Management Accounting Systems and Techniques in Zylla: A Report

This report provides an analysis of management accounting systems and techniques employed by Zylla Company, a large multinational organization undergoing significant changes. It covers essential requirements of management accounting, different reporting methods like cash flow analysis and Management Information Systems (MIS), and their benefits and applications. The report also delves into cost analysis techniques, including marginal and absorption costing, and their impact on financial reporting. Furthermore, it examines planning tools used in budgetary control, such as standard costing and cash flow analysis, along with their advantages and disadvantages. The report concludes by assessing how organizations adapt management accounting systems to address financial problems and achieve sustainable success, emphasizing the critical role of management accounting in strategic decision-making and organizational growth. Desklib offers a wide range of solved assignments and past papers to aid students in their studies.

Unit – 5
Management Accounting
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Contents
Introduction:...............................................................................................................................4
LO1............................................................................................................................................5
P1. Explain and give its essential requirements.....................................................................5
P2. Different methods used in management accounting reporting........................................6
M1. Benefits and their application within an organizational context....................................7
D1. Integration of management accounting systems and management accounting...............8
LO2............................................................................................................................................9
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costing..................................................................9
M2. Apply a range of management accounting techniques and produce appropriate
financial reporting documents..............................................................................................11
D2. Produce financial reports that accurately apply and interpret data for a range of
business activities.................................................................................................................12
LO3..........................................................................................................................................13
P4. Advantages and disadvantages of planning tools used in the budgetary control. [M3].13
LO4:.........................................................................................................................................16
P5. Compare how organisations are adapting management accounting systems to respond
to financial problems............................................................................................................16
M4. Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success.....................................................................................17
D3. Critically evaluate how planning tools for accounting respond appropriately to solving
financial problems to lead organisations to sustainable success..........................................18
Conclusion:..............................................................................................................................19
References:...............................................................................................................................20
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Introduction:
Being the management accountant of the Zylla company, which is the large multinational
organisation undergone with a number of changes over some time. The major change which
has occurred is in the acquisition, locations, and restructuring so the company wants to
manage the accounting. In this report, the manager has explained about the management
accounting systems and the management accounting techniques which help in ascertaining
the cost of the company. The report also includes the different management accounting tool,
budgetary control system and forecasting budgets. The report also gives the brief description
about the marginal and absorption costing which is the important technique to analyse the
cost. The report also states how the management accounting helps in solving the financial
problems. Planning tools and management accounting techniques maintains the proper
accounting of the company and helps in increasing the growth of the company. The report
also explains the benefits of the management accounting and budgetary control system.
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LO1.
P1. Explain and give its essential requirements.
Management accounting
The procedure of preparing management accounts and reports which are used by the
managers of the firm to make the decisions. These systems guide the managers of Zylla
company in the process of decision-making and improve the effectiveness of the decision-
making process. These systems can be used by the managers at the top and also the managers
at the ground level who takes the day to day decisions in the firm (Hilton and Platt, 2013).
Essential requirements of management accounting systems
The style of management
It means the autonomy allowed in the Zylla company. As for different organizations,
different powers are delegated, this changes the use of management systems. In an
organization where autocratic style is followed the company’s top management requires more
information and in the company following democratic system that s from bottom to top the
lower level managers require more information. This changes the requirement of
management accounting systems (Ward, 2012).
The organizational structure of Zylla Company
The organizational structure affects the system, if the company has a vertical system then
managers will require narrow information but in much depth, whereas in horizontal
organizations a lot of information will be required but in simple terms.
Information quality
The information collection process in the organization can be different and also the quality of
the information collected. If the information s collected randomly and is less reliable it will
be used accordingly and on the other hand, if a deeper analysis has been made then the
information will be analyzed in a more sophisticated manner (Dale, 2015).
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P2. Different methods used in management accounting reporting.
