Detailed Management Accounting Report Analysis for Zylla Company

This report provides a comprehensive overview of management accounting principles and their application within the context of Zylla Company, a multinational organization. It delves into various aspects of management accounting, including different types of accounting and their essential r...Read More

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different kinds of management accounting and essential requirements of their different
types........................................................................................................................................1
P2. Different approaches of management accounting reporting............................................2
TASK 2............................................................................................................................................4
P3 Various costing approach used to evaluate profitability...................................................4
TASK 3............................................................................................................................................6
P4. Planning tool use in budgetary control.............................................................................6
TASK 4............................................................................................................................................9
P5 Comparison with another business's with purpose to solve financial issue......................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11
.......................................................................................................................................................12

INTRODUCTION
Management accounting is a procedure of preparing accounts and reports that provide
proper and timely statistical as well as timely information. It is required by business managers in
order to make short term judgement in an accurate manner. Manager use accounting information
related to the provision which controls all the functions of business enterprise. These reports
mainly display the amount of present cash, outstanding debts, inventory, raw material and other
aspects (Bodie and et. al, 2014). Accounting is defined as a systematic recording, monitoring and
summarising of financial records and entries.
This project is based on Zylla Company which is a large multinational organisation. This
report consists of several tasks which lay on different accounting reports and systems. It will also
determine about the costing approach with an aim of evaluating business profitability. With the
use budgetary control, planning tools is very important to support in controlling all financial
problems. Overall, file is based on accounting system that helps in taking an accurate and
effective judgement regarding company’s sustainability in the future.
TASK 1
P1. Different kinds of management accounting and essential requirements of their different types
Management accounting is a approach which includes all those elements that are
beneficial for the financial department. They can support top level administration as well as other
departments in the execution and policy execution. Management is the main part of each and
every enterprise that is related with first task of controlling, executing and designing operational
activities of business. In order to make an impressive judgement, accounting information is
required and on the basis of same, position of firm is decided. In this accurate data is usually
right which output is uncertainty of fallible in decreased.
Management accounting is a beneficial part of the business that plays an essential role in
order to provide right direction to them. So, in this, business possibility of getting large number
of growth and profit of company (Burritt and et. al., 2011). In regards to evaluating Zylla
company performance, critical judgement are build to decrease its additional expenses and cost.
It is defined that scope & nature of accounting method is essential as well as wide due to its
correctiveness and accuracy. Aim and purpose of business managers in order to make accurate
financial report & entries so that objectives and aim can be achieved in an effective manner. In
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the case performance of the firm is impacting, so in this managers using various methods to
record business & financial transaction. Some kinds of accounting methods that can be essential
and supportive in monitoring business operations in an accurate manner. All these are
determined as:
Cost accounting: It is used by business organisation with an aim of evaluating cost that
firm is sustaining in their process of production. Main purpose of using this approach is to
identify the cost control, profitability and different parts related to costs which are obtained over
various activities. At the production point, project handler uses different aspects in costs like
standard, actual and normal cost.
Inventory management: It is an accounting system which is very effective in monitoring
closing and opening stocks (Cadez and Guilding, 2012). It is a big problem for the employer in
order to manage its inventory without having an accurate approach. For determining the stock
position, they can use stock turnover and ABC costing aspects.
Price optimisation: It is known as a systematic approach which helps business in
identifying the appropriate price. This aspect is supportive and beneficial in determining which
value is very much affordable for buyers for their commodities. It is used by Zylla with regard to
identify the profitability of them as well as create large chances for acquiring effective outputs in
quick period.
Job costing: Main purpose of using this approach is to determine batch size of products
and services manufacturing in the year. This aspect considers product date, number of
identification and quality of commodity.
P2. Different approaches of management accounting reporting
Reporting is defined as a financial transaction position in the accounts book. So, in this
way, final statements of business organisation can be built in an accurate and systematic manner.
It will include different necessary information linked with business operations . All data and
collection must be relevant before conveying into the statements. In this situation, upper level
management makes their own judgement through evaluating such entries in order to present and
give it to investors at the time (DRURY, 2013). So, it is a critical form of corporate governance.
Financial statements include cash-flows, income statements and balance sheet in order to pertain
regular transactions of company.
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Main aim of using this report is to control and evaluate wastage of business organisation.
