HND Business, Management Accounting Report for Tech (UK) Limited

This report, prepared for Tech (UK) Limited, delves into the realm of management accounting. It begins by differentiating management accounting from financial accounting, outlining various management accounting systems like cost accounting, inventory management, job costing, and price optimization systems, and emphasizing their importance. The report then explores different management reporting systems, including performance reports, inventory management reports, accounts receivable reports, job cost reports, and operational budget reports. It highlights the benefits of utilizing these systems for decision-making and financial control. Task 2 focuses on costing methods such as Cost-Volume-Profit analysis. The report also discusses budgeting, including its advantages and disadvantages, along with planning tools. The report concludes with an analysis of financial problems and effective accounting systems to resolve financial issues.

Management Accounting

Table of Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
P1: Various types of management accounting system and their importance......................................3
P2: Different types of management reporting system........................................................................5
M1: Benefits of using management accounting system.....................................................................6
D1: Critical evaluation of accounting reporting systems...................................................................7
TASK 2.................................................................................................................................................7
P3: Various types of costing methods which are use for calculating net profit..................................7
M2: Effective use of management accounting tools and techniques................................................11
D2: Evaluation on the basis of data collected from business activities............................................11
TASK 3...............................................................................................................................................12
P4: Advantage and disadvantage of budget.....................................................................................12
M3: use of various planning tools....................................................................................................13
D3: Critical analysis to overcome financial issues...........................................................................13
TASK 4...............................................................................................................................................13
P5: Effective use of accounting systems to resolve financial issues................................................13
M4: Analysis of financial problems.................................................................................................14
CONCLUSION...................................................................................................................................15
REFERENCES....................................................................................................................................16

INTRODUCTION
Nowadays, it has been seen that plenty of organisations are looking for an effective
system that can assists them to record various accounting transaction in their respective
format. The primary aims and objective of an organisation is to attain their long and short
term goals that are being set by company for betterment of future. The main role of managers
is to record their financial transactions in more effective manner so that goodwill of the
company can be attain in more quick time (Wickramasinghe and Alawattage, 2012).
The project report provide various information about different types of accounting
systems and reporting that are helpful in recording of the data in more reliable manner.
Further, this report would use various costing methods that are effectively responsible for
evaluating net profit of Tech Imda ltd. Merits and demerits of planning tools for controlling
budgets are explain under this. Examination of certain types of financial issues and their
effective measures to overcome those issues is discussed under this project.
TASK 1
P1: Various types of management accounting system and their importance
In accordance to increase profitability, it is necessary to make use of effective
accounting tools that are responsible for garneting more valuable results to the company. In
every business whether small or large they need to collect, summarise and evaluate financial
transactions through using effective accounting systems. Administration is always in research
for all those matters which are necessary for increasing productivity of Imda tech Ltd. It is
necessary operation of management to make use of appropriate accounting information for
the purpose of making effective decision making near future.
The management need to make proper planning, organising and communicating every
department works to analyse whether they are operating in right manner for the growth of the
company. While accounting is said to be a systematic recording of financial data that is being
use for the purpose of analysing future profitability of the company. Management accounting
is one of the most important aspects as a profession which include manager for partnering in
effective company to make future decision making. This is an effective technique of business
performance analyses in order to prepare internal accounting statements (Lavia López and

Hiebl, 2014). This will assists accountant to take crucial decisions according to their set aims
and objectives.
Basis Management accounting Financial accounting
Concept According to these specific
accounting systems which is being
provided as crucial information to
the managers to make vital plans for
their upcoming projects.
Under these accounting systems, it
will be assessing entire focus on
formulation of organisation strategies
to various interested parties.
Essential It is not essential for the department
to make entries of all data for the
company.
It more significantly need to be
followed by managers before making
any financial reports.
Purpose The primary objective is to make
proper planning and to make vital
decision by delivering effective
detail information to the department.
Under this accountant need to prepare
financial data for presenting it in front
of various stakeholders.
Format There is no need to make any
particular format for recording of
transactions.
It is utmost important for every
business enterprises to prepare
financial transactions in more specific
format.
Different types of accounting systems:
There are several accounting systems that can be helpful for an organisation to
evaluate their regular financial transactions that are done during the period of time. Few of
them are elaborated underneath:
Cost accounting system: This happens to be utmost important tools through which company
can more easily locate and determine their actual costs that are incur over the production of
products and services. These are directly or indirectly make impacts of manufacturing
process. Some essential costs associated during that time are normal, standard and actual.
Inventory management system: according to the account officers, it is essential for the
company to keep regular record of their stock by using appropriate accounting systems. This
assists in determining total flow of stock within a set duration of time. Through effective use
of such system overall bills, detail record of invoices and inventory related transactions are
analyse accordingly.

