Detailed Analysis of Management Accounting for Unicorn Grocery

This report delves into the realm of management accounting, offering a comprehensive overview of its principles and applications within the context of Unicorn Grocery, a micro co-operative business. The report is structured into four key sections, each designed to illuminate the functions of an accounts department and the practical application of financial formulas. The first section defines management accounting and its role in planning and controlling organizational operations. The second section provides an in-depth exploration of various accounting methods used for reporting, including Activity Based Costing, Geenzplankostenrechnung, Lean Accounting, and Resource Consumption Accounting, among others. The report also examines the advantages and disadvantages of budgetary control. Finally, the report concludes by proposing several strategies for resolving financial challenges, offering practical solutions to improve the financial performance of Unicorn Grocery. This report is intended to provide valuable insights into management accounting for students and professionals alike.

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management accounting provides financial and statistical information for business
manager to make their day to day transaction. It is also known as managerial or cost accounting
this is beneficial for both internal peoples and also for outsiders like stakeholders, investors etc.
detail of company related to available cash, sales revenue, accounts payable and receivable are
included in management accounting (Bouten and Hoozée, 2013). Main purpose of prepare this is
to provide annually or half yearly report of the company. Unicorn grocery is a micro co-
operative business in charlton-cum-hardy, Manchester England and the respective company
serve fresh, dried and processed food stuff and drinks. It is managed by the organisation
employees, owner or by the person who is running the company. This report is divided into four
different parts which shows the function of accounts department of company and throw some
light different formulas that help in calculating cost by the help suitable cost investigation
process for making attractive and correct income statements. Or else of this, same reports shows
advantages and disadvantages of budgetary control. In last task, assignment shows several ideas
and method for solving problem related to finance of Unicorn Grocery.
TASK 1
P1 Explain management accounting and types of accounting systems
Management accounting
It is initial task of the respective organisation it requires planning and controlling of
operational department of an organisation. The same requires information related to accounts
on which all decisions regarding manufacturing task are based (Burritt, Schaltegger and
Zvezdov, 2011). Enterprises can minimize errors by making decisions based on previous data
provided and it extents effectiveness of actions in particular situation.
Functions of management accounting: It's objectives are based on assisting
management to perform actions more effectively and it also help to manage planning, organising,
directing and controlling. Some of functions are as follows: Provides data: It can be taken as vital source of data to manage planning and they are
repository for large quantity of information about past achievements of company which is
needed to know for forecasting of future missions and visions.
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 Modifies data: It is necessary to make decisions properly by managers to classifies and
compile all tasks and activities. Taking an example of purchasing something for certain
periods can mentioned to recognize overall purchase on the specific time period
regarding product, supplier and territory. Analyse and interprets data: It is meaningful to analyse data of accounting to do
effective planning and decision making. The previous data and future assumption should
comparatively analysed for making future goals and objectives as well as ratios are re-
checked to matching direction are program. Easy way of communication: It also render the way to communicate plans or information
to superiors, sub-ordinates and outward through company to identify feasibility and
elasticity of different segments of plan. It make all parties to know about criteria that
have agreed upon and their duties in firm. Facilitates control: It helps to convert desired goals and missions into specified visions
for attainment due to correct time and secure effective accomplishment of objectives with
efficient manner. This would become possible regarding budget and regulation of cost
accounting it is an inbuilt part of accounting succeed
 Used as qualitative info for organisation: It will not going to control itself to fiscal data
to help in making decisions by managers as well as uses information Which is unable to
be measured in monetary terms (Chenhall and Smith, 2011). This kind of data can be
collected inly by researches, records, specific examination, applied maths compilations
and records related to engineering etc.
Reach of management accounting: same involve appearance of accountancy data with
it in very effective manner to manage activities in company. It has a large scope and consider
within its fold almost all aspects of business. It is useful in the following areas: Financial accounting: It would mainly involve with rearrangement of knowledge render
by financial accounting. IT is not possible to have full restrictions and coordination of
operations without proper designing of system of financial accounting. Cost accounting: All the cost tools and methods like chance cost reasoning, marginal
cost, standard cost accounting,differential costing and some more expenditure method
have an important and useful in business activity and restriction for business to run
successfully.