Which is complete in the unnecessary expenses and cost forms. In this situation investors and
administration can take future judgement on the report basis, it is formulated by accounts
division. After devising such report overlook is necessary and essential for making investment
plans decision. It will supportive and important for formatting performance appraisal & analysis
for group members as well as organisation. The sources of information and data gathered is non-
financial & financial. It will be collect from different division who are working in the enterprise
with the aim of achieving common interest (Fourie and et. al., 2015). There are several system
of reporting which is followed by Zylla managers, these are determined under this:
Operating budget: It is an accounting reporting system which is related with production process,
it is covers all expenditures and income which incur by business entity in the year. Main
objectives of applying this approach is to identify real price which is complete by firm over the
goods productions. So it is known as internal reporting which is beneficial for the production
department.
Performance reporting: This report considers the valuable and essential information about the
current and past year performance of the company which is use into consideration. So it is
support managers in order to evaluate a logical element where an accurate result can be given
regarding its effectiveness and performances.
Account receivable again report: It is also a essential part of the reporting which is beneficial
for the non-paying customers invoice as well as uncredited bills (Frezatti and et. al., 2011). Main
purpose of using this systems is to determine recovery period of due price.
Therefore, Management accounting approach is very essential and beneficial part of the
financial department in order to identify income and expenditure of the business. In this way,
business manager can safeguard and handle its financial statements. It will support in making
positive results with the present resources. In regrades to built more chances of receiving
revenues they require to use different system of accounting such as job costing, price
optimisation and other essential aspects which is impressive for the organisation. Main benefits
of using such kind of approach is to maximise business efficiency and effectiveness in a
systematic manner. Zylla enterprise is very much dependable for making their sustainability in
upcoming time. It is a reporting part which is linked with costs of production unites such as
overhead, raw material and labour etc. Main aim of using this, is to tract real value which is
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charged on particular job as well as analysis them effectively and efficiently. Output of these is
to minimised cost. Reporting approach is beneficial for the firm for procuring positive outputs
with the present factors.
It can support them in order to evaluate financial transaction which result is maximised
profit. Main aim of using such methods is to analysis performance, growth, success and
sustainability of the company. It can be described by using necessary information and data
regarding future and current year performance. So in this, accurate plan can be evaluate
regarding Zylla company performance and efficiency. Main objectives of using these approach is
to taking investment idea in there future projects and tasks. Accounts receivable as well as
performance document are essential tools of reporting.
TASK 2
P3 Various costing approach used to evaluate profitability
Costing is an essential part which is used by business organisation with the purpose of
analysing total costs. It is invested on producing services and commodities to the clients in a
systematic manner. It is related either indirectly and directly with production price such as
overheads, labour and material etc. Company use this aspects in order to measuring monitory
value which is called as summary of resources (Fullerton and et. al., 2014). It is use by
administrator in regards to build accurate products transfer to its buyers. Such kind of costs are
impressive in process of judgement making which is given reliable and correct information
regarding actual values charge by the business entity (Zimmerman and Yahya-Zadeh, 2011).
There are some kind of costing approaches which is suitable and valuable for firm in regards to
evaluate net profits.
Absorption costing: It is a part of costing approach which the firm incurs in the production of an
additional units. Into the consideration, fixed cost contribution does not includes in this
approach.
Marginal costing: It is a part of cost which follow by business in the production process. It is
never includes fixed costs as per contribution unit.
Difference between Marginal and Absorption costing
Absorption costing Marginal costing
This approach presented cost information and Calculation of per units contribution which is
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data. In regards to procure variable, fixed cost
and net profit are decreased from it.
evaluate by the account administrator in order
to identify total revenue of business
organisation.
There are more difference in opening and
closing stocks it will influence on production
cost in a direct manner (Giovannoni and et.
al., 2011).
In this study, there is some changes in
inventory which cannot influence on
production per unit.
In the observation costs, overheads expanses
are considers in an effective manner.
In the marginal costs, office expanses are
includes in a systematic manner.
In this methods, decision-making process is
does not effective.
Marginal cost is very much effective in order
to making crucial judgement.
Computation by using marginal costing
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Calculation through Absorption costing approach
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500 8000
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8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
Such kind of tools has been analysis there when different factors are influencing business
profitability. It can be evaluated with macro and micro environment of a company. In regrades to
decrease financial problems company use accounting system in order to reduce such type of
issue. Another is microeconomic techniques which is followed with variance and cost volume
benefits (Hiebl, 2014). Using of these tools, managers can resolve all issues in an easily manner.
Another methods is ABC costing which is very important for the Zylla to producing their
services and products. Income statements is an essential part of company to identify their cash
inflow and outflow.