Job costing system: It refers to be primary aspects of management which is used to measure
total assign products costs to single products instead of group of products. Basically, such
types of accounting system would always provide information about produced products
which is relatively different from each other (Christ, 2014).
Price optimisation system: This is another important accounting system which is helpful in
order to evaluate different types of consumer’s perception regarding set prices of products
those are being fixed by the company. According to proper analysis the price would be set in
order to helpful in order enhance their operational expenses of manufacturing a products.
Advantage of using all above mentioned costs:
From the above discussed accounting system which will be more reliable to take
valuable decision in respect to generate maximum profit for the company. This would be
assists in enhancing efficiency of TECH IMDA Ltd.
P2: Different types of management reporting system
It is the primary motive of every profit generating business is to make use of best
suitable reporting system that can provide them more reliable and healthy outcomes in very
less time period. This would be primary responsibility of managers to look for effective
system for the future development and to control extra costs of TECH Imda Ltd. They need
to record every financial data that are being incurred during the time and which has been
collected from various department of an organization (Moser, 2012).
By doing so, all these reports are being presented in front of all investors and external
stakeholders those are held liable to make analyses of current financial position of the
company. On that basis, a valuable decision would be made so that further capital investment
decisions will be made in advance by the investors. The data would be recorded by collecting
information from various department or sources. The primary sources of data collection
would be taken from internal department. Some crucial information would be collected from
financial or non financial modes. There are various types of accounting reporting system
which are effectively useful the company. Some of them are discuss underneath:
Performance report: It is one of the most essential report that are use for the purpose of
making comparison among actual outcomes with the standard one. In order to do so,
managers need to be making use of past data and make evaluation with present one. This will

determine real position of the company. All those issues that are arises in an organisation can
be resolve before making posting of the data into this statements.
Inventory management report: This kind of accounting reports consists of all vital
information about inventory position of the company. Such as opening and closing record of
stock that a company has kept in their warehouse are posted as per their data of occurrence.
As it has been observed that inventory is primary part of any manufacturing business that
leads to increase of overall growth and efficiency at the same point of time. There are various
techniques are being used by the accountant to record detail information about stocks such as
inventory turnover ratios, ABC costing and LIFO and FIFO method.
Account receivable report: According to this particular report every information which is
related with total lists of unpaid customers those are due for payment are determine under this
report. Through using this reporting system, a company can easily be able to analyse exact
timing of amount recovery which are being overdue for the payment.
Job cost report: Such kind of reports assist for evaluating vital records of product
manufacturing related information’s. This will be used to identify overall costs which they
are going to incur for producing one unit of products of group of products. Through this
company can easily be able to analyse their every day job costs and operations expenses.
Operational budget report: As per this report, every data regarding their total costs and
expenses that are invested during the manufacturing of goods are recorded properly. Such
kind of reports would be summarised by collected information about sales, production
purchase, raw material consumed and allocation of resources during that time (Hilton and
Platt, 2013).
M1: Benefits of using management accounting system
It has been seen that wide organisation are mainly using more reliable systems that
can assists in summating data as per their data of transactions. By doing this, chances of
mistakes would be minimise up to a extent. There are various crucial advantages of using
those above mentioned accounting systems. By the use of cost accounting systems, total flow
of cash in the business can easily be analysed. Whereas with having inventory management
tools managers can easily be able to record and maintain balance in their stock level. All of
them are held responsible for increase overall productivity of the company.

D1: Critical evaluation of accounting reporting systems
As per the above mentioned various types of accounting reports, it has been examine
that all of them are held responsible for generating maximum return for the company. If
managers use to record financial information in accurate and reliable manner they are in very
less period of time can attain their set aims and objectives. In respect to this, performance
report would be analysing in more effectively so that exact detail information about
company’s financial position would easily be determine. Whereas by the use of account
receivable report company can identify exact time and date of total overdue payments.
TASK 2
P3: Various types of costing methods which are use for calculating net profit
In every business, costs play an eminent role during production of products and
services. It is an essential part of an organisation to make use to their total costs in right
manner so that it would not increase extra expense for the company. This is necessary for
managers to make use of microeconomic factors in their daily business to generate more
reliable outcomes. This is an effective part which would assist in determining whether
resources of the company are utilised in proper manner. This will help entire operational
department to make desirable and economic reputation within an organisation. In respect to
get more effective outcomes within a definite set of time the company may require to control
their unnecessary cost and expenses those are incur in their regular cost of productions
(Becker, Ulrich and Staffel, 2011).
Cost is said to be amount of value charged in respect to get something. These are
directly or indirectly related with production of goods and services. This will enhance
maximum burden over employees to give their best efforts to increase profitability for the
company in very least time. It has been observed that without having proper flow of funds
management cannot be able to take valuable decision for their upcoming projects. The will
make huge impacts on their desire aims and objectives. There are various costing methods
which could effectively utilised by TECH Ltd in their business to determine total net
profitability of the company. Few of them are discuss below:
Cost volume profit (CVP): It is an essential techniques which is being use to measure
various modification in respect to total cost and volume that can affect companies overall
operating earnings as well as net flexible aspects.