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 Revaluation accounting: This is useful in ensuring The maintenance of capital invested
in real terms and benefits should be calculated keeping the facts in mind respectively. Budgetary control and Inventory control: It include the implementation of capital as in
respect of money so it is necessary framing of budgets, comparison of actual
presentation , complining of variances, outcomes of their origin, etc. Now talking about
inventory then restrictions for same will calculated from time as it will acquire till final
disposal of that will be happened. Statistical methods: The manpower and other resources like raw material and money
must be distributed to different departments of firm is according to their needs should be
manage properly to convert assumptions and missions into reality.
Essential requirements of management accounting systems
It can be defined as an association in which it is a process to identify, measure and
communicate the economic information to consider judgements and decisions regarding
knowledge provided by users of the information (Christ and Burritt, 2013). The basic elements
which are needed to establish different kind of accounting systems to make standards of
framework as to reason behind information are as follows: Evidence, Investigation and Connection Prosody in Costing: It includes various key
functions like accounting to aid management to identify most prompt usage of working
capital resources, to measure effective of controlling expenditures and further distribution
of knowledge through the whole company. Having an example of cost accounting which
focuses on association of cost regarding the production, work, departments and resources
(initial resources used for production and manpower). Economical day of the month
accumulation should be collected in the form of data record and paper documents are
made which are useful for communication to manage as well as external users to make
effective decisions for particular process (Types of Managerial Accounting Reports,
2017). Firm's management can reapportion capital in an effort to better their skilfulness
and decrease costs. Fiscal Accounting Investigation, Measuring and Communicating: The important
element of measuring the financial transaction is based on past records having
standardised analysis of commercial performance of an organisation. The economic
knowledge is identified and analysed before communication to make decisions take in
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mind income, inflow or outflow of cash flow and earnings and failure statements. It is
designed to check commercial health of firm for insiders and outsiders judgement makers
such as investors or outer auditors. The kind of information regarding this system needs
an understanding of GAAP (General Acknowledged Accountancy Principles) included
this there are several desires of monolatry of every state and federal taxing authority. Identify Proper country Economic Measurements for Analysis: It can observe
commercial conditions of countries and then utilise measurements which ensure to
worldwide standards as SNIRS to convey knowledge about economic productivity
having classic measures called GDP (Gross Domestic Product) and GNP (Gross National
Product). Identification of necessary information to measuring wellness of country for
render for Unicorn and every person quality make commercial determination requires
these basic components- SNIRS, GDP and GNP of accounting systems (Dillard and
Roslender, 2011.).
 Basic Purpose of Accounting Elements: These elements were provided classic
framework to make an observation of commercial and economic components and trends
to render a factual based dimension of standard to convey financial health and taxation of
company and economies. It observe that time period to recheck directly with similar
period like one year or one month so that it will become possible to provide an analysis
of commercial health of firm regarding factual data record.
P2 Describe different methods used for management accounting reporting.
This reporting provides accounting information to managers for helps in planning
financial budgeting of the organisation. There are different methods used for accounting method
but the more prescribed one are as followed :-
Activity based costing – It was developed in 1987 by Robert Kaplan and Robin Cooper of
Harvard University. In this costing method cost is matched with activities, it is an activity
related to consumption of resources and costing of them, it involves both direct and indirect
costing of activities i.e. attending customer complaint, setting new machinery or processing and
sales of orders. It helps manager to understand and direct the budget effectively according to
required activity.
Geenzplankostenrechnung- It was a popular German costing method from late 1940s
delineation in providing persistent and accurate application and provides a guideline that tells
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how costing is done and assigned for product or services. It is often used for flexible and
analytical accounting practices . It was made by Hans Georg Plunt engineers by professions have
a target to design sustainable methodology for correct intensify of cost accounting information
(Herbert and Seal, 2012). They provide sensible analysis and meaningful intuition that will
overall benefit user of concerned departments like controllers, plant managers and project
managers.
