Management Accounting Report: Galway Plc - Cost and Planning Analysis

This report delves into the realm of management accounting, focusing on its crucial role in business decision-making, particularly through the case study of Galway Plc. The report explores various aspects of management accounting including cost accounting, price optimization, inventory management, and job costing systems, highlighting their benefits and applications within an organization. It also examines different types of management reports such as inventory management reports, accounts receivable reports, performance reports, and budget reports, emphasizing their importance in analyzing performance and guiding strategic decisions. Furthermore, the report addresses the integration of accounting systems and reporting mechanisms with organizational procedures, emphasizing how these tools contribute to achieving business objectives. The report also covers cost calculation for income statement preparation, and planning tools, as well as comparing how different organizations adapt accounting systems to respond to financial problems, ultimately leading to sustainable success.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Management accounting with its essential requirements......................................................3
P2. Methods used in management accounting reporting.............................................................5
M1. Benefits of accounting systems............................................................................................6
D1. Ways in which accounting systems with reporting mechanisms are closely integrated
within procedures of organisation................................................................................................7
TASK 2............................................................................................................................................8
P3. Calculation of costs in order to prepare income statements..................................................8
M2. Accounting techniques with appropriate reporting documents..........................................13
D2. Financial reports together with data interpretation.............................................................13
TASK 3..........................................................................................................................................14
P4. Planning tools......................................................................................................................14
M3. Uses of planning tools........................................................................................................15
TASK 4..........................................................................................................................................16
P5. Comparison among organisations in context to adapting accounting systems for
responding financial problems...................................................................................................16
M4. Analyses of the ways financial problems are responded and management accounting leads
entities to sustainable success....................................................................................................18
D3. Panning tools for solving problems so to lead success.......................................................19
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

INTRODUCTION
Management accounting is the involvement of financial information and presentation of
data which helps to make key business decisions (Budding, Grossi and Tagesson, 2014). It is
used by business concern by analysis and evaluating information. In other words, it is a internal
management which helps to control over business activities and take corrective actions. This
report is based on importance of management accounting that states how to make decisions. To
understand this Galway Plc has been selected that is a manufacturer of single product. The
manager are playing important role as they gather the data and collects information for taking
right decisions. Various topics are going to be covered in such report such as management
accounting system, accounting report and planning tools for controlling the budget. Moreover,
marginal and absorption costing is used to calculate profits and financial problems that can be
solve by using management accounting systems.
TASK 1
P1. Management accounting with its essential requirements.
Management accounting is used by managers or accountant within organization in order
to analysing, classifying, gathering and controlling the financial information. Management is
related to managing the business activities and accounting states financial information and
transaction which are used to maximize profits. Management accounting is related term which is
widely used by organization for sustaining growth and development (Christensen, Cottrell and
Baker, 2013). Such as Galway is a manufacturing company that produce products by involving
all cost and expenses properly. The main aim of business organization is to maximize
profitability by using management accounting.
Management accounting systems are the systematic study of process and procedure
which helps in decision making process. It states different activities like controlling and
reporting, performance evaluation, decision making, planning and budgeting which leads to
maximize profits. Systems are useful for organization which helps managers to measure the
statical data, price level and cost of organization. Therefore, Galway Plc is using different types
of management accounting that are defined below:
Cost accounting system - To estimate the cost of products for the purpose of knowing
profitability by controlling cost this system is used by business organization. Mainly, it is

required to get the exact cost of products, so decisions can take accordingly within organization.
For example, Manager of Galway Plc is a manufacturer of single products, that is using cost
accounting system to get the real cost of products during manufacturing process. Such system
helps managers to know which product is profitable and which one not, that is essential decision
for respective company.
Price optimization system - Organizations are using this system to determine the price
of particular products. It is a mathematical analysis which is used to set the prices of products
that is essential for businesses (Collis and Hussey, 2017). Prices is important element which
helps to make customer buying decisions. It has requirement to determine the prices of products
by involving cost of manufacturing. For instance, manager of Galway Plc are determining the
prices of products by understanding the customer perception about the prices of products.
Therefore, respective company is using price optimization system that helps to make profits.
Inventory management system - It is a combination of technology which is used to
monitor and maintain stock products. Such system is associate with information such as barcode,
assets, availability and labels of inventory which is essential required for all organization. By
using this system Galway Plc can track the inventory level and proper maintenance of stocked
products. This system helps to improve cash flow, reduction in storage cost, improves
relationship between supplier and vendor, reduce dead stock and also reduce labour cost of an
organization. Stock is maintain by managers through a software that helps to prevent stock out
and managing multiple locations.
Job costing system - There are different cost arises due to manufacturing products which
need to monitor by assigning cost in to each product is consider as job costing system. Is is used
to track of expenses which is important for organization in order to make profits. It has essential
requirement to track the cost of each job and maintaining data for the purpose of making more
relevant to the operation of business. Galway Plc is using such system to assign the cost in to
specific process or products that helps to operate business successfully and smoothly.
Therefore, all system are used by Galway Plc to make the right business decisions which
increases profitability productivity. Such system has essential requirement that has to maintain
the business at up position and attracts customer by setting the reasonable prices of products.