All above information and data which are considers as per assumption form to evaluate
the changes in total profit. Absorption and marginal costing methods used by company for
analysing their current profit which output is future investment idea made. With the use of
absorption costing they receive 7800 profits while, using marginal costing they earn 7500.
TASK 3
P4. Planning tool use in budgetary control
Budget: Meaning of budget is future investment scheme which is made by business
organisation for a specific duration. It will covers revenue as well as sales planning with the use
of expenditure and income resources that a firm is procuring from its investments.
Budgetary control: It is define as a system linked with real planning and earning financial
spendings. It is supportive in order to identifying the policies and plans followed in a systematic
way according to government legislation (Lavia López and Hiebl, 2014). There are some process
which are includes in this such as:
Discuss with managers: It is a first part of the organisation, in this manager play important role
in gathering all information which output is higher growth and profitability of business. They
understand the needs and changes requirements of budget.
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Make accurate declaration and assumption: This is defined as a budget assumption which is
made by company. In this process, income create in future costs that are require by organisation
with the product production process.
Set systematic information and data for budget in order to attain objectives: In this process,
different kind of crucial information are equipped with the use of essential details from all
department and group who are working in business.
Measurement of real with standard: Zylla company is required current year performance to
evaluate with the use of predicated and accurate information of future year.
Review stage: It is last phase in such kind of tool which is lay on review evaluation. In this all
person asked by administration regarding any changes.
Planning techniques: It is an essential and necessary tools of budget which is used business
organisation to mange and control their budget (Pitkänen and Lukka, 2011). There are several
kinds of these which are determined under this:
Forecasting tools: In this methods, business organisation forecast their all plans in an effective
manner. For analysation and forestation which includes economic survey, projections, outlook
and other aspects.
Advantages Disadvantage
Support in effective and better planning.
Achieves co-operations and coordination in
organisation.
It is totally based on assumption and past data.
In this all data and information are inadequate.
Contingencies tools: This approach recognise the require for contingencies planning as well as
identify the business possibility in an effective manner. It will assess of the uncertainty which
determined with the help of risk strategy.
Advantages Disadvantage
Maximise transparency about cost and value of
public service.
It is best tools because it reduce the future risk
and uncertainty in the business.
It will ignores the aspects of human
behaviours.
It is mainly focus on condition and not on
resources and tools.
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Scenario tools: It is also very essential and important tools of analysing internal and external
factor of the business success.
Advantages Disadvantage
Maximised motivation related to ownership of
the annual budget
It is forecasting under risk.
It is a very lengthy and expansive.
Not good for the business success and
development.
Master budget: It is techniques which is related with services and product manufacturing process
(The Advantages and Disadvantages of Budgeting, 2016). Business organisation used to identify
total expanses and cost which is incur by firm in the year. This aspects considers production and
sales budget.
Advantages Disadvantage
It is entirely lay on estimation regarding
projected & sales costs. It is receive by
business entity in advance. It is mainly
prepared at every day time duration.
This aspect is very expensive as all data is lay
on few variation and estimation of very much
effective results.
Static budget: It is also known as fixed budget which is prepared at opening of project budget
time. In this tools, all numbers are entirely different from current.
Merits Demerits
Main advantages of this budget is all
information are build on assumption (Quinn,
2014). It is can not be charged and modified
any situation.
It is more concise as well as ineffective as
likeness to other tool of budget.
Cash budget: It is very useful and beneficial for determined out-flow and cash-flows. It is
mainly made by business entity in the financial year. There are some activities which are
includes in this such as financing, operating and investing activities.
Advantages Disadvantage
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This budget support business in order to
evaluate net profit which is incurred by firm
from its different activities. It is identify by
company with the use of these budget in an
essential manner.
Main demerits of this budget disregard cash-
flows. So in this investment recovery time will
be fulfilled.
Therefore, In order to procure accurate and correct data, business may use different kinds
of budget tools. So planning techniques is more beneficial to observe business information
regarding financial situation (Renz, 2016). Operating budget, is another tool which is used by
company in order to see total expanses and costs in the year. For development of organisation
performance, all financial tools are require in a specific and systematic manner. In this chance
and new opportunities plenty are procuring in an accurate outputs. It is use where, there different
financial problems are available. It will make large effect on company profitability ratio. It is
define the duty of managers in order to analysis all problems and make better process to reduce
difficulties.
