Management Accounting Report: Sollatek Ltd. Fiscal Analysis

This report provides an analysis of management accounting technologies and their application within Sollatek Ltd., a UK-based manufacturer of electromagnetic and digital equipment. It examines various management accounting techniques, including cost optimization, asset administration, cost accounting, and job pricing, highlighting their importance in maintaining fiscal competitiveness. The report also discusses the necessity of management accounting reporting, detailing different types of statements such as performance reports, accounts receivables documents, job cost documents, and stock administration statements. Furthermore, it explores the advantages and disadvantages of different accounting systems and forecasting methods, emphasizing their role in addressing fiscal challenges and supporting strategic decision-making within the organization. The analysis includes a discussion of cost estimation methods and the involvement of managerial accounting in the fiscal analysis phase, concluding with an assessment of planning strategies for dealing with fiscal concerns.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1: The various sorts of managerial accountancy technologies and their criteria.................1
P2: The necessity of managing accountancy reporting and the many sorts of managing
accountancy statements..........................................................................................................4
M1: Managerial accountancy solutions' advantages and applications...................................5
D1: Analyze the pros and cons of alternative compliance with accountancy systems..........6
P3: Cost estimation utilizing the most relevant methods.......................................................6
M2: Accountancy procedures come in a variety of shapes and sizes.....................................8
D2: Evaluation of the information..........................................................................................9
PART 2............................................................................................................................................9
P4: The advantages and disadvantages of employing financial management instruments....9
P4. Various sorts of forecasting methods have benefits and drawbacks................................9
M3: The usage of various organizing technologies, as well as their applicability...............11
P5: In order to address fiscal challenges, we compared ourselves to other organizations...11
M4: Managerial accounting's involvement in fiscal analysis phase.....................................12
D3: Assessment of planning strategies for dealing with fiscal concerns.............................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Managerial accountancy is the method of creating yearly fiscal statements to assist a
company in preserving its fiscal competitiveness in the global marketplace (Altukhov, Predeus
and Predeus, 2019). Profit and loss a/c, Balance sheet, Cash Flow report, and other fiscal
instruments fall into this category. It is advantageous to investors who assist a company in
conducting company's activities in a comprehensive and timely way. Accountancy executives
have the responsibility of converting fiscal information into meaningful knowledge so that they
may make efficient judgments and lucrative strategies for the company. It strengthens the brand
visibility amongst competitors in a more effective manner. For the task of introducing this study,
Sollatak Ltd., a corporation that manufactures and sells electromagnetic and digital gear to the
citizens of the United Kingdom with the goal of protecting other employees and consumers from
energy outages, was chosen. The study illustrates the distinct accountancy technologies and their
critical importance in a company. In moreover, this study discusses several distinct
methodologies that aid management in the decision-making processes. In addition, this study
covers various methods of pricing that are employed in the computation of net viability. Aside
from that, this study primarily discusses organizational techniques for budgetary management
and finance instruments for resolving fiscal concerns.
PART 1
P1: The various sorts of managerial accountancy technologies and their criteria
MA's criteria include:
Institute of Management Accountants (IMA): The Institute of Management Accountants
(IMA) is a vocation that entails a variety of positions and obligations, including decision-
making, developing programs and strategies, and preparing financial statements, among others,
to help an institution accomplish pre-determined aims and outcomes within a provided time
frame.
Institute of Certified Management Accountants (CMA): The Association of Certified
Management Accountants (CMA) is a professional association of professional accounting
professionals. Managerial accountancy necessitates managing accountancy training and expertise
abilities in order to generate accountancy information that assist managers in formulating

