Management Accounting Report: Financial Planning and Control

This report provides a comprehensive analysis of management accounting principles and their application within the context of a fictional company, Tech. It explores the importance of management accounting, cost accounting, and inventory management systems, highlighting their roles in decision-making and operational control. The report delves into various management accounting reports, including job cost reports, inventory management reports, and operating budget reports, explaining their functions and benefits. It then examines different costing methods, specifically absorption and marginal costing, with a comparative analysis using income statements. Furthermore, the report discusses budgetary control, outlining the use of budgetary plans, cash flow management, and capital expenditure budgets. It also includes a Porter's Five Forces analysis to assess the competitive landscape. Finally, it addresses financial issues that Tech might face and suggests solutions using management accounting systems to improve financial performance and profitability. This report is a valuable resource for students studying management accounting, offering practical insights and examples.

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management explanation reports will assistance arrangement to measure the performance
of various departments in command to addition the profitableness and industry. The written
document will screen direction account and its indispensable necessitate. Different methods for
management explanation reports and income evidence using absorption and marginal costing
method will be obstinate in this written document. Preparation tools for monetary fund relation
and explanation method to respond fiscal issues will be covered in this study.
TASK 1
P1 Administration system of rules and its constitutional requirements
Management explanation: Management accounting is very essential for Tech in order
of magnitude to negotiate assorted internal and outside operational act. Cost explanation and
social control explanation is also known as social control explanation. Explanation officer set up
internal and external financial reports in order to make decisions.
Management explanation system renders useful and essential subject matter regarding
business organization activities. This wills assistance to make effectual determination making.
Management accounting system includes outgo of merchandise and bang-up and useful data to
negotiate operations.
Cost accounting system: Cost accounting system helps accountant officers to to evaluate
the cost of goods and services offered by Tech. The system also helps to determine the cost of
products and services. It analyse profitability in order to compete others effectively.
Inventory management system: Inventory refers to finished goods, work in progress,
raw materials, products and services and work in progress (Bennett and James, 2017). Inventory
management will help to manage available resources in the firm under the budget.
Job costing system: It is a process of cost recording and accumulation which helps to
control and manage the cost. This will also help to determine the actual selling price of products
and services offered by Tech.
Management accounting reports also plays the role of marketing tools and help towards
decision making effectively. Such reports will help managers to determine the overall picture and
performance of organisation in terms of financial and non-financial activities, which helps to
make decisions accordingly (van Helden and Uddin, 2016).
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P2 Different methods used in management accounting report
Job cost reports: Such reports will assistance system of rules officer to regulate the cost
of work and undertaking. This will also provide help to focus on key region of gainfulness and
production. Job cost reports will also analyse the cost of activity in advancement and power
disbursal.
Contract process costing- this is regarded to as allotting all cost per unit of production to
those products which are homogeneous in nature.
Batch costing- this is similar to process costing but only difference is that it includes that
identical or homogeneous products are given batch or divide into certain groups and then cost is
identified accordingly.
Inventory management reports: Reports regarding the management of inventory will
help to manage resources in the firm. Inventory management reports will also analyse the quality
and quantity of stock within Tech (Berman, 2015). This will consider overhead costs, labour
costs and inventory waste.
Within this there are many techniques which could be used by firm like that of FIFO or
LIFO methods
FIFO- in this method all inventory which is coming or been purchased at starting or at first must
be distributed or taken out for output at priority bases only.
LIFO- while in this method is just opposite of FIFO under which the stock that is last to be
arranged to take out on first priority bases.
AVCO- this is called to as average cost of inventory at particular point or period of time that is
calculated after dividing cost of goods with number of stock at that time.
Operating budget report: Such reports will help accounting officers to determine the
performance of different departments within firm. This will help to manage the cost of
operations effectively. This will analyse the best performance and provide incentives and
rewards.
Accounts receivable ageing reports: This types of reports analysis will help officers to
manage and control the cash flow activities within Tech effectively. These are also consider as a
critical tool which helps to break down customer balance at the time when they purchase
something and owned the business effectively.
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Performance reports: Performance analysis will help to determine the overall
performance of employees, departments, groups and operating markets effectively. This will
provide analysis from which profitability can be measured easily. Tech is able to control the cost
of operation with the performance report (Eman and Nassar, 2017).
It is very important that all information that related to financial statements and accounts
must be presented in manner which is understandable or clear. This is required so that decision
could be made on clear sense that is helping company.