Cash flow analysis
Cash flow statements are used for analyzing the inflow and outflow of cash and cash
equivalents in an organization (Reid and Myddelton, 2017). This system is used for the
purpose of knowing the situation of cash in the organization. It offers valuable insights into
cash position and how they were earned. It also helps the managers in their decision-making
process. These statements ensure the proper cash flow for the firm and prevent ant future
financial crises. It further ensures that the liquidity of the firm is maintained so that
unforeseen expenses can be met (Drury, 2013).
Management Information System (MIS)
MIS is a computer-based system where all the financial information of the company is stored
in digital format. This enables the managers of the company to access the information in an
organized manner. This system enables the managers to have complete access to the
information and make the decision in an effective manner. This increases the overall
productivity of the firm and enables the firm to increase its profitability. It also eases the
work of managers as they can find all the important information in one single place. This
system further helps the top management to monitor the performance of the firm.
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M1. Benefits and their application within an organizational context.
Benefits
This system helps the managers of the Zylla company in the process of decision making and
also assists in preparing budgets and implementing them in an effective manner this improves
the overall efficiency of the budget-making process I the organization. This system increases
the productivity of the firm by ensuring proper control of the process in the firm. It also
improves the profit-making capacity of the firm by reducing the costs and regularly
monitoring them. Finally, this system improves the overall functioning of the organization by
providing the manager’s in-depth information about the organization and improves the
quality of their decisions and by effectively monitoring them it also prevents variances
(Yalchin, 2012).
Application
This system is used by the managers for making decisions in a scientific manner. This system
helps the departments of Zylla Company to work in harmony as the responsibilities are
properly delegated. This system improves the level of inventory of the firm. By regularly
notifying managers about the future shortages and reorders the system helps to manage
optimum inventory levels and prevent any future shortages, this ensures regular supply for
production department. This system can be used by the organization in multiple dimensions.
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D1. Integration of management accounting systems and management accounting
reporting in the organizational process.
This system can be used by Zylla Company by, first of hiring staff that will help the firm to
implement the system. This includes accountants and computer operators. The accountants
will help the firm to use cash flow statements, cost accounting, standard costing, marginal
costing, etc. The computer operators will help the firm to implement management
information system and monitoring the above-mentioned systems (Taipaleenmäki and
Ikäheimo, 2013). This system also requires cooperation from the managerial staff as the
system is based on the contribution from the departmental managers. This system is having
many spheres and can be implemented at different levels. It only requires coordination among
various departments for its implementation. In simple words, the process is the training of
employees, setting up of cost centres, integration of cost data and introduction and using the
management accounting techniques in the organization.
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LO2.
P3. Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costing.
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M2. Apply a range of management accounting techniques and produce appropriate
financial reporting documents.
Differentiate management accounting techniques helps in producing the appropriate financial
reporting. In this report, the manager has explained the two essential management accounting
techniques such as Marginal costing and Absorption costing.
Marginal costing: Marginal costing basically called the variable costing only. Marginal cost
is the cost which is charged to the variable cost and it is the one additional unit of an output.
In marginal costing fixed cost remains same at each level of unit and variable cost changes as
per the change in the unit cost. Fixed cost is treated as the period cost of the company
whereas the variable cost is treated as it changes as per the outcome changes. Marginal
costing is the technique which helps in taking the decision of the company Zylla. The
marginal cost emphasises on the changes which have occurred and helps in considering the
decisions of the company. This technique is essential as it critically evaluate the allocation of
resources for the better results. Marginal cost is also known as the average cost of the
company and it is consist of direct labour, material and direct expenses and variable
overheads. Marginal cost also helps in controlling over expenditure, recovery of overhead,
short-term planning of profit and shows the profits which are realistic (Nawaz, 2013)
Absorption costing: In absorption costing we calculate the overhead expenses which is also
as indirect expenses and direct cost. Absorption costing means all the cost which is absorbed
in manufacturing cost which is produced by per units. It is the cost of the finished goods of
inventory and also includes the direct material, labour and manufacturing overhead expenses
of both fixed and variable. In absorption costing all the expenses are determined as the basis
of function. Absorption costing is the predetermined cost of the company which evaluates the
value of the manufacturing cost. This technique helps in determine the products selling price.
This method of costing is widely used in ascertaining the cost (DRURY, 2013).
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