lucrative decisions and appropriate regulations for the development of a company (Amidu, Effah
and Abor, 2011).
Meaning: Managerial accountancy allows a company to compete with its competitors by
preserving its fiscal place in the industry. It could be achieved by utilizing yearly fiscal records
such as profit and loss accounts, balance sheets, and cash flow statements.
As a result, managerial accountancy is critical to a firm's productivity and expansion.
Developing fiscal reporting, adopting resources effectively and efficiently, selecting the
appropriate pricing approach, producing a budgets, and using planned instruments to oversee are
just a few of the responsibilities that an accountants supervisor is expected to undertake. Sollatek
Ltd. is a manufacturer of electromagnetic technology that helps businesses and consumers use
less power and save even more money. As a result, in order to extend its company activities on a
big extent, its administration must hold a consistent fiscal circumstances. It could be
accomplished by incorporating various accountancy methods, such as a pricing efficiency
platform, a costing accountancy framework, a task pricing framework, and so on, in addition to
create successful strategies and judgments in terms of achieving an economy's productivity. It
provides a number of benefits to the businesses, which also are listed below:
Increased client commitment: Sollatek Ltd. can detect the perspective of prospective
consumers regarding the pricing imposed on their goods and solutions through utilizing multiple
accountancy methods, such as a pricing management platform. It allows managers to make
optimal marketing strategies that enhance customer happiness (Arroyo, 2012).
Productivity evaluation: Managerial accountancy assists divisions in improving their
entire results by evaluating real and planned performances. It makes the greatest contribution to
accomplishing a firm's targeted aims and ambitions. For instance, employing a price accountancy
platform to create a budgeting allows you to allocate costs to multiple divisions based on their
wants and objectives.
Effective management control: Sollatek Ltd. is competent to lower corporate costs and
operations with the help of the managing accountancy process to develop efficient programs and
strategies after evaluating the valuable information received from the managing accountancy
platform.
Various accountancy techniques for administration:

Price Optimization technique: This accountancy technology enable managers in creating
efficient marketing strategies by understanding potential customers' perceptions as well as how
much customers are inclined to purchase for Sollatek Ltd's offerings. This should increase the
degree of pleasure of prospective customer while also making it easier to gain their commitment.
For example, increasing the cost of electronics appliances on a constant schedule could raise the
likelihood of committed customers defecting to competitors, which is not really a promising
indicator for Sollatek Ltd. As a result, employing such a method aids in determining what level
of price the consumers were pleased with at the date of acquisition (Bedford, Malmi and
Sandelin, 2016).
Asset administration technique: This is yet another excellent accountancy method that
instructs organizations to keep enough products in the organization in order to satisfy
marketplace expectations and demands. Sollatek Ltd. should use such a strategy in order to take
advantage of the circumstances of expanding product growth over the coming years by ensuring
the accessibility of raw resources in their facilities. Improvements in number of power
commodities, for instance, in the nearest term will necessitate the business possesses buffer
supply to fulfill consumption, which could be facilitated by such a network.
Cost accountancy technique: This is an accountancy framework which assists managers
in formulating the overall expense that will be spent in the implementation of various company
operations such as manufacturing or advertising. Since Sollatek Ltd. is a small business with
scarce funds, it is critical for leadership to make the best use of those assets in order to reduce
waste. It is feasible via the use of a price accountancy framework that limits and guides a firm's
expenditures after considering prospective risks and associated efficacy.
Job pricing technique: This is an accountancy method that assists in determining the
total expense of creating a single commodity or a collection of items, allows companies to
construct a performance characteristics. Sollatek Ltd.'s administration must evaluate all of the
actions involved in creating items, as well as the costs associated with them, in attempt to
accomplish beneficial results in the coming years. Batch costing, procedure costing, and
contractual costing are some of the methodologies used in such a framework. Owing to the fact
that Sollatek Ltd. deals with power gear, batching pricing could be a possibility (Borthick and
Pennington, 2017).

P2: The necessity of managing accountancy reporting and the many sorts of managing
accountancy statements
Sollatek Ltd. is a modest firm that manufactures and sells electronic goods to other
organizations and consumers. The administration has constantly attempted to develop the
company's operations, which could be accomplished by keeping weekly, bimonthly, fortnightly,
or annual accountancy statements. Profit and loss a/c, Balance sheet, Cash flow statement, and
other documents reveal the firm's existing and precise fiscal reputation in the industry. This
instructs managers to adopt sound judgments and develop appropriate programs in order to get a
comparative benefit. As a result, it is critical for Sollatek Ltd. to preserve several sorts of records,
like annual reviews, accounts receivables findings, and work expense findings, among others,
that would offer helpful material on which appropriate strategies and regulations may be created.
These studies are also important for presenting such studies to investors in order to obtain
additional fiscal assistance in plan to enlarge the company's operations to new nations. Traders,
lenders, and vendors are examples of these kinds of owners. As a result, Sollatek Ltd. should
produce a variety of documents in ability to remain above of their competitors and stay in the
marketplace for a prolonged amount of duration. The following sections go over comparable
report standards in more detail:
Performance report: A productivity statement is a summary that contains pertinent data
on the functioning of different divisions inside a company. Supervisors within every division
should indeed be expected to keep all documents relevant to their efforts in attaining the intended
goal. Sollatek Ltd.'s administration and leadership tasks a strategy and assigns activities and
duties based on this information. Since each division's participation maximizes a company's core
success, financiers are increasingly drawn to them for investing (Christ, Burritt and Varsei,
2016).
Accounts receivables document: This document is necessary to keep in order for the
organization to retain a healthy fiscal circumstance. This type of data collection informs the
business about a database of borrowers who have not yet reimbursed the business for activities
they conducted with the firm previously. This will instruct administration to approach
individuals in order to retrieve the restoration payment. It also encourages businesses to
reconsider their lending procedures in order to prevent outstanding debt or non-payment by
customers.