M1 Management accounting reports will help accounting officer in Tech to make decisions
regarding the operational and financial activities by providing useful information and data.
Accounting officer use this information to make changes in order to increase the performance
and profitability. The system and reports are integrated with organisation process that it will
provide useful information regarding various business resources that helps to manage and control
operational activities.
TASK 2
P3 Income statement for Tech
Absorption costing:
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It can be said from the above analysis that absorption method produce a net income of
15625 and marginal 13625 effectively. Both methods are showing different results in terms of
15625 and 13625. The marginal cost accounting system supply sales and subtract cost of
production which is 15000 and the closing stock 10000 as well. Production overheads of 100 will
be minus and production costs will be added to sales 52500. The net profit will be 13625
effectively. The marginal costing system only takes variable expenses in the procedure and
natural action method considered fixed and variable both expenses in the accounting. It is needed
to realise the changeable disbursal first (Kihn and Ihantola, 2015). Fixed disbursement is those
which is fixed for the steadfast for an example, salary paid to director and person is a fixed cost.
Semi-variable disbursal is those in which the same part of the disbursal remains aforesaid and
come changes accordant. Variable disbursal which is systematically alteration for an example,
price of raw worldly.
Marginal costing
M2 Absorption and marginal costing both methods can be interpreted and their
techniques will help to determine net profit amount effectively. It can be said that marginal
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costing system only takes variable expenses in the calculation and absorption method considered
fixed and variable both expenses in the accounting. It will help to produce appropriate financial
reports for the firm in order to increase profitability by measuring all the extra expenses.
TASK 3
P4 Planning tools to control the budget
Budgetary control alludes to the systems a plans detailed by the firm keeping in mind the
end goal to deal with the cost of various assets and exercises inside Tech under the financial
plan. Financial plan ought to be overseen for units, divisions, budgetary exercises and assets.
Viable control over spending will likewise enhance the money related position of firm with a
specific end goal to accomplish the coveted objectives and targets.
Budgetary spending plan: Financial spending alludes to the desires in which the firm enhance
and create money incomes. Money can be created from deals incomes, advances, protection of
stock and offer of benefits viably.
Money spending plan: Cash spending alludes to the gauge of money receipts. Trade spending
plan is essential out request to oversee and control money exercises, for example, approaching
and active. This is the duty of officers to guarantee that the money spending will meet the present
commitments.
Capital use spending plan: It is a money related spending plan and for the most part centered
around resources, for example, hardware, plans and land. This will be obtained by firm with
securities and long haul bonds. It is related with ventures which are vast in nature.
Working BUDGET- Deals and income spending plan: The financial backing fundamentally
centred on the wage got from operational exercises in the market. It is pivotal for the officers to
assess the budgetary position Tech later on (Kotas, 2014).
Cost spending plan: This spending will assess the foreseen costs in a specific day and age
successfully and effectively. Such spending plans will likewise give data from which officers can
get ready for future costs.
Task spending plan: The venture spending plan depicts distinction amongst costs and deals. In
the event that the foreseen benefits are low for Tech than some specific techniques and plan
ought to be defined by the officers to expand deals and incomes. FIXEED AND VARIABLE
BUDGET
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Settled cost: Fixed cost is settled for the firm that compensation of officers and representatives is
the best case of settled cost.
Variable cost: Variable cost is reliant on the extent of Tech operational exercises. Crude
materials obtained by Tech I
s the best case of variable cost
PORTER'S FIVE FORCE ANALYSIS
Dangers of new passageway: There are a ton of business enter in the market and make rivalry for
Tech. It exceptionally urgent for the firm to make high obstructions with a specific end goal to
forestall others in the market.
Dealing intensity of providers: Suppliers have bartering power so they can without much of a
stretch offer the items and administrations at high rates with low quality. This will influence
business regarding expanding cost of crude materials.
Dangers of substitutes: Customers can deal the cost of items and administrations which diminish
the productivity and they may discover elective alternative accessible in the market.
Contention among existing contenders: Tech should attempt to center around enhancing
client faithfulness and development too with a specific end goal to contend others in the
market viably.
ADVANTAGES DISADVANTAGES
Budgetary control make coordination with
organisation operational activities.
Budgetary control can cause problems if used
rigidly or mechanically.
This will help to convert plans and strategies
into action (Lavia López and Hiebl, 2014).
Decrease the motivation level of employees.
Manage resources under the budget in order to
improve financial performance.
