Comprehensive Management Accounting Report: Tech (UK) Limited

This report provides a comprehensive overview of management accounting principles and their application within Tech (UK) Limited, a mobile phone charger producer. It begins with an explanation of management accounting, emphasizing its importance in decision-making, cost control, and financial reporting. The report details various systems such as cost accounting, inventory management, and job costing. It then explores different types of managerial accounting reports, including budget reports, job costing reports, and inventory reports. The report also presents and compares income statements using absorption and marginal costing techniques, along with a reconciliation of profitability. Finally, it discusses the benefits of management accounting for Tech (UK) Limited and assesses the differences between management accounting systems and management reporting systems. The report includes tables and appendices to support its analysis and conclusions.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Management accounting Explanation and the essential of management accounting system 1
P2 Presenting financial information.......................................................................................3
M1 Evaluation of benefits......................................................................................................5
D1 Management accounting system assessment of and management reporting...................5
TASK 2............................................................................................................................................5
P3 Management accounting techniques:-...............................................................................5
M2 Techniques and reconcile the profitability.......................................................................6
D2 Interpret data for the business activities...........................................................................7
TASK 3............................................................................................................................................7
P4 Various budget system......................................................................................................7
M3 Analysis of different planning.......................................................................................10
D3 Evaluation of planning tools...........................................................................................10
TASK 4..........................................................................................................................................10
P5 Comparison the way of company are adapting management accounting system to respond
financial system....................................................................................................................10
CONCLUSION ............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The process of ready to management reports and accounts that give appropriate and well
timed fiscal and statistical content needed by managers to make daily basis decisions is termed as
management accounting. In this, director usage the provisions of accounting content in order to
improved inform themselves. This present report is based on Tech (UK) Limited which is
producing particular charger for mobile telephone in the UK. In this report, explanation of
management accounting, their importance along with absorption and marginal costing are
covered. Other than that, benefits of different types of budgets, their process and importance are
discussed.
TASK 1
P1 Management accounting Explanation and the essential of management accounting system
Management accounting system is a profession which include partnering in the
management decision making that help managers in their working and decision. Through it,
managers can take their decision on daily basis. This is a process of handling the entire situation
in the company. Each and every company need management accounting system to make good
environment in their organisation (Fullerton and Widener, 2014). They want to secure their
entire information and data of the company, so they use the management accounting for their
business.
Management accounting manage the entire operational work in the company. Through it,
they can make some report of the company, it can be budget report, sales report, inventory report
and employees productivity report. In the financial accounting, they calculate the entire figure
which was invested in the organisation and which will be expense in the future. Other than that,
they can evaluate their profit and loss statements from the financial accounting. Management
accounting and financial accounting system play the important role in Tech (UK) Limited
company.
Importance of management accounting information: -
Management accounting play vital role in the organisation. There are lots of benefits
from the management accounting in the company. Through it, they can determine their aim and
set the goals of the company, it helps in the preparation of plan. Through it, their employee can
provide better services to their customers. Along with this, it increases efficiency of the business
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and profitability. When company uses this management, it provides them effective management
control, so managers can take their better decision for any situation. When they will be able to
measure performance, then they can take decision of incentives which is given to the employees.
Management accounting gives this entire benefit to their managers, so it is very useful
accounting system in the organisation. Through it, they can beat any of the competitor in the
market and will be able to earn more profit and reward from the business (Renz, 2016).
Cost accounting system: -
It is the important system in the management accounting system for analysis the entire
cost of the company. Through it, they can examine about the cost or organisation. Other than
that, they can have analysis about the department and employees, who is giving their best or not
at their work place. Through cost accounting system, managers can control the entire expenses of
the organisation. In the cost accounting system, they can include the inventory rating activity,
cost accumulation activity, cost flow assumption, input measurement basis and ability of
recording inventory (Chenhall and Moers, 2015). These elements are very useful in the
organisation and it gives lot of information and knowledge to the managers. It is a model utilized
by the company to figuring the value of their good for profit investigation, inventory valuation
and cost control. In this system, company analyses about products or their profitability in the
business; other than that, they evaluate about their employees that their productivity is effective
or not for the company. In the Tech (UK) Limited, there are different types of departments are
working and they can use cost accounting system to improve their work at their work place.
Every department can evaluate the productivity of their team members, so that they can improve
their productivity.