Flexible budgeting: This is said to be an adjusted techniques which alter in more reliable
manner and make use as static budgets. It can varies with the changes in output those are
flexible in nature.
Cost variance: It is an essential or more simple for making comparison between actual cost
value and their budgeted amount. This would assist to make analysis of all those changes
those are incur during production process.
Marginal costing: It is known as those costing techniques which is use for production of one
additional unit. These are mainly conclude variable costs not fixed because of this nature, it is
said be period costing method. Most of the investors use to take these techniques more
reliable for making valuable decision for their business projects.
Absorption costing: It refers to be utmost important costing techniques which are applicable
to all production related cost (Absorption costing, 2018). These costs use to taken into
account both variable and fixed costs. Because of this nature they are known as full costing
method. Having all reliable criteria but cannot be taken into consideration for valuable
decision making in near future time.
Income statement on the basis of Marginal costing method:
Working 1: Calculate variable production cost £
Direct material cost 8
Direct labour cost 5
Variable production O/h 2
Variable production cost 15
Working 2: Calculate value of inventory and production
Opening inventory Production Closing inventory
Nil 2000*15 = 30000 500*15 = 7500

Net profit using marginal costing ￡Amount £ Amount
Sales value
Less: Variable costs
Stock at the begining
Cost of production
Stock at the closing
Variable sales overheads
Contribution
Less: Fixed costs:
Fixed Production overheads
Fixed Selling overheads
NIL
30000
(7500)
15000
10000
52500
(22500)
(7875)
22125
(25000)
Net loss -2875
Income statement on the basis of Absorption costing method
Selling Price per unit ￡35
Unit costs
Direct materials cost ￡8
Direct Labour cost ￡5
Variable Production overhead ￡2

Variable sales overhead ￡5.25
Budgeted production during the year is 3000
units
Production overhead: In this budgeted cost is £15,000and Actual cost is £10,000
Selling cost: under this budgeted cost is £10,000and Actual cost is £7875
Absorption costing working notes
Working Note 1: Calculate full production cost
Direct material ￡8
Direct labour ￡5
Variable cost ￡2
Fixed cost ￡5
Total ￡20
Working Note 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 2,000*20 = £40,000 500*20 = £10,000
Working Note 3: under/ over absorbed fixed production overhead
Actual fixed production: ￡15000
Fixed overhead: ￡10000
Total £5000 (under absorbed)

Net profit using absorption costing ￡Amount £Amount
Sales value
Less: Cost of Sales:
Opening stock
Cost of production
Closing stock
(Under)/Over absorbed fixed prod. O/h
Gross Profit
Less: Selling Expenses
Variable sales expenditure
Fixed selling expenditure
NIL
40000
(10000)
7875
10000
52500
(30000)
(5000)
17500
17875
Net loss -375
M2: Effective use of management accounting tools and techniques
There are different types of accounting techniques which helps an organization to
make use of their earnings in more reliable use so that better outcomes in coming future can
be generate to the company. Product costing techniques are one of the vital types of costs
which consist of both fixed and variable. Standard and historical costs are some other tools
which are also helpful for the development of the company.
D2: Evaluation on the basis of data collected from business activities
In respect with evaluating more reliable results for the company manager of TECH
Ltd would require to make use of both absorption and marginal costing techniques. These are
providing more different results in their total net profitability. Whatever difference are seen
are arise because of fixed expense treatments. But marginal cost results are taken more
importance for taking crucial decision.

TASK 3
P4: Advantage and disadvantage of budget
In all sorts of business whether operating in retail or manufacturing sector they
require to use planning tools to manage their budgets in more effective manner. Some of
them are discuss underneath:
Operational budget: It refers as one of the major effective budget which relies on
effectively for taking vital decision for increasing total earning out of their functional
operations. This would be prepared through using sales, production and raw material data.
 Advantage: This is more reliable to control overall costs and expense for the
company by continuous recording of their expenses information.
 Disadvantage: It is too time consuming for TECH Ltd because of their dynamic
nature.
Cash budget: These types of budget would record only cash related transaction those are
done in an accounting period of time. It is prepared by taking information from various
activities such as operation, investing and financing (Eierle and Schultze, 2013).
 Advantage: to determine total cash inflows and outflow incur by the company during
a financial period.
 Disadvantage: Once the recovery time is completed managers cannot make any
further changes can be made under these particular budgets.
Process of budget
There are various steps needed to be followed in order to manage and control
performance of an organisation. Some of them are:
 In the early stage, proper prediction of budget need can be identified by the managers.
 On the basis of companies total estimation every income and expenses of various
departments are send to higher level.
 In the third step, valuable permission from higher department process of budget
development can be started to begun.
 After finishing entire budget, it is being sent again to board of director to take prior
permission.
 At the end, it is ready to deliver in front of other parties.