Reduce the innovation and initiatives at lower
level.
PORTER'S FIVE FORCE ANALYSIS
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Threats of new entrance: There are a lot of business enter in the market and create competition
for Tech. It very crucial for the firm to make high barriers in order to prevent others in the
market.
Bargaining power of suppliers: Suppliers have bargaining power so that they can easily sell the
products and services at high rates with low quality. This will affect business in terms of
increasing price of raw materials.
Threats of substitutes: Customers can bargain the price of products and services which reduce
the profitability and they may find alternative option available in the market.
Rivalry among existing competitors: Tech should try to focus on improving customer loyalty
and growth as well in order to compete others in the market effectively.
M3 Different planning tools will help to achieve better planning and controlling over various
business resources in order to forecast budget. This will help management to increase
profitability by reducing waste expenses and extra cost of resources effectively. This will also
help business to respond its financial issues by managing financial activities under the budget
efficiently.
TASK 4
P5 Management accounting system to face financial issues
Money related ISSUES
Business in its own particular lives can contend others in the market effectively and furthermore
take care of the issues. There are distinctive money related issues emerges inside Tech which is a
noteworthy issue for the firm. Money related issues diminish the incomes and productivity of
firm successfully.
Creation and benefits: Production purchasers costs, for example, crude material, items and
administrations. Expanding cost I a noteworthy issue for the firm keeping in mind the end goal to
deal with the assets under spending plan successfully (Maas, Schaltegger and Crutzen, 2016).
Subsidizing: It can be said that financing is a choice from which firm can extend their exercises
keeping in mind the end goal to expand the gainfulness and creation. Absence of subsidizing
keep business from acquiring crude materials, assess installments and hardware support and so
forth.
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Obligations: Too much obligations are unsafe for firm that banks additionally declined to pay the
credit sum if the business have such a large number of obligations. Obligations are liabilities for
the business which influences the incomes and money related exercises.
Poor money related administration: Poor monetary administration likewise cause budgetary
issues which influence the operational exercises. Officers are in charge of overseeing and
controlling budgetary exercises.
Planning issue: Budget can cause issues if utilized inflexibly or mechanically. It will diminish
the effect of advancement and activities at bring down level administration and furthermore
influence the benefits and generation. This will diminish the development level also (Pavlatos
and Kostakis, 2015).
Administration ACCOUNTING TECHNIQUES
Key execution marker: This will assist business with measuring esteems as indicated by the
working state of business keeping in mind the end goal to assess and figure out where is the
business running as indicated by the objectives and targets so as to accomplish them
successfully.
Benchmarking: Benchmarking is where the business can contrast its present and current
information with some other competition firm that measures contrasts amongst objectives and
accomplishments. Hence, the business should deal with recommendations gave by any others to
increment money related development and improvement.
Basic leadership: Management bookkeeping systems give successful basic leadership to the
officers to oversee and control diverse viewpoints and exercises inside Tech. This will likewise
deal with the money related loss of 1.5million.
Specific nature: The bookkeeping officer gathers all the data and information in regards to
budgetary exercises which will diminish the money related loss of 1.5 million inside Tech viably
(Nitzl, 2016). Likewise, powerful basic leadership will likewise deal with the specific idea of
officer.
Think Beyond: It can be said that administration bookkeeping officer required inventive
reasoning so as to contend others in the market. Imperative reasoning will bring efficiencies and
furthermore lessen the money related loss of 1.5million towards Tech viably.
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In this way, one might say that Balance scorecard approach and Just in time technique are
additionally helpful for chiefs keeping in mind the end goal to react the money related issue of
1.5 million viably and productively.
M4 management accounting reports provides financial and non-financial data which helps
management to respond their financial issues regarding various business resources by managing
costs of different departmental activities under the budget. KPI, Benchmarking and Just in time
method will help to reduce extra expenses which lead towards profitability and production.
CONCLUSION
It can be concluded from the above report that management accounting and reports are
very crucial for the firm in order to evaluate the overall performance of organisation. This will
help to increase the profitability and production as well. Management accounting reports will
help accounting officer in Tech to make decisions regarding the operational and financial
activities by providing useful information and data. Budgetary control refers to the strategies an
plans formulated by the firm in order to manage the cost of different resources and activities
within Tech under the budget. Management accounting techniques such as Benchmarking, Just
in time method and balance scorecard approach will also help to respond to the financial issues
within Tech.
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REFERENCES
Books and Journals
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