TASK 4
P5 Comparison with another business's with purpose to solve financial issue
In each and every enterprise are observed financial problems that can influence on
organisation growth and productivity in direct way. Main aim of the manager is to accurate plan
with the purpose of achieving long term objectives and profitability. It will impacted business
performance and its profitability at large. There are also several issues such as short duration
liabilities, lack of financial aspects and cash inability (Schaltegger and et. al., 2013). There are
several kinds of tools which has been reduce all issues in a systematic manner are as follows:
KPI: It is known as Key performance indicators which is very important and essential
techniques. It is used by company with the purpose of reducing all financial problem. Main aim
of using this approach is to evaluate organisation and team performance in the year.
Financial governance: This aspects is made by legal authorities which is followed by each and
every organisation. It will support them in order to analysis stability as well as durability of firm
in the past. It is very essential tools that control all financial risk in the business. In this all
transaction related to the company profit and loss account, balance sheet and other.
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Such kind of company is small business organisation which is dealing in electronic
equipments. In a middle level, 4com is operating in successfully. With the use of Key
performance indicators, they can easily analysis team and business performance. Another is Such
kind of company is a big organisation which dealing in multiple products. They required to have
accurate and effective system of accounting, with the help of these tool they can easily handle
their regular expanses. They use benchmarking and financial governance with the aim of
reducing financial problems. Such type of issue is identify the each and every organisation, so in
this situation they use accurate accounting methods to reduce these issue. It will make large
effects on company profitability and growth (Vosselman, 2014). In order to control entire
financial difficulties, business entity use various approaches which is profitable from acquiring
hamper. In this situation, business entity can achieve positive results, in this they adopt outdated
approach. With the use of key performance indicators & financial governance, firm can manger
their regular risk in a systematic manner.
CONCLUSION
As per the above mentioned report, it can be determined that management accounting is
important apart of the each and every organisation. With the help of these tools is to monitor
financial transactions in an effective manner. This study gives necessary and essential
information regarding different accounting approach as well as reporting tool. All those are more
valuable and beneficial for crucial judgement. Several tools and techniques are determined by the
company with the aim of achieving higher profitability and growth. Business organisation also
use planning methods which is used them in budgetary process. These tool give the accurate
information to firm in regrades to solve all financial problems.
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REFERENCES
Books and journals
Bodie, Z., Kane, A. and Marcus, A. J., 2014. Investments, 10e. McGraw-Hill Education.
Burritt, R.L., Schaltegger, S. and Zvezdov, D., 2011. Carbon management accounting:
explaining practice in leading German companies. Australian Accounting Review. 21(1).
pp.80-98.
Cadez, S. and Guilding, C., 2012. Strategy, strategic management accounting and performance: a
configurational analysis. Industrial Management & Data Systems. 112(3). pp.484-501.
DRURY, C. M., 2013. Management and cost accounting. Springer.
Fourie, M.L. And et. al., 2015. Municipal finance and accounting. Van Schaik Publishers.
Frezatti, F. and et. al., 2011. Does management accounting play role in planning process?.
Journal of Business Research. 64(3). pp.242-249.
Fullerton, R. R., Kennedy, F. A. and Widener, S. K., 2014. Lean manufacturing and firm
performance: The incremental contribution of lean management accounting practices.
Journal of Operations Management. 32(7). pp.414-428.
Giovannoni, E., Maraghini, M. P. and Riccaboni, A., 2011. Transmitting knowledge across
generations: The role of management accounting practices. Family Business Review.
24(2). pp.126-150.
Hiebl, M. R., 2014. Upper echelons theory in management accounting and control research.
Journal of Management Control. 24(3). pp.223-240.
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.
Pitkänen, H. and Lukka, K., 2011. Three dimensions of formal and informal feedback in
management accounting. Management Accounting Research. 22(2). pp.125-137.
Quinn, M., 2014. Stability and change in management accounting over time—A century or so of
evidence from Guinness. Management Accounting Research. 25(1). pp.76-92.
Renz, D.O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Schaltegger, S., Gibassier, D. and Zvezdov, D., 2013. Is environmental management accounting
a discipline? A bibliometric literature review. Meditari Accountancy Research. 21(1).
pp.4-31.
Vosselman, E., 2014. The ‘performativity thesis’ and its critics: Towards a relational ontology of
management accounting. Accounting and Business Research. 44(2). pp.181-203.
Zimmerman, J. L. and Yahya-Zadeh, M., 2011. Accounting for decision making and control.
Issues in Accounting Education. 26(1). pp.258-259.
Online
The Advantages and Disadvantages of Budgeting. 2016.[Online]. Available
through:<http://www.bifa.org/library/freight-management/finance/budgeting/the-
advantages-and-disadvantages-of-budgeting> .[Accessed on 21th November 2017].
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