Inventory management system: -
In the Tech (UK) Limited, they need to manage their inventory and it can be managed by
the inventory management system. Through it, they can manage their entire orders of parts of the
mobile telephone. It is the current process of automotive pasts and good into and out of a
organization's position. When Tech (UK) Limited import or export their products, they should
manage their sale and purchase data in the system and all data can be saved in the inventory
management system. Organisations handle their stock list on a daily basis as they place new
orders for goods and ship orders out to clients. Through it, managers can track end to end record
of their products and services. They can manage their warehouse from inventory system.
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Company can save their entire data of sales, purchase, return, delivery, and pending. They can
track any of the record in very easy process thorough inventory management system.
Job costing systems: -
This system relate to the procedure of roll up about the costs related with a particular
manufacture or service job. It need to accumulate direct materials, direct labour and overhead.
There are lots of department in the production, but they need to analysis about labour, direct
materials, and overhead. When they use of job costing system, they can track the cost of
materials that are utilized in the productions. Other than that, the this method can track the cost
of the labour utilized on a task. In the organisation, there are different types of equipment, so
they can get the depreciation on it. It also can be identified by the overhead of job costing
system. However, department of production can use this system, and track the entire job costing
in the business (Suomala and Lukka, 2014). It is the very useful system in the company for
controlling the cost. They can reduce their costing and increasing profitability from this
management accounting system.
P2 Presenting financial information
Types of managerial accounting reports: -
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Illustration 1: Job costing report
(Sources : Job costing report, 2017)

Management accounting report help owner of Tech (UK) Limited and their managers to
monitor the performance of the organisation. It is the portion for making sure that organisation
has complete the presentation of business performance and their finance condition. There are
following managerial accounting report which is managed in the company:
 Budget report: - It report is an interior study utilised by administration to analyse the
estimation, fund prediction with effective execution figure gained during a time period. In
the organisation, there are different types of department and employees are working. The
managers allot different types of work to their department and members. Main thing is,
they should analyse that department or employee's productivity is effective or not in the
business (Quinn, 2014). If they are not giving according to their target, then company
will reduce their budget on that department.
 Job costing report: - This report shows all expenses for a specific project or department.
They analyse that a particular department is earning revenue or not. If they found that
they’re not getting revenue according to company's target,
 then they can reduce budget on that department. In the Tech (UK) Limited, lots of
employees are working and managers allotted different types of task to them according to
their knowledge and profile. However, job costing report shows that the employee's
productivity is good or not (Messner, 2016). Other than that, their work is worth or not
for the organisation. If they will not able to give their effective service to the company
then, they cannot get the incentives and bonus from the organisation.
 Account receivable aging: - This report mange the cash flow of Tech (UK) Limited. In
this report they are mention all data of credit. They are providing their credit services to
the customers. Sometime some costumers are not able to pay their outstanding amount on
time, so company can track record and know about the customers who are not able to pay
their pending amount. When they are not paying their amount them company can take
action against that customers. Other than that, there are the customers who can able to
pay their amount on time. This report is very useful in the Tech (UK) Limited, because
they are providing credit service to their dealer and customers.
 Inventory and manufacturing report: - It is the very effective report in Tech (UK) Limited
organisation. In this report, mangers can manage their entire information data of the
business. When they import or export their goods, then they need to keep their entire data
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in very safe place (Lavia López and Hiebl, 2014). However, they are managing their
entire data of sales, purchase, return, and delivery are in inventory report. Along with
this, managers can compare entire data for one another, so they can get the report of
costing. This is very useful report for Tech (UK) Limited, and their managers are using
this report for tracking. They can evaluate the data from inventory report in the business.
It is very important in the organisation, and its helping in make decision,
forecasting cash flow, helping understand performance variances and analysing the rate of return.
Other than that, it helps managers in making a budget report for their business. Through this
entire managerial accounting report, company can keep their information in the secure place.
They can track information on records when they require.
M1 Evaluation of benefits
Tech (UK) Limited get lots of benefits from management accounting system and
reporting system. This is very useful and important for them. Through it, they can earn the more
profit in the organisation.
D1 Management accounting system assessment of and management reporting
This both process are different to one another Through management accounting system
they can improve their entire accounting system and through management reporting system, they
can make the all report of the organisation.