Pricing system: There are certain effective pricing systems which will be discussed below:
 Price skimming: Under this pricing method this aids to enhance total sales of
brand new products of a company. At the beginning of product development it
will be much higher.
 Economic pricing: In this particular method, every organisation required to set
prices very low of their different products in respect to attract maximum
customers (Akbar, 2010).
Different types of costing methods:
There are several types of costing method that are helpful in evaluating future aims and
objectives. Few of them are discuss underneath:
 Direct costing: This is happens to be more effective costing techniques which
include various modified capacity of results. It concludes direct material, labour
and other overhead expenditure.
 Standard costing: This seems to be necessary aspect for controlling cost and
evaluate total variances in respect to compare actual outcomes with budgeted one.
M3: use of various planning tools
Planning is an essential technique by which an organisation can attain their objectives
by proper utilising resources of the company. There are various tools such as forecasting
which use by managers to evaluate upcoming estimation of their costs. Whereas scenario and
contingency tools are another valuable tools that are helpful for TECH Ltd.
D3: Critical analysis to overcome financial issues
In every business there are certain types of business problems that are arise without
giving prior indications. To resolve them as soon as possible is primary target of the
company. For this purpose, they are using key performance indicators and financial
governance to deal with those issues.
TASK 4
P5: Effective use of accounting systems to resolve financial issues
It has been seen that “TECH Ltd” is related with the production of mobile charges and
other electronic gadgets. They are also associated with produce special kind of charges to the
customers. In accordance with finance record, it has been observed that the cited company

has recorded a net loss of £ 1.5 million during the year. Because of this, wide number of
financial problems is arising in organization department in accordance to funds. In this phase,
management accounting plays an eminent role to resolve those issues and make proper
planning for boosting by the use of various methods. The management of organization has
decided to adopt balance scorecard method to reduce their present losses. This happens to be
an utmost important technique which is helpful in facing all kind of financial and non-
financial problems (Leitner, 2013).
Balance scorecard method:
It is an essential method which is use by management for making improvement in their
internal operation and achievement of desire outcomes. It would provide great opportunity in
accordance to creation of direct connection among organization internal functions and their
aims by effective control and communication to reduce those issues. There are various
perspectives which are defined under this:
Financial: This would ascertain regarding the organization current finance position and their
various users those utilizing resource of the company.
Customer: It is necessary to take information regarding the all stakeholders about
performance of an organization.
Internal process: collecting information from internal department on daily basis to examine
quality of their goods and services.
Organizational volume: Gathering feedbacks regarding organizational performance through
capital, infrastructure and other aspects (Weygandt, Kimmel and Kieso, 2015).
M4: Analysis of financial problems
It has been noticed that there are certain types of financial issues those are related
with manufacturing of products in an organization. This will lead to make huge impacts of
overall productivity of the department as a whole. Some issues are related with profit level
and few of them are associated with product and quality services of the company. The main
aim of managers is to resolve those issues as soon as possible so that better outcomes can be
attaining in near future.

CONCLUSION
From the above project report, it has been concluded that management accounting is a
perfect techniques by which manager can make use of their financial transaction in more
systematic manner. For this purpose, they need to make use of accounting system and
reporting. The overall analysis is done to reach their destination and to become more
sustainable company in coming time.

REFERENCES
Books and Journals:
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of
Management Accounting Research. 27(1). pp.81-119
Christ, K. L., 2014. Water management accounting and the wine supply chain: Empirical
evidence from Australia. The British Accounting Review. 46(4). pp.379-396.
Moser, D. V., 2012. Is accounting research stagnant?. Accounting Horizons. 26(4). pp.845-
850.
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Becker, W., Ulrich, P. and Staffel, M., 2011. Management accounting and controlling in
German SMEs–do company size and family influence matter?. International Journal of
Entrepreneurial Venturing. 3(3). pp.281-300.
Eierle, B. and Schultze, W., 2013. The role of management as a user of accounting
information: implications for standard setting.
Akbar, S., 2010. Management accounting change: a comparative study of Indian and UK
organisations. Journal for Global Business Advancement. 3(1). pp.1-27.
Leitner, S., 2013. Information Quality and Management Accounting: A Simulation Analysis
of Biases in Costing Systems (Vol. 664). Springer Science & Business Media.
Weygandt, J. J., Kimmel, P. D. and Kieso, D. E., 2015. Managerial accounting. Wiley.
Online
Absorption costing. 2018.[Online]. Available through:
<https://www.accountingtools.com/articles/what-is-absorption-costing.html>.