration can be understood with the
help of management accounting. In the above portion of the detailed report, analysis of costing
has been described. The different areas had been served by management accounting with various
systems. The reporting system, which are reporting and analysis have been given by the
management accounting it can be described from the above analysis the management accounting
is necessary for the administration. The profitability of administration can be augmented by
proper application of these systems.
Task 2
Part 1
Methods of Costing
Cost evaluation is an indispensible part of the administration. Proper application of cost
management techniques can be helpful in terms of expenditure reduction. As opined by (Roberts
and Piller, 2016), there are different techniques of costing applied in accordance with the
necessity of that particular administrative system. Three different kinds of costing have been
described below.
Expenditure of Job Order
Job order costing method includes the allocated cost according to the particular job completion.
As per Roberts and Armitage (2017), this method helps towards the minimization of the
manufacturing cost.
Batch costing
The cost of batch costing method, can be calculated as the production batch required. This
method is beneficial for determining the efficiency and the usefulness of the internal resources.
Batch costing is required to merge the money wastage, system of quality controller and
registration of data in a particular administrative system.
Process costing
10
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In process costing, production cost is taken care of separately. The type and variation of
manufacturing processes can be understood with the help of this costing method. On the other
hand, process costing is essential to distinguish different processes.
Costing Methods
Marginal costing
According to Yu et al. (2019), marginal costing method is very much useful and this method
takes care of variable cost as a separate entity called unit cost of production. Here, after the
calculation is done, fixed production cost is required to be mentioned.
Absorption costing
Absorption costing method, fixed cost of production as well as variable cost of production have
been incorporated during calculation. Moreover, that, in this costing method, the total cost of
production is considered as unit cost of production. Absorption costing technique is very helpful
to take into account the inventory rising.
The provided statement of income for the company with regard to absorption costing as of 1st
June is stated below:
Company Revenue Statement for absorption Expenditure as of1stJune
Factors (Absorption) Sum Sum
Net Income £
45,00,000
Extract: Expenditure of
Production
Expenditure Variability
Expenditure of Raw
Products
£
2.11
Expenditure of
Employment
£
1.23
Overhead Variability of £
11
manufacturing processes can be understood with the help of this costing method. On the other
hand, process costing is essential to distinguish different processes.
Costing Methods
Marginal costing
According to Yu et al. (2019), marginal costing method is very much useful and this method
takes care of variable cost as a separate entity called unit cost of production. Here, after the
calculation is done, fixed production cost is required to be mentioned.
Absorption costing
Absorption costing method, fixed cost of production as well as variable cost of production have
been incorporated during calculation. Moreover, that, in this costing method, the total cost of
production is considered as unit cost of production. Absorption costing technique is very helpful
to take into account the inventory rising.
The provided statement of income for the company with regard to absorption costing as of 1st
June is stated below:
Company Revenue Statement for absorption Expenditure as of1stJune
Factors (Absorption) Sum Sum
Net Income £
45,00,000
Extract: Expenditure of
Production
Expenditure Variability
Expenditure of Raw
Products
£
2.11
Expenditure of
Employment
£
1.23
Overhead Variability of £
11
Production -
Company Plants £
2.34
Expenditure of Goods
Production
£
3.67
£
20,00,000.00
Addition: Initial Storage £
-
Net Expenditure for
Product Trading
£
21,00,000.00
Extract: End Production 0 £
-
Expenditure of
Production Traded
£
20,00,000.00
Addition: Below absorption
of overhead company plant
or
Extract: Below absorption
of Overhead Company Plant
Actual Expenditure of
Products Traded
Net Profitability of
Product Traded
Extract: Expenditure of
fixed and trading of
company
£
-
Company Expenditure and
Trading Variability
Overall Expenditure of
Non-Production
Materials
£
-
TOTAL FUNCTIONAL £
12
Company Plants £
2.34
Expenditure of Goods
Production
£
3.67
£
20,00,000.00
Addition: Initial Storage £
-
Net Expenditure for
Product Trading
£
21,00,000.00
Extract: End Production 0 £
-
Expenditure of
Production Traded
£
20,00,000.00
Addition: Below absorption
of overhead company plant
or
Extract: Below absorption
of Overhead Company Plant
Actual Expenditure of
Products Traded
Net Profitability of
Product Traded
Extract: Expenditure of
fixed and trading of
company
£
-
Company Expenditure and
Trading Variability
Overall Expenditure of
Non-Production
Materials
£
-
TOTAL FUNCTIONAL £
12
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