TASK 2
P3 Management accounting techniques:-
Income statement by absorption costing:-
Particular Amount Amount
Sales (1500*35) 52500
Less
Cost of goods sold
(1500*£20)
-30000
Adjustment for over
absorption
2500
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Gross profit 25000
Less
Sales & admin ((10000+ (15%
of 52500))7875
-17875
Net profit 7125
Income statement by marginal costing:-
Particular Amount Amount
Sales (15000*35) 52500
Less
Cost of goods sole (15000*15) 22500
30000
Variable sales & admin cost 7875
Variable contribution margin 22125
Less
Fixed S&A cost 10000
Fixed production overhead
cost (5*1500)
7500
Net profit 4625
Appendix 2
Fixed overhead absorbed £15000
Actual fixed production overhead (15000*£5) £7500
Over absorbed £2500
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Appendix 3
Profit under absorption 7125
Difference in units: closing inventory (500units
*£5)
2500
Profit under marginal costing 4625
M2 Techniques and reconcile the profitability
There are two types of costing system, and thorough both system company can make a
report of income and statements. This both report shows proper figure of the P&L.
D2 Interpret data for the business activities
This entire figure of P&L statements can make by the marginal and absorption costing
system. It help company in showing the accurate data and reduce the cost of the organization.
TASK 3
P4 Various budget system
AS estimate costs, revenues, and resources over a specific time, reflective a reading of
upcoming fiscal conditions and goals. Budget is most important tool in the business, because
through it, company can able to make cash flow budget, capital and master budget, operating and
expenditure budget (Cullen and Gorst, 2013).
 Cash flow budget:- This budget is a helpful management instrument because it forces
company to think their agriculture idea for the time period, and trial their agricultural
idea, such as if they will produces enough financial gain to meet all their cash demand.
This budget report maintain the entire cash of the organisation. Maintaining a cash flow
budget will help you forecast your company's entire financial health. Through it company
can make their another budget5, and provide them fund from this budget (Morales and
Lambert, 2013). It is very useful in the organisation. Cash flow budget based on
company's financial condition. If their condition of financial is good then they can
provide budget to the another depart.
Advantages and disadvantage:-
It is much direct as profit is extremely dependent on accounting conversations and concept. It is
able to satisfy the entire requirement of all customers better since cash flow is more direct its
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messages. Cash flow budget provide effective satisfaction to the shareholders and management.
Disadvantage of this budget is that it avoid the accoutrement or matched conception.
 Operating budget:- This budget is the combination of known expenses, expected future
costs, and fore castes income over the course of a year (Christ, 2014). It is very useful
budget for the company, because they require more fund for operating their all
departments. Operating budget is based on entire operational work and their department.
When managers will not get the appropriate productivity of the employees of different
department, then they can reduce their budget from operating system. So, they can able to
reduce their budget on the employees or department are not giving their effective
performance to the company. Their profit and revenues is depend on the employees and
department's productivity. If they will not give their effective performance then the
company will not be able to achieve their target and goals.
Advantages and disadvantage:-
Company can make their accountability great through operating budget system,. But their
information and time for managing can be very costly. Other than that, they can handle the all
expenses in good way, but they need more fund and more employees for the operating budget
and it can be expensive for the company. Through it, managers can projecting the expense3s of
future, and it will help organization in deceasing their expenses, but disadvantage of this is, that
company can not be sure that which types of expenses will be reduce in the future (Horton and
de Araujo Wanderley, C. 201).
 Capital budget:- Capital budget is based on the capital receipts and payments. This
budget is also incorporates transaction in the public account. It is the process used by the
organisation for determine and ranking potential expenditure or investment that are
significant in amount. When they start their business, they require equipment, purchasing
vehicles, and buildings, so it all capital are expenditure capita. They can make a report for
this entire expenditure capital and analysis that it is worth or not for the company.
Advantages and disadvantage:-
This budgeting system helps an organisation to identify the different types of risk involved in an
investment opportunities. Other than that, they can know the risks affect the return of the
organisation (Fourie and Kumar, 2015). It assist to sort an advised decision about all investment
taking into circumstance all possible alternative. Disadvantage of capital budget is that capital
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budgeting decisions are for long term and mainly irreversible in nature. Other than that, this
method is based on the estimations, so it will not be able to provide accurate information to the
managers. A big disadvantage of capital budget is that a incorrect capital budgeting decision take
can impact the long term permanence of the organisation and therefore it requires to be dome
judiciously by the occupational group who understand the project well.
The budget formulation process:-
Understanding or budget strategies and preparation is , not just to deduct expenditure
protections. In this process, they need to know about framework of budget decisions, responsible
person for designing and ready the budget, know the primary steps . Other than that they should
need to know about critical imperfection in process and its overcome, and ways to changes in
budget plans (Klychova and Valieva, 2015).