P2. Methods used in management accounting reporting
Management accounting reporting is related with different reports which are prepared
by managers in order to analyse performance and protect them. Reports are in written form
which states business position by evaluating performance of organization. Reports should be
written form which are get ready by managers by using different software that helps to complete
the objectives in short period. Therefore, it is important for business organization is to develop
management reports so decisions can make independently. The administrator of Galway Plc
focusing on different types of management report that are as explained:
Inventory management report - To grow a business successfully such report is
important which is used to manage the inventory appropriately. This is prepared by stock keeper
or manager who has proper records about inventory. It is prepared by all business organization
for managing inventory and placing next order accordingly (Cooper, 2017). The purpose of
developing inventory management report is to get the information about material and buy raw
material accordingly. The manager of Galway Plc is preparing inventory report for the purpose
of keeping records of stocked and sold products. This report is very useful for such company as
manager can keep proper records of stocked item and demand items which helps to maintain
profits.
Account receivable report - It has been analysed that all businesses are relied on credit
system that retain customers for long term and increase turnover. This report is used to keep
records of defaulter and creditors who has not paid amounts in consideration of products and
services. This is used by Galway Plc to record credit sales as well as analysing due payment in
financial period. Such company sales products to customer on credit for specified period and
maintain records of unpaid customers. At the time of maturity company receive its due payment
which helps to balance cash flow investment and other accounts. Moreover, some bad debts also
arises during receiving payment that should be written off in order to get exact money.
Performance report - Such report is developed by business industry to review and
evaluate business performance. This is used by managers to make key strategic decisions for the
future of business firm. It states a way of improving the employee's performance by using such
reports. For instance, Galway Plc's management awarded its workers for their commitment and
completing them in specified period. Management of respective company evaluate performance

and prepare a report that can motivates employees and improve productivity. Moreover, bonus is
also provided by administrators to well performer employees by using performance report.
Budget report - It involves expected income and expenses which is used to measure the
position of company. Budget is important for businesses as manager make plans and implement
them with the help of budget in order get profits (Grabner and Moers, 2013). This is the
estimation of income and expenses that can occur at the time of producing products and services.
In context to Galway Plc, administrator prepares budget report in every quarter that helps to
determine the expenses in manufacturing products. It is prepared by all business such as small,
medium and large organization. The manager of respective company uses this report for
improving the profitability by setting a budget and implement it properly.
M1. Benefits of accounting systems.
Management accounting system Benefits and application
Cost accounting system  Such system give chief advantages that is to
measure the organization efficiency and improve
it carefully that helps to make profits.
 Galway Plc can reduce the cost of production by
making proper making proper planning and
implementing them with the help of cost
accounting system (Hall, 2012).
 Moreover, such system helps to increase the
production level by reducing the cost of every
products and services.
Price optimization system  This system helps to determine the prices of
products by minimizing the human error.
 It attracts people because Galway Plc provides
products at reasonable prices which helps to
recover cost of manufacturing and make profits.
 Moreover, by using this Galway Plc can analysis
the customer's buying pattern and preference for

pricing of product.
Job costing system  It has advantages as to record the actual material
and labour expenses in to specific jobs that
maintains profits (Harrison and Lock, 2017).
 Benefits of such system is to ascertain the
associated cost with job and finished product.
 As applying this system manager of Galway Plc
can calculate the earned profit accurately on
individual jobs or cost.
Inventory management system  It helps to figure out that how much exactly
inventory need to have on hand for running a
business.
 By using this, Galway Plc prevents the shortage
of products and also helps to keep enough
inventory in ware house.
 By using this organization save time and money
as it ensure proper records and accurate
management.
D1. Ways in which accounting systems with reporting mechanisms are closely integrated within
procedures of organisation.
Organizational processes are related with management accounting system and reporting
which helps to maintain the profitability by making correct decisions. System and reports of
management accounting is important for organizational processes as they helps to maintain
proper records and data in order to achieve business objectives (Hilton and Platt, 2013). Different
types of management accounting system are used by Galway Plc such as inventory management,
price optimization, job costing and cost accounting that helps to accomplish target on particular
period. On the other side, performance report, budget report, account receivable and inventory
management report is prepared by administrator of Galway Plc that helps to perform
organizational functions effectively. Therefore, management accounting system and reports are
directly integrated with organization processes by achieving business goals.

TASK 2
P3. Calculation of costs in order to prepare income statements.
Cost: The term is stated to the cash amount that is invested for an asset. It comprises
necessary valuable amounts that is required for getting an asset addition to ready for its usage.
Cost primarily involves amounts which is incurred by business concerns so to produce
commodities together with providing services. It plays crucial role in Galway Plc as it helps in
fine tuning operations along with activities to generate more profits. Few costing techniques that
are opted by mangers of selected business concerns are the discussed as:
Marginal costing: the technique helps in calculating changes in costs while there are any
changes in quantity. It states increase or decreases in production costs that allows organisations
to analyse the amount they have to pay for producing additional units (Järvinen, 2016). In
addition, with technique of marginal costing, financial analysts of Galway plc develops various
strategies addition to consider actions that will result in future profits.

Absorption costing: With this technique, managers of entities accumulates associated
costs within manufacturing procedures. Further, these are apportioned towards individual
commodities. It is favoured by Galway plc managers as to create accounting standards that helps
in inventory valuation so to state the accurate amount in balance sheet of business. It point outs
all manufacturing values which are wrapped by produced units. Such techniques is usually opted
for the formulating external reports including taxation and stock valuation reports.

Valuation of closing inventory via LIFO method.