The GPK contain 4 important elements
 Cost- type accounting- The separate costing of labours , materials and inventory and
break it down into fixed and proportional costs.
 Cost centre accounting-In this managers are having responsible areas and they are
accountable to their work and area of performance
 Product cost accounting- In this cost are related to products and and the proportional
costs are are assigned to services and product
 Profitability management- It is a final costing method in which the budgetary factors
like revenue,flexible costs and fixes costs are considered in cost accounting method . It is
a very important factor which include price decision making and internal pricing transfer
as well as providing costing decision for long term investing decision.
Lean accounting- Lean accounting was developed by Toyota with the help of several
other UK's companies. Lean accounting have two major applications like - This method helps
the budgetary control of an organisation by performing and analysing activities to company
accounting , controlling and process measurement, main objective of using lean method in
elimination and reuse of wastages , increasing process speed ,increasing efficiency by reducing
errors and make the process accountable and clear. Other factor of lean accounting is to change
of traditionally accounting, measurement and controlling policy. This method has overcome
other classical policies like the cost-plus pricing and variance reporting and these methods have
successfully replaced by summarising direct costing of value based activity and decision making
and reporting or also accurate analysis of financial impact ( Kotas, 2014).
Resource consumption accounting- it is a flexible,advanced and inclusive management
accounting which bestow managers with direct information and optimisation resource. This
method is new to market and mainly inspired by German Management Accounting .It was
developed in CAM-1(The Construction of Advanced Management, International).It has an
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ability to fetch directly through operational resource data and isolate different superfluous
capacity cost.
Different concepts of Resources Consumption Accounting
 Gordon Shilling law's costing attributes.
 Flexibility in using activity based costing
 analysis of quantitative data and their fundamental operations.
 Support the marginal profit-loss statement supporting marginal decision making
key elements of RCA like - resources and the costing are the main puller of cost
modelling and decision support quantity based modelling- the whole value of product are
calculates and their economical outcomes are analysed. Another one is cost behaviour – values
are added to resources and their operations are analysed in internal environment.
Throughput accounting – This accounting technique helps managers the supportive
information for profit and wealth maximisation for any enterprise. It helps in identifying factors
that hamper the the progress the environment in reaching the targeted goals. This accounting
practice is only depends on the varying cost and overall unit of outputs and increasing the
shareholders wealth.
They use three methods of income and disbursement :-
 Throughput(T)- It is a rate for measuring unit goals which determines the money value.
Throughput -Net Sales (S)- total variable cost (TVC) raw material cost. Product kept in
warehouses cannot be included in throughput but are considered as investments.
 Investment-Its the money in the system which includes ,inventory, machinery,
stationary,asserts, liabilities (Li and et.al., 2012). The inventories are valued on the basis
of cost related to creating inventories only but not with overheads and depreciation.
 Operating expense – it the money invested on achieving the organisational goal units
omitting the cost of raw material including factors like maintenance ,rent ,damages,
payrolls , and stationary .
Formulation under operational expanses
 net profit- throughput-operation expenses (T-OE)
 return of investments- net profit/investment(NP/I)
 TA Productivity – throughput/operating expenses (T/PE)
 Investment turns(IT)- throughput/investment(T/I)
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Transfer pricing- They are methods of determining price transect ion among the
endeavours having common ownership and control. This pricing technique provides multiple
gateway of controlling equity transaction of taxes they have the luxury to operate through
different taxation practices from different accessibility control centre. This helps to monitor and
adopt transfer pricing guidelines allowing taxation authority for regulating cross-border
transaction. Due to these guidelines and protocols it is sometimes termed as tax avoiding practice
(Otley and Emmanuel, 2013).The major problem with transfer pricing is it is misused for illicit
monitory transfer by false prices on invoices which results in Freudianism
Functions and risk :
 development of productivity
 assembling and manufacturing
 promotion activities
 profit and wealth maximisation risk
 termination of sales practices
 warehousing and transportation risk in delaying of services
 demographic conditions
 change in political and economic environment
 controlling pricing risk
 production and estimation
 risk in unequal transaction of budgets
Above are some of the important methods which are used in managerial accounting
reporting practices. Hence reporting plays a huge role in having transparency in financial
practices and having details of all financial factors leads to effective planning and can overcome
all the factor of risk and uncertainty .these above mentioned methods are prescribed by many
successful professors and high gross income company hence in current scenario they can be seen
adapted by entrepreneurs to control and regulate financial budgeting practices.