When company need budget prepare process, then they should to follow the rules and
regulations of the budget preparation process. First step of this process is to understand, “What is
the model in which budget decisions are made”? However, they should to know about
framework and budget decision which they are made in the organisation. In this step, they should
know about the rules and regulations of the government in budget preparation process, and
through that rules they can identify the responsibilities for the elements of budget preparation
process. The second step of this process is recognise the useful of budget principles. They should
know about the separated economical and structural categorize that meet worldwide
standardized. After that, they can identify the responsibilities within the budget system. They can
distribute their budgeting system between executive and legislative branches. They can provide
some information to them like legislature quality to suggest spending, power of rectification and
executive power to limit spending appropriations. They can distribute their powers to the
executive and it is number of agencies involved in this system, structure of negotiations, and
agenda for setting budget negotiations. Along with this, they should know the ways of activities
funded (Schaltegger and Zvezdov, 2013). In this process they can use some activities for fund
and it is revenue accounts, borrowed resources, multiple, funds, special funds, contingency fund
etc. This all are the sources of fund, so company can easily borrow the fund from this activities.
If they will follow the entire activities of this process, then organisation can get their goals and
target of their business. Further, they should know about the person who takes the responsibility
for the designing and formulation of the budget. The responsibilities of formulating fund usually
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lies with the government department of finance with input from the line government department
and few little disbursement agencies. They should know about the primary steps in fund
preparation method. The basic step in fund planning should be the examination of a
macroeconomic model for the budget year. The second step should be the allotment of this
worldwide among form government department, departure area of reserves to be managed by the
government department of finance. The 3rd step should be for the give direction about fund
section to set up a budget circular to line government department. The next step should be
comprises the negotiation, usually at official and then bilateral or collective ministerial level,
leading eventually to statement and the last step six is cabinet endorsement of the substance for
inclusion in the budget that will go to parliament.
M3 Analysis of different planning
There are different types of system for budget and they can use any of the budget system
for their organisation. They can make their own budget system from their managers so it will be
help company in comparison of both budget report.
D3 Evaluation of planning tools
This all budget report can resolve the problems of the company. If they will follow the
rules and regulations of budget report then they will be able to get accurate solutions of their
issues.
TASK 4
P5 Comparison the way of company are adapting management accounting system to respond
financial system
In the Tech (UK) Limited, they face different types of problems at their work place. They
have lots of competitor in the market, so they are facing some biggest problems in the market.
Their competitors are using management accounting report, budget report, and follow the budget
preparation process (McLaren and Mitchell, 2016). The thing is that, they are not able to know
about their processes, and they are facing the problem that they are not able to know the
situations of the business. Company can reduce this entire problems with effective solution. They
can adapts the management accounting system to react to financial problems.
 Financial governance:- The consequences of failure can be devastating for a council is
the most effective for better governance. No substance how great the part of a council's
governance may be fiscal failure can bring in undone. In this system, government set the
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rules and regulation and it is followed by the entire companies. Financial governance is
the stringent set of rules and guidance issued by regulators to ensure that financial
processes are, well, governed (Wouters and Kirchberger, 2015). In the financial
governance of the company, they can include the entire reporting of the company like
financial control, audit internal control, process work flow and data tracking. It is the
very useful system in Tech (UK) Limited, they can control their audit and financial
system in the organisation. If they will not able to control their entire situation in the
work place, them financial governance will do the same ting for the Tech (UK) Limited.
 Balance scorecard:- This is the very useful and important management accounting system
for the Tech (UK) Limited company. The balance score card is a strategy of performance
management. In the company, they can adapt the balance scorecard for their management
accounting system. This system provide some effective method for management
accounting in the business. Through it, they can manage their balance sheet of the
company (Järvinen 2016). Other than that, they can know the figure of their company. In
that figure they can identify the profit of the organisation. Along with this, they can
evaluate of the productivity of all employees. When they will make balance scorecard or
follow the same system, then they will be able to compare their all data and figure of the
organisation.
CONCLUSION
In this report, it has been recognised about all system of management accounting,
their types and management accounting reporting. Other than that, it is concluded ,that Tech
(UK) Limited need cash flow report, inventory, profit and loss, and cost report for their
organisation. Along with this, in the report it is also concluded, about marginal and absorption
costing.
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