Analysis of Management Accounting for Conway Ltd Report

This report delves into the realm of management accounting, focusing on its application within Conway Ltd. It begins with an overview of management accounting systems, including cost accounting and inventory management, and their benefits. The report then explores various management accounting techniques, such as absorption and marginal costing, providing income statements for Conway Ltd using both methods. Planning tools, including scenario, contingency, and forecasting tools, are examined in the context of budgetary control, highlighting their advantages and disadvantages. The report further addresses how management accounting can be utilized to respond to financial problems, using Unilever and P&G as examples. It evaluates how planning tools help organizations solve financial issues such as maintaining price and profit margins, and concludes with a summary of the key findings.

Management Accounting

Table of Content
• Introduction
• 1. Understanding of Management Accounting Systems
• 2. Range of Management Accounting Techniques
• 3. Use of Planning Tools in the Management Accounting
• 4. Use of Management Accounting to Response Financial
Problems
• Conclusion
• References

Introduction
Management accounting is the process of managing
information for the analysis of their financial data and it will
use by the manager to for the internal decision making
process. This report include the Conway Ltd financial
information to calculate or analyse the cost of their products.
It will be calculated through marginal or absorption costing
method.

1. UNDERSTANDING OF MANAGEMENT
ACCOUNTING SYSTEMS

DIFFERENT TYPE OF MANAGEMENT
ACCOUNTING SYSTEM
 Cost Accounting System: Managerial framework which help the
manager to identify the cost of each unit. Manager analyse the cost
through evaluating their profit margin, involuntary valuation and
try to reduce product cost and control it.
 Inventory Management System: Software which help the
organisation to track their inventory level on regular basis. As
physical counting will take enough time so this system help the
manager to improve their warehouse system.

BENEFITS OF MANAGEMENT
ACCOUNTING SYSTEM
 Cost Accounting System: Help the manager to identify the
cost of each unit including the labour, material & other
overheads. Easy identification of the overall expenses or
revenue of the organisation which further helps in achieving
business objectives & goals.
 Inventory management system: Increase productivity or
efficiency in the operational functions. Reduce the wastage
of material as well as provide prior information before
shortage. Provide accurate information and reduce manual
burden to record each entry.

CRITICAL EVALUATION OF MANAGEMENT
ACCOUNTING REPORTING INTEGRATED
WITH ORGANISATIONAL PROCESS
Management accounting reports are integrated with
organisational process due the inter- related function. Such as
different accounting reports required various information
which will be collected through organisational process and it
include the business goals & objectives. Performance or
budget report required the information related to employees or
operational functions which perform in the organisation.
Manager of Unilever company have to perform organisational
process and it will be done through budget report because it
include the each and every information regarding material,
planning, funding & other activities.

DIFFERENT METHODS OF
MANAGEMENT ACCOUNTING REPORT
 Budget Report: An internal report which help the
management to compare estimated data with the actual
performance.
 Performance Report Accounting: It includes the
experience of workers or organisation at the time of
performing their task. Also individual performance of an
employee is reflected in this.
 Cost Managerial Accounting Report: Includes all product
cost related information as well as strategies which help the
company to control their product cost or try to reduce each
unit.

2. RANGE OF MANAGEMENT
ACCOUNTING TECHNIQUES

Absorption Costing
It is an accounting methods which include the
manufacturing cost of product. Absorption costing not just
include the material and labour cost it also include the
production overheads. It will include direct or indirect cost of
manufacturing.

Marginal Costing
This costing system determine the changes when quantity
increased by every single unit. It is helpful technique to find
out each cost of product, where variable cost considered as
cost of unit and fixed cost as period cost

Income statement by absorption costing
methods:
Particular Amount
Sale(40000*15) 600000
Less: - Cost of goods sold
Material Cost (40000*4) 160000
Labour Cost (40000*4) 160000
Variable Cost (40000*2) 80000
Fixed overheads 50000