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TASK 2
P3 Computation of costs with the help of proper methods of cost analysis
Absorption cost and marginal cost is different from each other their differences are
explained below-
Basis Marginal costing Absorption costing
Meaning Decision making technique for
find out the total cost of
production is marginal
costing(P.Tucker and D.
Lowe, 2014).
Absorption costing is known
as full costing, in this all cost
whether fixed or variable are
absorbed by the total units
produces.
Gainfulness profit volume ratio are used
for measuring profit.
By the Involvement of fixed
cost, profit get affected.
Highlights Contribution per definite
quantity
Net profit per component part
Income statement as per marginal costing
Amount
Sales value (35*600) 21000
less:
Cost of Production (6+5+2) -9100
closing stock (100*13) -1300
variable overheads -7800
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Contribution 13200
less:
variable sales overheads (600*1) -600
fixed cost -2000
Admin & selling cost (700+600) -1300
-3900
Total 9300
Income statement as per absorption costing :
Amount
Sales value (35*600) 21000
less:
Cost of Production 9600
Gross Profit 11400
LESS:
Fixed and variable cost:
variable sales overheads (600*1) 600
Admin & selling cost (700+600) 1300
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Amount
Less: over absorbed fixed production overheads -100 -1800
Net profit 9600
TASK 3
P4 Pros and Corns of various types of planning tools used for budgetary control
Fund controlling is process of comparison between actual and standard budget of Unicorn
grocery. It is a pattern of fiscal planning and this is carried by organisation for its fast running.
Budget is a document of company which shows allocation of money for a specific purpose and
summary of expensive meet for achieving organisation target (Parker, 2012). It is a monetary
planning of a company prepared by budget manager in proper manner. Main objective of making
budgetary plan is to minimise losses because it shows responsibilities of employees and manage
Unicorn grocery employees for their success. Apart from all these it give description of capital in
the respective given company. Budgetary control have some advantage and disadvantage of its in
organisation are explained below:-
Merits of Budgetary control-
 Maximisation of profits- Main aim of preparing this is to maximisation profit of
Unicorn Grocery. By the help of this blueprint there is proper control on various capital
and revenue expenditure also help in achieving organisation goal in efficiently and
effectively.
 Co-ordination- for achieving budget target co-ordination of various employees and
subordinates is necessary. With the help of the same different department of organisation
and sectors is properly coordinated.
 Specific Aims- every organisation work for a specific aim and plan, policies and goals
are decided by top management of Unicorn Grocery. According to departments works are
divided between them but they work together for some specific aim. If there is no definite
aim is decide by the company then all the efforts are wasted.
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 Tools for measuring performance- It help in measuring performance of the employees
by providing them different task and then budgeted target are compared with actual and
standard performance. Each and every individuals performance are measured by top
management Easily with the help of same.
 Introduction of incentives scheme- by the help of Budgetary control there is
introduction of new scheme known as incentives scheme of remuneration. Comparison in
actual and budgeted performance of employees in Unicorn Grocery help management to
give them incentives on the basis of their presentation (Van der Stede, 2011).
 Regular monitoring- entire information related to the company are mention in official
document and issues related to budget are required regular monitoring so that their will
be no problem in the company related to profit and some other also.
 Utilisation of resources- it help in allocation of assets in proper manner with the help of
relevant data and statistical information. Budgetary control play a important role in
Unicorn working and in funds allocation.