Job price document: This is a critical accountancy summary that Sollatek Ltd. must keep
track of in order to establish the accrued in manufacturing a specific commodity or collection of
similar products. An institution's administration must determine if the money spent in a specific
commodity would be recovered in the coming years. The major goal of generating such a
document is to determine the costs associated with various work order. It would have a
significant and positive effect on the firm's financial performance.
Stock administration statement: This is an accountancy document that puts the
organization in a condition to satisfy marketplace expectations and demands by keeping enough
stock on hand. Since Sollatek Ltd.'s clientele include employees and consumers, desire for their
electronic goods would be considerable at any moment, necessitating the firm's maintaining an
adequate quantity of inventory. This could be accomplished by gathering knowledge from
certain data so that management could execute an allocation for merchandise at the appropriate
time and location, allowing the manufacturing operation to function more efficiently. The EOQ,
ABC costing methodology, and stock governance methodology are all important techniques for
preparing accounting reports (Cleve, 2017).
M1: Managerial accountancy solutions' advantages and applications
Sollatek Ltd. could gain a number of advantages by implementing various managerial
accountancy solutions. The following are some of the advantages:
Accountancy tools for administration Advantages
Accountancy methods for costs It aids in reducing cost waste by allocating
costs after evaluating the information gained in
the upcoming.
Stock control mechanism It aids Sollatek Ltd. in maintaining an
acceptable inventory levels in addition to fulfil
industry demands.
Mechanism for pricing optimization It assists in increasing the degree of
contentment of focused clientele by
establishing efficient price strategy (Corrigan,
2018).
Mechanism for calculating job costs It aids in calculating the entire price of

manufacturing a single commodity or a
collection of commodities.
D1: Analyze the pros and cons of alternative compliance with accountancy systems
There are indeed a variety of accountancy and monitoring technologies that assist
managers in formulating successful choices and appropriate strategies by providing knowledge
via these platforms and analyses. Accounts payable statements, for instance, offer data about a
list of outstanding borrowers, allowing administration to make adjustments to its reputation rules
in place to evade payments collection issues.
P3: Cost estimation utilizing the most relevant methods
Cost: It relates to the quantity of money spent to create or purchase anything in addition
to make revenue from the sale of those produced goods and solutions. To put it another way,
expense is primarily a value of the money, materials, duration and energy, hazards, and other
factors that must be engaged in the implementation of various commercial operations. These
costs are connected to the materials, personnel, running costs, and other costs involved in the
manufacturing processes. The administration has two ways for determining net efficiency in this
case (Curtis and Taylor, 2018).
Sollatek Ltd. is a production firm, therefore it must estimate the expenses associated with
various commercial operations in addition to reach high revenue and long-term viability. It
instructs administration to reduce waste as much as possible in addition to maximize revenues.
Marginal costing and absorption costing are the two most used pricing approaches. It is further
described in the following sections:
Marginal costing:
It is a technique for calculating net viability that only considers changeable expenses.
Whenever an organization produces one additional item of production in addition to the primary
production, this strategy is beneficial. It typically raises or lowers the overall expense of
manufacturing, depending on the amount of products generated. Marginal cost, sometimes
referred as variable cost, comprises personnel and commodity expenses, as well as a fraction of
the fixed cost that is projected.
Absorption costing:

Another successful pricing approach incorporates all sorts of expenditures, such as
variable and fixed costs that have an impact on net competitiveness. Exterior reporting must
follow Generally Accepted Accounting Principles (GAAP). When calculating net viability, it
takes into account both variable and fixed costs. For instance, immediate costs comprise the cost
of labor, the cost of raw supplies, and the cost of overhead. Attributed to the prevalence of fixed
costs, the net income of the organization diminishes, making it less appealing among most
businesses (Giacomini, Sicilia and Steccolini, 2016).
Calculation of net profit by using marginal costing method:
Particulars Amount
Sales revenue = (selling price * no. of goods sold = 55 * 600) 33000
Marginal Cost of goods sold: 9600
Production = (units produced * marginal cost per unit = 800 * 16) 12800
closing stock = (closing stock units * marginal cost per unit = 200 *
16) 3200
Contribution 23400
Fixed cost ( 3200+1200+1500 ) 5900
Net profit 17500
Computation of net income by using absorption costing method:
Particulars Amount
Sales = (selling price * no. of units sold = 55 * 600) 33000
Cost of goods sold = (total expenses per unit * actual sales = 23.375 * 600) 14025
Gross profit 18975
Selling & Administrative expenses = (variable sales overhead * actual sales +
selling and administrative cost = 1 * 600 + 2700) 3300
Net profit/ operating income 15675
Evaluation of the breakeven point: It is thought to be a pivotal moment at which all
costs and expenditures must offer comparable results for Sollatek (UK). It is regarded as the
efficient threshold when a corporation neither makes revenue nor suffers a deficit.
A. Total number of product sold
Sales per unit 40
Variable costs VC = DM + DL 28
Contribution 12
Fixed costs 6000
BEP in units 500

b. Calculation of breakeven point in accordance to sales revenue
Sales per unit 40
Variable costs VC = DM + DL 28
Contribution 12
Fixed costs 6000
Profit volume ratio PVR = Contribution / sales * 100 30.00%
BEP in sales 20000
c. Calculation for getting desire profit of 10,000
Profit 10000
Fixed costs 6000
Contribution 16000
Contribution per unit 12
Sales 1333.33
Margin of safety: It is regarded as among the most trustworthy criteria associated with
the improved administration of the different fundamental values of stocks at marketplace prices.
It's referred to as a much more precise manner of providing efficient strategies as an ending
quantity of selling, which really is dependent on the proper company spectrum for
comprehensive break even assessment (Gonzalez and Mendoza, 2020).
d. The margin of safety, if 800 products are sold
Actual sales in units 800
Break even sales in units 500
Margin of safety 37.5
M2: Accountancy procedures come in a variety of shapes and sizes
Accountancy procedures can be divided into two categories:
Standard costing: Standard costing is a good strategy for determining prospective
viability by taking into account a variety of factors such as potential selling income,
expenditures, and demands. Most businesses favor this strategy for predicting prospective
results.
Marginal costing: Nearly every single organization, especially Sollatek Ltd, uses
marginal costs. So that only variable expenditures are taken into account when calculating net
earnings (Hall, 2012).

D2: Evaluation of the information
In addition to estimate net viability, two techniques are used, as shown in the above
computation. The profit is 17500 when utilizing the marginal pricing approach, whereas it is
15675 when utilizing the marginal pricing technique. The 9600 discrepancy is due to changes in
variable costs. The entire quantity of items produced in Breakeven is 500, and the total quantity
of sales income required to break even is $20,000. Sollatek Ltd. needs sales revenue of 1333.33
to make a profit of at least 1000. Whenever 800 goods are sold, the safety margins are 37.5.
PART 2
P4: The advantages and disadvantages of employing financial management instruments
Budgeting control: Various divisions put up their best attempts to accomplish the
intended aims and targets. They required finances to perform their tasks, therefore the
administration created a budgeted based on the demands and objectives of every sector. It is
critical to keep track of expenditures incurred in the implementation of various corporate tasks,
and administration is obligated to use various budgeting techniques to do so (Roberts and Gnan,
2017).
P4. Various sorts of forecasting methods have benefits and drawbacks
Budgeting control: This is a strategy for effectively regulating costs that comprises
integrating departments, preparing budgeting, assigning duties, and evaluating the current
performances with an acceptable quantity of funding in order to achieve greater productivity and
efficiency. The main goal of this instrument is to decrease or eradicate the company's
inefficiency and boost revenue. The financial management method involves a number of
components, which have been listed below:
Communicate with the executive: As a first stage, the supervisory or managers of
different departments must meet and discuss the corporate activities that will help the company
or its numerous businesses in the big scheme of things.
Assertions: After gathering all facts and input from multiple divisions, the management
of Sollatek Ltd. requires to convene for the goal of addressing the actions that are beneficial for
the company in terms of offering long-term disadvantages and rewards. Make concerns for
upcoming commercial activities if you want to get effective findings.