Demerits of Budgetary control :-
 Uncertain Future- Budget are future oriented and prediction made for future may not
always true because business environment is dynamic and flexible in nature. Changes in
future condition can disturb preplanned budget and have to be prepared according to
future conditions.
 Budgetary Revision required- Budget is prepared on assumptions and it will prevail in
future because of some uncertainties. Frequent revision in target involve expenses and
also reduce value of current budget.
 Discourage efficient persons- Under the same target are fixed for every person in
Unicorn and the employees have to work on that common tendency is achieving target
only. This may discourage the employees working in respective company.
 Problem of Co-ordination- if there is no co-ordination among different department in
organisation then it will affect the performance of other department. Budget related
problems are solved with help of officers and every organisation cannot afford appointing
budgetary officers.
 Conflicts Among Different Departments- it is the reason of conflict among functional
department in organisation because every head working on its department goal without
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thinking of business goal and wants maximum allocation of funds this is the main reason
of conflict among them (van der Steen,2011).
 Depends upon support of top management- Budgetary control totally depend upon top
level management of the company some times it happen if there is no support of top
management then the same system will collapse.
 Zero Budget- It is prepared by past available information and help company's operating
team in selecting best course action so that it maximise returns of the respective
company. For making this budget they officers or the person who is preparing this have
to take proper steps needed for identifying the task from stating to the end.
While Making budget for Unicorn grocery use many techniques and tool that help them
in achieving their predetermined goal efficiently and effectively which is beneficial for
generating revenue. It also help in improving understanding between employees and employers
with the help of interaction for assigning tasks and allocation of funds. Apart from all the
advantages there are some disadvantage in preparing budget is that officer have to face many
problems and barriers in preparing budgetary control.
TASK 4
P5 Usage of management accounting systems to resolve financial problems
Management accounting help in many ways to Unicorn grocery in solving their financial
problems. It help in acquiring maximum profit with the help of official documents and statistical
informations. There is range of management accounting techniques are microeconomics,product
costings, cost of inventory. Planning tools used in the same are using budgets, pricing, common
costing system, strategic planning. Therefore there are many ways of resolving problem of
company related to financial issues some of them are explained below:-
Central presentation signal- It is a kind of presentation measuring activity which help
in prosperity of the Unicorn or a special activeness performing in Unicorn Grocery such as
project, programs, products and other initiatives. Key performance indicators are used by
company at multiple level to evaluate their success at reaching targets. There are two type of
KPIs first is, high level it focus on overall performance of the enterprise and the second is, low
level focus on process of a particular department like sales, marketing or it may be a call center.
If sometimes employees are failed to complete their target then it will feel that operations are not
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working properly. By the help of same every one project will be done in effective way on the
given time period so all issues related to this will be settled (Ward, 2012 ).
Benchmarks – It is a practice of comparing actual performance results and a standard
results of performance also help in improving some activities within an organisation.
Comparisons are done in the results in order to evaluate company overall competitiveness,
efficiency and productivity. Through benchmarking improvement that are made can help in
running business more efficiently and become more cost effective.
Financial governance- all the issues related to fund will be considered. Financial
governance help in securing all financial processes and gain trust of stakeholders. Cash in
unicorn will be represent in such a way so that their will be no issues in connection to it should
be progress by association (Zimmerman and Yahya-Zadeh, 2011).
All the above explained are the management accounting tools which help the respective
company in solving their problem related to finance it is important sector of every organisation
for its smooth and effective flow.
CONCLUSION
From the preceding report it has been concise that management accounting is an essential
for improvement and smooth flow of organisation and it help in decision making by providing
relevant applied mathematics data. The same report is about Unicorn grocery which is a micro
business having employees under 70 with roughly idea. This project highlights uses of
management accounting and its tools for cited company. Apart from all these, it also help in
explaining that how to set up income statement with the help of cost investigation method and
fine data. This report too include advantage and disadvantage of various methods of controlling
budgets thus the respective company can easy carry off their activity. In the last main need of
management accounting is to support Unicorn in their judgement making procedure by
providing necessary information and material body.
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REFRENCES
Books and Journals
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